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 March 31, 2000
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: 000-21261
VIATEL, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3787366
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
685 Third Avenue
New York, New York
(Address of principal executive offices)
10017
(Zip Code)
(212) 350-9200
(Registrant's telephone number, including area code)
--------------------------------------------------
(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. |X| Yes | | No
As of May 12, 2000, 50,273,590 shares of the registrant's common stock,
$.01 par value per share, were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
VIATEL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
March 31, December 31,
2000 1999
--------------------- ---------------------
<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 471,358 $ 373,044
Restricted cash equivalents 17,170 9,632
Restricted marketable securities 142,282 125,581
Trade accounts receivable, net of allowance for doubtful accounts of
$16,263 and $10,034, respectively 209,090 115,103
VAT receivables, net 42,167 37,867
Prepaid expenses and other current assets 32,418 16,789
---------------------- ---------------------
Total current assets 914,485 678,016
--------------------------------------------
Restricted marketable securities, non-current - 62,547
Property and equipment, net 1,083,322 884,328
Cash securing letters of credit for network construction 45,419 50,165
Intangible assets, net 975,729 1,011,659
Other assets 34,651 17,382
---------------------- ---------------------
Total Assets $ 3,053,606 $2,704,097
====================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued telecommunications costs $ 78,337 $ 77,333
Accounts payable and other accrued expenses 302,465 161,136
Property and equipment purchases payable 108,474 87,810
Accrued interest 35,136 37,545
Current installments of notes payable 25,277 24,997
Current installments of obligations under capital leases 14,321 10,337
---------------------- ---------------------
Total current liabilities 564,010 399,158
---------------------- ---------------------
Long-term liabilities:
Long-term debt, excluding current installments 1,678,127 1,680,885
Notes payable and obligations under capital leases, excluding current
installments 78,660 86,663
---------------------- ---------------------
Total long-term liabilities 1,756,787 1,767,548
---------------------- ---------------------
Series B cumulative convertible preferred stock, $.01 par value: authorized
650,000 shares; issued and outstanding 325,000 and 0 shares, respectively 307,469 -
---------------------- ---------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized 1,350,000 shares, no shares
issued and outstanding - -
Common stock, $.01 par value; authorized 150,000,000 shares; issued and
Outstanding 50,188,642 and 47,093,361 shares, respectively 502 471
Additional paid-in capital 1,122,966 1,066,964
Unearned compensation (32,450) (5,768)
Accumulated other comprehensive loss (65,898) (45,464)
Accumulated deficit (599,780) (478,812)
---------------------- ---------------------
Total stockholders' equity 425,340 537,391
---------------------- ---------------------
Total liabilities and stockholders' equity $3,053,606 $2,704,097
====================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
VIATEL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
For the Three Months Ended
March 31,
---------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
Revenue:
Communication services revenue $ 160,640 $ 48,395
Capacity sales 20,038 13,246
---------------- ----------------
Total revenue 180,678 61,641
---------------- ----------------
Operating expenses:
Cost of services and sales 130,162 51,048
Selling, general and administrative 61,428 18,763
Depreciation and amortization 66,666 9,603
Restructuring 571 -
---------------- ----------------
Total operating expenses 258,827 79,414
---------------- ----------------
Other income (expense):
Interest income 7,346 6,828
Interest expense (48,385) (26,166)
---------------- ----------------
Net loss (119,188) (37,111)
Dividends on cumulative convertible preferred stock (1,780) (1,177)
================ ================
Net loss attributable to common stockholders $(120,968) $(38,288)
================ ================
Net loss per common share attributable to common
stockholders, basic and diluted $ (2.51) $ $ (1.65)
================ ================
Weighted average common shares outstanding,
basic and diluted 48,202 23,186
================ ================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
VIATEL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
For the Three Months Ended
March 31,
------------------------------------------
2000 1999
-------------------- --------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (119,188) $(37,111)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 66,666 9,603
Accreted interest expense on long term debt 4,837 10,330
Provision for losses on accounts receivable 6,293 1,600
Earned stock compensation 1,688 -
Changes in operating assets and liabilities, net of effect of acquisitions
Increase in accounts receivable and accrued interest (26,845) (18,936)
(Decrease)/increase in accrued interest expense on senior notes (13,391) 15,049
Increase in prepaid expenses and other receivables (20,368) (13,245)
Increase in other assets and intangible assets (4,921) (947)
Increase in accrued telecommunications costs, accounts
payable and other accrued expenses 57,064 7,689
-------------------- --------------------
Net cash used in operating activities (48,165) (25,968)
-------------------- --------------------
Cash flows from investing activities:
Capital expenditures (97,306) (101,691)
Purchase of marketable securities (62,546) (194,058)
Proceeds from maturity of marketable securities 105,094 220,954
Acquisition, net of cash received of $24,112 (117,326) -
Cash securing letters of credit for network construction 4,747 (121,239)
-------------------- --------------------
Net cash used in investing activities (167,337) (196,034)
-------------------- --------------------
Cash flows from financing activities:
Proceeds from issuance of senior notes - 365,471
Proceeds from issuance of convertible preferred stock 306,091 -
Deferred financing costs - (12,880)
Repayment of senior discount notes (5,151) -
Proceeds from issuance of common stock 27,259 46
Repayment of notes payable - (682)
Payments under capital leases (4,093) (300)
-------------------- --------------------
Net cash provided by financing activities 324,106 351,655
-------------------- --------------------
Effects of exchange rate changes on cash (2,752) (3,902)
-------------------- --------------------
Net increase in cash and cash equivalents 105,852 125,751
Cash and cash equivalents at beginning of period 382,676 339,821
==================== ====================
Cash and cash equivalents at end of period $488,528 $465,572
==================== ====================
Supplemental disclosures of cash flow information:
Interest paid $ 37,291 $ 231
==================== ====================
Assets acquired under capital lease obligations $ 3,934 $ 13,550
==================== ====================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 2000 AND FOR THE PERIODS ENDED
MARCH 31, 2000 AND MARCH 31, 1999 ARE UNAUDITED)
(1) DESCRIPTION OF BUSINESS
Viatel, Inc. and subsidiaries (collectively, the "Company") is a provider
of "ALL DISTANCE" telecommunications services to individuals,
corporations, internet service providers, applications service providers
and other communications carriers in Europe and North America. The Company
is a licensed provider of telecommunications services in ten western
European countries, Canada and the United States. The Company owns and
operates international telecommunications networks and has been building a
fiber optic network in Western Europe.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The consolidated financial statements as of March 31, 2000 and for the
three month periods ended March 31, 2000 and 1999, respectively, have been
prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the consolidated
financial position, results of operations and cash flows for each period
presented have been made on a consistent basis. Certain information and
footnote disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations although management believes that the disclosures herein are
adequate to make the information presented not misleading. It is suggested
that these financial statements be read in conjunction with the Company's
annual consolidated financial statements. Certain reclassifications have
been made to the prior year's condensed consolidated financial statements
to conform to the current year's presentation. Operating results for the
three months ended March 31, 2000 may not be indicative of the results
that may be expected for the full year.
5
<PAGE>
(B) REVENUE AND COST OF SERVICES AND SALES
The Company records communication services revenue as earned at the time
services are provided. The related cost of communication services is
reported in the same period.
Revenue from capacity sales mainly represents indefeasible-rights-of-use
("IRUs") for sales of portions of the network that qualify for sales-type
lease accounting. Transactions that do not meet the criteria for
sales-type lease accounting are accounted for as operating leases and
revenue is recognized over the term of the lease.
Cost of capacity sales is determined based upon the ratio of total network
capacity sold to total estimated network capacity, multiplied by the total
capitalized costs of the related network.
In June 1999, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 43, "Real Estate Sales, an interpretation of FASB
Statement No. 66" ("FIN 43") which is applicable for all contracts entered
into after June 30, 1999. FIN 43 requires that a lease of property
improvements or integral equipment include a provision allowing title to
transfer to the lessee in order for that lease to be accounted for as a
sales-type lease.
The Company recognizes revenue in accordance with FIN 43 and the
Securities and Exchange Commission Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements". However, accounting
practices and guidance for sales of IRUs is evolving. Standard setting
bodies are currently reviewing a number of issues related to FIN 43 and
other related issues are expected to be referred to these bodies. Changes
in the accounting treatment for IRUs could affect the way that the Company
may recognize revenue and costs associated with these capacity sales in
the future.
(C) NEW PRONOUNCEMENT
In March 2000, FASB Interpretation No. 44 - "Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB
Opinion No. 25" ("FIN 44") was issued. FIN 44 clarifies the application of
APB No. 25 regarding (a) the definition of EMPLOYEE for purposes of
applying APB No. 25, (b) the criteria for determining whether a plan
qualifies as a noncompensatory plan, (c) the accounting consequence of
various modifications to the terms of a previously fixed stock option or
award, and (d) the accounting for an exchange of stock compensation awards
in a business combination. FIN 44 does not address the application of the
fair value method of Statement No. 12 (Accounting for Stock-Based
Compensation"). FIN 44 is effective July 1, 2000, but certain conclusions
in this interpretation cover specific events that occur after either
December 15, 1998, or January 12, 2000. To the extent that this
interpretation covers events occurring during the period after December
15, 1998, or January 12, 2000, but before its July 1, 2000 effective date,
the effects of applying this interpretation are recognized on a
prospective basis from July 1, 2000. The Company has not yet assessed the
impact of FIN 44.
6
<PAGE>
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of (in thousands) :
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------------- -----------------------
<S> <C> <C>
Communications systems $820,772 $698,483
Construction in progress 288,793 210,671
Furniture, office and computer equipment and other 29,755 25,707
Software 16,584 13,481
Leasehold improvements 32,953 11,926
----------------------- -----------------------
1,188,857 960,268
Less accumulated depreciation and amortization 105,535 75,940
----------------------- -----------------------
$1,083,322 $884,328
======================= =======================
</TABLE>
At March 31, 2000, construction in progress primarily represents
construction of the fiber optic network we are constructing in Western
Europe. For the periods ended March 31, 2000 and 1999, $4.2 million and
$2.3 million, respectively, of interest was capitalized.
In connection with the Company's joint construction of the civil works
associated with a national communications network being constructed in
Germany, the Company was required to obtain a letter of credit in support
of its obligations. At March 31, 2000, the total amount outstanding under
this letter of credit was approximately $45.4 million (DM92.5 million).
This letter of credit is collateralized by cash deposits.
(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following as of (in
thousands) :
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
---------------------- ---------------------
Accounts payable $98,215 $78,677
Accrued expenses 204,250 82,459
---------------------- ---------------------
====================== =====================
Total $302,465 $161,136
====================== =====================
</TABLE>
7
<PAGE>
(5) LONG TERM DEBT
Long term debt consists of the following as of (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------------------ ---------------------
<S> <C> <C>
11.25% Senior Notes $400,000 $400,000
12.50% Senior Discount Notes, less discount of $154,173 and
$164,393, respectively 345,827 335,607
11.50% Senior Notes, less discount of $3,390 and $3,486,
respectively 266,065 265,986
11.50% Senior Notes 200,000 200,000
13.50% Senior Notes 157,633 158,300
11.50% Senior Notes (E 150,000) 144,134 151,027
11.15% Senior Notes (E 91,010) 87,451 91,633
12.40% Senior Discount Notes (E 80,151) and (E 115,552),
less discount of $34,016 (E 35,401) and $38,011 (E 37,752),
respectively 77,017 78,332
------------------------ ---------------------
$1,678,127 $1,680,885
======================== =====================
</TABLE>
The Company has entered into a credit facility with NTFC, which provides for
borrowings to fund certain equipment acquisition costs and related expenses. The
facility provides for an aggregate commitment of NTFC of $49.0 million. As of
March 31, 2000, the aggregate amount due to NTFC was $30.6 million. All of the
equipment purchased with the proceeds of the NTFC facility has been pledged to
NTFC. The terms of the NTFC facility require the Company to maintain certain
debt service coverage ratios, certain EBITDA thresholds (both as defined in the
terms of the NTFC facility), and minimum cash balances. Due to the Company's
acquisition of Destia (as defined below), NTFC has the right to require Destia
to exercise its right to repay all outstanding obligtions under the NTFC
facility within 90 days following Viatel's acquisition of Destia. NTFC has
extended the date by which it must exercise its right until May 26, 2000. Before
May 26, 2000, the Company will be required to either (i) obtain a waiver, (ii)
prepay the outstanding amounts owed at a premium of not more than 102% of the
amount outstanding or (iii) negotiate a new facility. The Company's intent is to
renegotiate a new facility with NTFC and, as such, the Company continues to
record the NTFC borrowings as a long term liability.
8
<PAGE>
(6) STOCK OPTION PLAN
Stock option activity for the three months ended March 31, 2000 under the
Company's various stock option plans is shown below (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
Weighted Average Number
EXERCISE PRICE of
SHARES
Outstanding at December 31, 1999 $13.33 5,741
Granted 49.84 2,660
Exercised 10.93 (2,494)
Forfeited 14.73 (14)
------------------- --------------------
Outstanding at March 31, 2000 $30.82 5,893
=================== ====================
</TABLE>
As of March 31, 2000, approximately 1.8 million options were currently
exercisable under the Company's various stock option plans.
(7) COMPREHENSIVE LOSS
The Company's comprehensive loss is as follows (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------------------------
<S> <C> <C>
2000 1999
------------------- --------------------
Net loss $ (119,188) $ (37,111)
Foreign currency translation adjustments (20,434) (8,836)
------------------- --------------------
Comprehensive loss $ (139,622) $ (45,947)
=================== ====================
</TABLE>
9
<PAGE>
(8) SEGMENT AND GEOGRAPHIC DATA
While the Company's management monitors the revenue streams of the various
products and geographic locations, operations are managed and financial
performance is evaluated based on the delivery of multiple, integrated
services to customers over a single network. As a result, there are many
shared expenses generated by the various revenue streams and management
believes that any allocation of the expenses incurred to multiple revenue
streams or geographic locations would be impractical and arbitrary.
Management does not currently make such allocations internally.
The Company groups its products and services by retail, wholesale,
advanced services, and capacity. The information below summarizes revenue
by type for the three months ended March 31 (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
------------------- --------------------
Retail $ 99,848 $27,334
Wholesale 49,116 20,398
Advanced Services 11,676 663
Capacity 20,038 13,246
-------- -------
Consolidated $180,678 $61,641
======== =======
</TABLE>
The information below summarizes revenue by geographic area for the three
months ended March 31 (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
------------------- --------------------
Western Europe $ 93,649 $41,449
North America 85,017 17,252
Other 2,012 2,940
-------- --------------------
Consolidated $180,678 $61,641
======== =======
</TABLE>
The information below summarizes long lived assets by geographic area as
of (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
2000 1999
-------------------- --------------------
Western Europe $1,296,051 $1,087,038
North America 717,550 762,198
Other 200 201
------------------- --------------------
Consolidated $2,013,801 $1,849,437
</TABLE>
10
<PAGE>
(9) ACQUISITIONS
DESTIA COMMUNICATIONS, INC.
On December 8, 1999, the Company acquired Destia Communications, Inc.
("Destia") through a merger of Destia with one of the Company's
subsidiaries. Destia is a facilities-based provider of domestic and
international long distance telecommunications services in Europe and
North America. Its customer base consists of residential customers,
commercial customers, ethnic groups and other telecommunications carriers.
Destia offers a variety of retail telecommunications services, including
international and domestic long distance, Internet access and wireless
services. On February 13, 2000, Destia's name was changed to Viatel
Communications, Inc.
In connection with the Company's integration plan, as of December 31,
1999, the Company recorded accruals related to the closing and termination
of Destia facilities and lease and other contract costs of $9.2 million
and employee termination costs relating to Destia employees of $2.2
million. Payments made during the three months ended March 31, 2000
against these accruals totaled $5.1 million, of which $4.6 million related
to lease and other contract cancellation costs and $0.5 million related to
employee termination costs.
AT&T COMMUNICATIONS (UK) LIMITED
On February 29, 2000, the Company acquired all of the issued and
outstanding share capital of AT&T Corporation's UK subsidiary, AT&T
Communications (UK) Limited ("AT&T UK"). As a result of the transaction,
AT&T UK became a wholly-owned subsidiary of the Company. AT&T UK is a
provider of voice and data solutions to primarily enterprise level
customers. In connection with the acquisition, AT&T UK's name was changed
to Viatel Global Communications Limited.
The purchase price for AT&T UK was $117.3 million, net of cash acquired of
$24.1 million, and was comprised of a $125.0 million cash payment at the
time of closing, certain post closing payments in connection with
preliminary acquired working capital, and estimated transaction costs. The
acquisition has been accounted for under the purchase method of
accounting. The purchase price has been preliminarily allocated based on
estimated fair values at the date of acquisition, pending final
determination of certain acquired balances. The preliminary allocation of
the AT&T UK purchase price is as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
Current assets, net of cash acquired of $24,112 $70,938
Property, equipment and leasehold improvements 112,169
Other non-current assets 17,230
Current liabilities (83,011)
-------------
Fair value of assets acquired $ 117,326
=============
</TABLE>
11
<PAGE>
The following pro forma financial information presents the combined
results of operations of Viatel, Destia, and AT&T UK, as if the
acquisitions had occurred as of January 1, 2000 and 1999, after giving
effect to certain adjustments, including amortization of goodwill,
depreciation expense, and interest income and expense. The pro forma
financial information does not necessarily reflect the results of
operations that would have occurred had Viatel, Destia and AT&T UK been a
single entity during such periods.
<TABLE>
<CAPTION>
Three months ended March 31,
2000 1999
---------------- ---------------
<S> <C> <C>
Revenue $206,125 $169,458
Net loss attributable to common stockholders (126,261) (105,878)
Net loss per common share attributable
to common stockholders $(2.62) $(2.82)
</TABLE>
AT&T UK had significant transactions and relationships with AT&T Corp. and
its affiliates. As a result of these relationships, it is possible that
the terms of these transactions were not the same as those that would have
resulted from transactions among wholly unrelated parties.
(10) RESTRUCTURING
During 1999, the Company recognized restructuring charges relating to the
streamlining of the Company's organizational structure and the strategic
repositioning of certain operations, primarily as a result of the merger
with Destia. These restructuring charges were composed primarily of
anticipated costs to terminate certain leases, and other contract
cancellation costs and employee termination costs associated with
workforce reductions. As of March 31, 2000, approximately 55 employees
have been terminated due to the Company's streamlining activities.
At March 31, 2000, the Company has accruals for restructuring of $2.8
million. During 1999, a total of $3.9 million was accrued for
restructuring, consisting primarily of charges relating to employee
terminations and lease and other contract cancellation costs. Payments
made during the three months ended March 31, 2000 against the
restructuring accruals totaled $1.1 million, of which $0.1 million related
to employee terminations and $1.0 million related to lease and other
contract cancellation costs. The Company recorded additional restructuring
charges of $0.6 million for the three months ended March 31, 2000,
primarily related to employee termination costs. Additionally, during the
three months ended March 31, 2000, the Company accelerated depreciation on
certain assets that were taken out of service as of March 31, 2000. The
Company anticipates that all remaining actions required to complete this
restructuring plan will be completed by December 2000.
(11) CONVERTIBLE PREFERRED STOCK
On March 9, 2000, the Company completed an offering of $325 million in
Series B Cumulative Convertible Preferred Stock for net proceeds to the
Company of $306.1 million. The Series B preferred stock accrues interest
at an annual rate of 7.50%, may be converted at the option of the holder
at a conversion price of $46.25 per share and is mandatorily redeemable in
February 2015. As part of this financing, the Company also issued warrants
to purchase 753,116 shares of common stock, 50% of which are exercisable
for 5 years at a price of $75 per share, and 50% of which are exercisable
for 7 1/2 years at a price of $100 per share. In addition, the Company
issued warrants to purchase 7,532 shares of its Series C preferred stock
(each share of which is convertible into 100 shares of the Company's
common stock), 50% of which are exercisable for 5 years at a price of
$7,500 per share and 50% of which are exercisable for 7 1/2 years at a
price of $10,000 per share.
12
<PAGE>
(12) SUBSEQUENT EVENTS
SALE OF TRUST CONVERTIBLE PREFERRED SECURITIES
On April 12, 2000, Viatel Financing Trust I, a Delaware trust and
subsidiary of the Company (the "Trust"), sold $180 million of 7 3/4% trust
convertible preferred securities. The trust convertible preferred
securities were sold pursuant to a private placement transaction. In
connection therewith, the Company received net proceeds of approximately
$171.4 million.
DEBT OFFERING
On April 20, 2000, the Company completed a high yield offering of E300
million principal amount of 12 3/4% senior Euro notes due 2008 pursuant to
a private placement transaction. In connection therewith, the Company
received net proceeds of approximately $277.8 million.
TRANS-ATLANTIC CAPACITY
On April 10, 2000, the Company executed a definitive agreement with Level
3 Communications ("Level 3"), under the terms of which the Company
acquired a 25% ownership interest in the trans-Atlantic fiber optic cable
project being developed by Level 3. The Company's required commitment in
2000 to fund this purchase is approximately $140 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We are a rapidly growing provider of "ALL DISTANCE," integrated
telecommunication services to individuals, corporations, internet service
providers, applications service providers and other communications carriers in
Europe and North America. We operate one of Europe's largest pan-European
networks, with international gateways in New York City and London, direct sales
forces in 12 Western European cities and New York City, and an indirect sales
force in numerous locations in Western Europe and North America. We have full
public telecommunications operator licenses in ten Western European countries,
Canada and the United States and interconnection agreements with the incumbent
telecommunications provider in each of these countries.
Historically, our revenues have been derived primarily from communication
services and the provision of telecommunications services in Europe and more
recently in North America. Communication services revenue is comprised of Basic
and Advanced Services. Basic Services can be provided as both retail and carrier
services. Our Basic Services revenue includes revenue from switched and
dedicated long distance, 800 services, conference calling, and enhanced fax
services as well as prepaid, postpaid, and debit calling cards. Basic Services
revenue is primarily generated from billed minutes of use. Advanced Services is
comprised of domestic and international private line services, Internet access,
frame relay, asynchronous transfer mode, Internet protocol services and managed
bandwidth. Advanced Services have been offered as a response to the growing
demand for such services from our customers and are anticipated to continue to
grow as a percentage of revenue.
Capacity sales include sales of dark fiber and leases of capacity that qualify
for sales-type accounting. Each revenue source has a different impact on our
results of operations. Revenue from capacity sales will continue to vary
substantially from period-to-period and will cause fluctuations in our operating
results. These sales substantially increase our gross profit (I.E., total
revenue less cost of services and sales) because our cost of communication
13
<PAGE>
services as a percentage of communications service revenue is currently higher
than the cost of capacity sales as a percentage of capacity sales. Due to the
timing of capacity sales and the higher margin associated with such sales, our
gross profits and gross margin may also fluctuate substantially in the future,
in ways that will not necessarily reflect the trends in our communication
services business. We capitalize all of the costs associated with designing,
building, funding and placing each portion of our constructed network into
service.
In December 1999, we completed our acquisition of Destia and in February 2000,
we completed our acquisition of AT&T UK. As a result, our March 31, 2000
consolidated financial statements include three months of results from Destia
and one month of operations from AT&T UK.
Revenue from capacity sales consists mainly of revenues recognized when we
deliver indefeasible rights-of-use that qualify for sales-type lease accounting.
Transactions that do not meet the criteria for sales-type lease accounting are
accounted for as operating leases and revenue is recognized over the term of the
lease and is included in communication services revenue.
RESULTS OF OPERATIONS
The following table summarizes the breakdown of our results of operations as a
percentage of revenue. Our revenue, and therefore these percentages, could
fluctuate substantially from period-to-period due to revenues from capacity
sales, which have a substantially different impact on margins than revenues from
communications services.
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED
MARCH 31,
----------------------------
<S> <C> <C>
2000 1999
------------ -------------
Cost of services and sales 72.0% 82.8%
Selling, general and administrative expenses 34.0% 30.4%
Depreciation and amortization 36.9% 15.6%
Restructuring 0.3% -
EBITDA loss (1) (6.0%) (13.3%)
</TABLE>
- - -----------
(1) As used herein "EBITDA" consists of earnings before interest, income
taxes, restructuring and impairment charges, extraordinary loss,
dividends on preferred stock and depreciation and amortization. EBITDA
is a measure commonly used in the telecommunications industry to
analyze companies on the basis of operating performance. EBITDA is not
a measure of financial performance under generally accepted accounting
principles, is not necessarily comparable to similarly titled measures
of other companies and should not be considered as an alternative to
net income as a measure of performance nor as an alternative to cash
flow as a measure of liquidity.
14
<PAGE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1999
TOTAL REVENUE. Total revenue increased by 193.1% to $180.7 million for the three
months ended March 31, 2000 from $61.6 million for the three months ended March
31, 1999. This growth was attributable to a 231.9% increase in communications
services revenue to $160.6 million for the three months ended March 31, 2000
from $48.4 million for the three months ended March 31,1999. Billable minutes
increased to 1.4 billion for the three months ended March 31, 2000 from 270.8
million for the three months ended March 31, 1999. Within the communication
services revenue for the quarter ended March 31, 2000, Basic Services
represented $149.0 million, or 92.8%, compared to $47.7 million, or 98.6%, for
the quarter ended March 31, 1999. Advanced Services reached $11.7 million, or
7.2%, of communication services revenue for the first quarter of 2000 compared
to $0.7 million, or 1.4%, for the first quarter of 1999. Capacity sales
increased to $20.0 million, or 11.1%, of total revenue for the three months
ended March 31, 2000 from $13.2 million, or 21.5%, of total revenue, for the
three months ended March 31,1999. Revenue growth in 2000 continues to be
generated primarily by growth from our European operations, capacity sales, and
as a result of the Destia and AT&T UK acquisitions.
Although there was a substantial increase in billable minutes from 1999 to 2000,
the effects of such growth were partially offset by a decline in revenue per
billable minute, which declined by 41.2% to $.10 for the three months ended
March 31, 2000 from $.17 for the three months ended March 31, 1999, primarily
because of (1) a higher percentage of lower-priced intra-European and national
long distance traffic on our network and (2) reductions in prices in response to
price reductions by incumbent telecommunications operators and other carriers in
many of our markets. Communications services revenue per billable minute
excludes fixed monthly fees associated with our other products and service
offerings.
Communication services revenue per billable minute from the sale of Basic
Services to retail customers, which represented 55.3% of revenue for the three
months ended March 31, 2000, compared to 44.3% for the three months ended March
31, 1999, decreased 26.7% to $.11 for the three months ended March 31, 2000 from
$.15 for the three months ended March 31, 1999. Communication services revenue
per billable minute from the sale of Basic Services to carriers and other
resellers decreased 60.0% to $.10 for the three months ended March 31, 2000 from
$.25 for the three months ended March 31, 1999.
For the three months ended March 31, 2000, as compared to the same period ended
March 31, 1999, our Basic Services revenue derived from carrier services grew on
an absolute basis. Basic Services revenue from carrier services represented
approximately 60.0% of revenue and approximately 36.9% of billable minutes for
the three months ended March 31,2000 as compared to approximately 34.2% of
revenue, and approximately 27.1% of billable minutes, for the three months ended
March 31, 1999.
COST OF SERVICES AND SALES. Cost of services and sales increased to $130.2
million for the three months ended March 31, 2000 from $51.0 million for the
three months ended March 31, 1999. As a percentage of revenue, however, cost of
services and sales decreased to approximately 72.0% for the three months ended
March 31, 2000 from approximately 82.8% for the three months ended March 31,
1999. This decrease was due to our migration from leased infrastructure to our
own network, capacity sales and the Destia and AT&T UK acquisitions. The
beneficial effect of bringing traffic on-net, however, is somewhat delayed
because our leased line agreements require minimum notification to terminate our
obligations.
Cost of services and sales for the three months ended March 31, 2000 includes
costs associated with capacity sales. The cost of capacity sales represents
non-cash charges of the PRO RATA cost of the network assets and is determined
based upon the ratio of total network capacity sold to total estimated network
capacity, multiplied by the total capitalized costs of the related network.
15
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $61.4 million for the three months ended
March 31, 2000 from $18.8 million for the three months ended March 31, 1999 and,
as a percentage of revenue, increased to approximately 34.0% for the three
months ended March 31, 2000 from approximately 30.4% for the three months ended
March 31, 1999. The increase was primarily the result of the expanded
geographical reach of our network, additional product offering capabilities and
reorganization expenses related to our strategic acquisitions. Much of these
expenses are attributable to overhead costs associated with our headquarters,
back-office and operations as well as maintaining a physical presence in
multiple jurisdictions. We expect to incur additional expenses as we continue to
invest in operating infrastructure and actively market our products and
services. Salaries and commissions, as a percentage of total selling, general
and administrative expenses, were approximately 46.9% for the three months ended
March 31, 2000 compared to 44.7% for the three months ended March 31, 1999,
respectively. As a percentage of total selling, general and administrative
expenses, advertising and promotion expenses were approximately 7.1%, for the
three months ended March 31, 2000 and 7.6% for the three months ended March 31,
1999. Advertising and promotion expenses will continue to be a significant
component of selling, general and administrative expenses in the future.
EBITDA LOSS. EBITDA loss increased to $10.9 million for the three months ended
March 31, 2000 from $8.2 million for the three months ended March 31, 1999. As a
percentage of revenue, EBITDA loss decreased to approximately 6.0% for the three
months ended March 31, 2000 from approximately 13.3% for the three months ended
March 31, 1999.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense, which
includes depreciation of our network, increased to approximately $66.7 million
for the three months ended March 31, 2000 from approximately $9.6 million for
the three months ended March 31, 1999. The increase was due primarily to the
increase in gross property and equipment to $1.2 billion at March 31, 2000 from
$440.0 million at March 31, 1999 and an increase of $34.3 million in
amortization of goodwill related to our acquisition of Destia.
As a result of our acquisition of Destia, amortization expense will continue to
increase significantly in 2000. The purchase price for Destia was $901.9 million
and was allocated based on estimated fair values at the date of acquisition,
pending final determination. This preliminary allocation has resulted in
intangible assets and goodwill of approximately $131.0 million and $822.3
million, respectively, which are being amortized on a straight-line basis over
their estimated useful lives which are four to seven years and seven years,
respectively.
RESTRUCTURING. During 1999, we recognized restructuring charges relating to the
streamlining of our organizational structure and the strategic repositioning of
certain operations, primarily as a result of the merger with Destia. These
restructuring charges were composed primarily of anticipated costs to terminate
leases and certain other contracts in connection with the Company's streamlining
activities, as well as employee termination costs associated with workforce
reductions.
At March 31, 2000, we had accruals for restructuring of $2.8 million. During
1999, a total of $3.9 million was accrued for restructuring, consisting
primarily of charges relating to employee terminations and lease and other
contract cancellation costs. Payments made during the three months ended March
31, 2000 against the restructuring accruals totaled $1.1 million, of which $0.1
million related to employee terminations and $1.0 million related to lease and
other contract cancellation costs. We recorded additional restructuring charges
of $0.6 million for the three months ended March 31, 2000, primarily related to
employee termination costs. Additionally, during the three months ended March
31, 2000, we accelerated depreciation on certain assets that were taken out of
service as of March 31, 2000. We anticipate that all remaining actions required
to complete the restructuring plan will be completed by December 2000.
INTEREST. Interest expense increased to approximately $48.4 million for the
three months ended March 31, 2000 from approximately $26.2 million for the three
months ended March 31, 1999, primarily as a result of increases in our
outstanding indebtedness, which includes notes and capital lease obligations,
which increased to $1.8 billion at March 31, 2000 from $1.3 billion at March 31,
1999. For the three months ended March 31, 2000, we capitalized approximately
$4.2 million of interest costs. Interest income increased to approximately $7.3
million for the three months ended March 31, 2000, from approximately $6.8
million for the three months ended March 31, 1999, primarily as a result of the
interim investment of the net proceeds from our 2000 Convertible Preferred Stock
offering.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
We have incurred losses from operating activities in each year of operations
since our inception and expect to continue to incur operating and net losses for
the next several years. Since inception, we have used cash provided by financing
activities to fund operating losses, interest expense and capital expenditures.
The sources of this cash have primarily been through private and public equity
and debt financings and, to a lesser extent, equipment-based financing. As of
March 31, 2000, we had $516.8 million of cash, cash equivalents and cash
securing letters of credit for network construction and $159.5 million of
restricted cash equivalents and other restricted marketable securities, which
primarily secure interest payments on our notes through April 2001. The
following private and public equity and debt financing provided funds to satisfy
our liquidity needs. Giving effect to the April 12 and the April 20 offerings
described herein, pro forma restricted and non-restricted cash, cash
equivalents, marketable securities and cash securing letters of credit for
network construction as of March 31, 2000 was $1.1 billion.
On February 1, 2000, we executed a securities purchase agreement pursuant to
which we agreed to sell, and affiliates of Hicks, Muse Tate & Furst and Chase
Capital Partners committed to buy, $325 million in Series B cumulative
convertible preferred stock for net proceeds to us of $306.1 million. The
transaction closed on March 9, 2000, following receipt of Hart-Scott-Rodino
Antitrust Improvements Act clearance. Following the initial closing, affiliates
of Chase Capital Partners sold a portion of their Series B preferred stock to
certain affiliates of The Blackstone Group. The net proceeds of this private
placement are being used for network expansion, services development and general
corporate purposes.
Destia's credit facility with NTFC Capital Corporation, under which Destia had
borrowed approximately $30.6 million as of March 31, 2000, provides for
borrowings to fund certain equipment acquisition costs and related expenses. All
of the equipment purchased with the proceeds of the NTFC note has been pledged
to NTFC. The terms of the NTFC facility require the company to maintain certain
debt service coverage ratios, EBITDA, and minimum cash balances. Due to the
Company's acquisiton of Destia, NTFC has the right to require Destia to repay
all outstanding obligations under the NTFC facility within 90 days following
Viatel's acquisition of Destia. NTFC has extended the date by which it must
exercise its right until May 26, 2000. Before May 26, 2000, we will be required
to (i) obtain a waiver from NTFC, (ii) prepay the outstanding amounts owed at a
premium of not more than 102% of the amount outstanding or (iii) negotiate a new
facility. The Company's intent is to renegotiate a new facility with NTFC and,
as such, the Company continues to record the NTFC borrowings as a long term
liability.
On February 29, 2000, we acquired the entire issued and outstanding share
capital of AT&T UK. The purchase price was $117.3 million, net of cash acquired
of $24.1 million, and was comprised of a $125.0 million cash payment at the time
of closing, certain post closing payments in connection with the preliminary
acquired working capital, and estimated transaction costs.
During the second quarter of 2000, we intend to file a universal shelf
registration statement that will enable us to issue, from time to time,
additional shares of our common stock and preferred stock or debt securities. At
this time, we have not determined the dollar amount of securities that will be
registered for future offerings. We have no current intention to issue any
securities pursuant to this shelf registration in the immediate future.
We have very substantial interest expense. Although we have restricted cash
available to make our interest payments on certain of our high yield debt
instruments through April 15, 2001, thereafter we need to pay our interest
expense from operating income or borrowings. During the three months ended March
31, 2000, we had an operating loss of $78.1 million and we have no commitment
from any lender to make funds available.
On April 12, 2000, Viatel Financing Trust I, a Delaware statutory trust and
consolidated subsidiary of ours, sold $180 million of 7 3/4% trust convertible
preferred securities. The proceeds from this offering have been loaned by the
trust to us. We will use the net proceeds of $171.4 million from this offering
to further develop and enhance our network, to make selective acquisitions and
investments and for working capital and general corporate purposes.
On April 20, 2000, we completed a high yield offering of 12 3/4% senior Euro
notes due 2008 through which we received approximately $277.8 million of net
proceeds.
17
<PAGE>
We believe that the net proceeds from the offerings discussed above together
with cash and marketable securities on hand and future capacity sales on our
network will provide sufficient funds for us to expand our business as planned
and to fund operating losses for the next 12 to 18 months. However, the amount
of our future capital requirements will depend on a number of factors, including
the success of our business, any acquisitions or investments we make, the
start-up dates of each additional segment of our network, the dates on which we
further expand our network, whether our network build-out is on-time and
on-budget, the types of services we offer, staffing levels, and customer growth
as well as other factors that are not within our control, including competitive
conditions, government regulatory developments and capital costs. Depending on
the factors listed above, we may need more capital or may be required to delay
or abandon some or all of our development and expansion plans or we may be
required to seek additional sources of financing earlier than currently
anticipated. If we are required to seek additional financing, there can be no
assurance that such financing will be available on acceptable terms, or at all.
CAPITAL ADDITIONS; COMMITMENTS
The development of our business has required substantial capital. Capital
additions consist of capital expenditures, the net increase in property and
equipment purchases payable, assets acquired under capital lease obligations and
capitalized interest during the period. For the three months ended March 31,
2000, capital additions totaled $133.6 million and consisted of capital
expenditures of approximately $104.8 million, a net increase of $20.7 million in
property and equipment purchases payable, $3.9 million of assets acquired under
capital lease obligations and capitalized interest of $4.2 million. We have also
entered into certain agreements associated with our network, purchase
commitments for network expansion and other items aggregating approximately
$210.0 million at March 31, 2000. We expect to continue to have substantial
capital expenditures in the future.
In addition, on April 10, 2000, we executed a definitive agreement with Level 3
Communications under the terms of which we acquired a 25% ownership interest in
the trans-Atlantic fiber optic cable project being developed by Level 3. Our
required commitment in 2000 to fund this purchase is approximately $140 million.
FOREIGN CURRENCY
We have exposure to fluctuations in foreign currencies relative to the U.S.
Dollar as a result of billing portions of our communications services revenue in
the local European currency in countries where the local currency is relatively
stable while many of our obligations, including a substantial portion of our
transmission costs, are denominated in U.S. dollars. In countries with less
stable currencies, we bill in U.S. dollars. Debt service on certain of the notes
issued by us is currently payable in Euros. A substantial portion of our capital
expenditures is and will continue to be denominated in various European
currencies, including the Euro. Most of the European currencies in which we do
business converged on January 1, 1999, with the exception of the British Pound
Sterling.
A significant portion of our assets are foreign-denominated and, as such, are
subject to fluctuations in value due to movements in foreign exchange rates.
With the continued expansion of our network, a substantial portion of the costs
associated with the network, such as local access and termination charges and a
portion of the leased line costs, as well as a majority of local selling
expenses and debt service related to the Euro denominated notes, are charged to
us in the same currencies as revenue is billed. These developments create a
natural hedge against a portion of our foreign exchange exposure. Our financial
position as of March 31, 2000 and our results of operations for the three months
ended March 31, 2000 were not significantly affected by fluctuations in the U.S.
Dollar in relation to foreign currencies.
18
<PAGE>
EURO
On January 1, 1999, eleven of the fifteen member countries of the European Union
established irrevocable fixed conversion rates between their existing sovereign
currencies and a single currency called the Euro. The sovereign currencies are
scheduled to remain legal tender as denominations of the Euro during a
transition period from January 1, 1999 to January 1, 2002.
We have completed an internal analysis regarding business and systems issues
related to the Euro conversion and, as a result, made necessary modifications to
our business processes and software applications. Throughout most of 1999, and
the three months ended March 31, 2000 we have been able to conduct business in
both the Euro and sovereign currencies on a parallel basis, as required by the
European Union.
We believe that the Euro conversion has not and will not have a significant
impact on our business in Europe. The costs to convert all systems to be Euro
compliant did not have a significant impact on our results of operations.
INFLATION
We do not believe that inflation has had a significant effect on our operations
to date.
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS NO. 133 AND SFAS NO. 137. Statement of Financial Accounting Standards No.
133 ("SFAS 133,") "Accounting for Derivative Instruments and Hedging
Activities," was issued in June 1998. SFAS 133 standardizes the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring recognition of those instruments as assets and
liabilities and to measure them at fair value. In June 1999, the FASB issued
Statement of Financial Accounting Standards No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of SFAS
133," which amends SFAS 133 to delay the date by which all companies must comply
with SFAS 133. Companies must comply with SFAS 133 for all fiscal years
beginning after June 15, 2000. We have not completed our analysis of the impact
of these statements on our consolidated financial statements.
In March 2000, FASB Interpretation No. 44 - "Accounting for Certain Transactions
involving Stock Compensation, an interpretation of APB Opinion No. 25" ("FIN
44") was issued. FIN 44 clarifies the application of APB No. 25 regarding (a)
the definition of EMPLOYEE for purposes of applying APB No. 25, (b) the criteria
for determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a previously
fixed stock option or award, and (d) the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 does not address the
application of the fair value method of Statement No. 123. This Interpretation
is effective July 1, 2000, but certain conclusions in this Interpretation cover
specific events that occur after either December 15, 1998, or January 12, 2000.
To the extent that this Interpretation covers events occurring during the period
after December 15, 1998, or January 12, 2000, but before the effective date of
July 1, 2000, the effects of applying this Interpretation are recognized on a
prospective basis from July 1, 2000. The Company has not yet assessed the impact
of FIN 44.
19
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are subject to foreign currency exchange rate risk relating to receipts from
customers, payments to suppliers and interest and principal payments on our
outstanding Euro denominated senior notes and senior discount notes in foreign
currencies. We do not consider the market risk exposure relating to foreign
currency exchange to be material. See "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources - Foreign Currency."
We have financial instruments, which are subject to interest rate risk,
principally short-term investments and debt obligations issued at a fixed rate.
Historically, we have not experienced material gains or losses due to interest
rate changes when selling short-term investments and typically holding these
securities until maturity. Based on current holdings of short-term investments,
our exposure to interest rate risk is not material. Fixed-rate debt obligations
issued by us are generally not callable until maturity.
20
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On March 9, 2000, the Company completed the sale of $325 million of 7.50%
Cumulative Convertible Preferred Stock Series B due 2015, liquidation preference
$1072, par value $.01 (the "Series B Preferred Stock") to affiliates of Hicks,
Muse, Tate & Furst, Chase Capital Partners and The Blackstone Group. The Series
B Preferred Stock was issued in two tranches -- Series B-1, which has voting
rights (the "Series B-1 Preferred Stock") and Series B-2, which generally has no
voting rights (the "Series B-2 Preferred Stock"). The net proceeds from this
offering were $306.1 million, which the Company is using to continue its build
out of the Viatel network, to fund new initiatives and for general corporate
purposes.
All shares of Series B Preferred Stock were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), under Section 4(2) of the Act. Theses sales were made
without any general solicitation or advertising. The Series B-1 Preferred Stock
is convertible, generally at any time, into the Company's fully paid and
non-assessable shares of common stock. The Series B-2 Preferred Stock is
convertible, generally at any time, into a number of fully paid and
non-assessable shares of Series C preferred stock (calculated as to each
conversion to the nearest 1/10,000 of a share) equal to the then effective
liquidation preference thereof plus accrued and unpaid dividends to the date of
conversion divided by the conversion price in effect at the time of conversion
divided by 100. The initial conversion price for the Series B Preferred Stock is
$46.25 per share.
As part of this financing, the Company issued warrants to purchase 753,116
shares of its common stock, 50% of which are exercisable for five years at a
price of $75 per share, and 50% of which are exercisable for seven and one half
years at a price of $100 per share. The Company also issued warrants to purchase
7,532 shares of its Series C preferred stock, 50% of which are exercisable for
five years at a price of $7,500 per share and 50% of which are exercisable for
seven and one half years at a price of $10,000 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
21
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
<TABLE>
<CAPTION>
NO. DESCRIPTION
<S> <C>
3.1(iii) Certificate of Trust of Viatel Financing Trust I,
dated March 30, 2000.
3.1(iv) Amended and Restated Declaration of Trust of Viatel
Financing Trust I, dated and effective as of April 12,
2000.
4.11 Senior Euro Notes Indenture, dated as of April 20,
2000, between Viatel, Inc., as issuer, and The Bank of
New York, as trustee.
4.12 7 3/4% Convertible Junior Subordinated Debentures
Indenture, dated as of April 12, 2000, between Viatel,
Inc. and The Bank of New York, as trustee.
4.13 Registration Rights Agreement, dated April 14, 2000,
between Viatel, Inc. and Morgan Stanley & Co.
International Limited, Chase Securities Inc. and Credit
Suisse First Boston Corporation.
4.14 Registration Rights Agreement, dated April 6, 2000,
between Viatel Financing Trust I, Viatel, Inc. and
Morgan Stanley & Co. Incorporated, Salomon Smith Barney
Inc. and Banc of America Securities LLC.
10.30 Placement Agreement, dated April 14, 2000, between
Viatel, Inc. and Morgan Stanley & Co. International
Limited, Chase Securities Inc. and Credit Suisse First
Boston Corporation, as placement agents.
10.31 Placement Agreement, dated April 6, 2000, between
Viatel Financing Trust I, Viatel, Inc. and Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc.
and Banc of America Securities LLC, as placement
agents.
10.32 Trust Convertible Preferred Securities Guarantee
Agreement, dated as of April 12, 2000, executed and
delivered by Viatel, Inc.
10.33 Common Securities Guarantee Agreement, dated as of
April 12, 2000, executed and delivered by Viatel, Inc.
10.34* Amended and Restated Engineering, Procurement and
Construction Contract, dated as of November 15, 1999
and effective as of February 19, 1999, between Bechtel
Limited, ViCaMe Infrastructure Development GmbH, Viatel
German Asset GmbH, Metromedia Fiber Network GmbH and
Carrier 1 Fiber Network GmbH & Co. OHG.
27 Financial Data Schedule
- - ----------------------
* Confidential portions of this contract have been redacted pursuant to a
request for confidential treatment and redacted material has been filed
separately with the Securities and Exchange Commission.
</TABLE>
22
<PAGE>
(B) REPORTS ON FORM 8-K.
A report on Form 8-K was filed by the Company on February 16, 2000, pursuant to
Item 5 thereof, announcing the execution of a Securities Purchase Agreement with
affiliates of HMTF Europe Acquisition Corp. and Chase Equity Associates, LLC, an
affiliate of Chase Capital Partners, for $325 million of the Company's Series B
Cumulative Convertible Preferred Stock.
A report on Form 8-K was filed by the Company on March 14, 2000, pursuant to
Item 2 thereof, announcing the acquisition of the entire issued and outstanding
share capital of AT&T Communications (UK) Limited.
A report on Form 8-K was filed by the Company on March 30, 2000, pursuant to
Item 5 thereof, announcing its intention to raise approximately $350 million
through an offering of trust convertible preferred securities issued by Viatel
Financing Trust I, a subsidiary of the Company.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-------------------------------------
Michael J. Mahoney
Chief Executive Officer
By: /s/ Allan L. Shaw
-------------------------------------
Allan L. Shaw
Chief Financial Officer
Date: May 15, 2000
24
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NO. DESCRIPTION
<S> <C>
3.1(iii) Certificate of Trust of Viatel Financing Trust I,
dated March 30, 2000.
3.1(iv) Amended and Restated Declaration of Trust of Viatel
Financing Trust I, dated and effective as of April 12,
2000.
4.11 Senior Euro Notes Indenture, dated as of April 20,
2000, between Viatel, Inc., as issuer, and The Bank of
New York, as trustee.
4.12 7 3/4% Convertible Junior Subordinated Debentures
Indenture, dated as of April 12, 2000, between Viatel,
Inc. and The Bank of New York, as trustee.
4.13 Registration Rights Agreement, dated April 14, 2000,
between Viatel, Inc. and Morgan Stanley & Co.
International Limited, Chase Securities Inc. and Credit
Suisse First Boston Corporation.
4.14 Registration Rights Agreement, dated April 6, 2000,
between Viatel Financing Trust I, Viatel, Inc. and
Morgan Stanley & Co. Incorporated, Salomon Smith Barney
Inc. and Banc of America Securities LLC.
10.30 Placement Agreement, dated April 14, 2000, between
Viatel, Inc. and Morgan Stanley & Co. International
Limited, Chase Securities Inc. and Credit Suisse First
Boston Corporation, as placement agents.
10.31 Placement Agreement, dated April 6, 2000, between
Viatel Financing Trust I, Viatel, Inc. and Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc.
and Banc of America Securities LLC, as placement
agents.
10.32 Trust Convertible Preferred Securities Guarantee
Agreement, dated as of April 12, 2000, executed and
delivered by Viatel, Inc.
10.33 Common Securities Guarantee Agreement, dated as of
April 12, 2000, executed and delivered by Viatel, Inc.
10.34* Amended and Restated Engineering, Procurement and
Construction Contract, dated as of November 15, 1999
and effective as of February 19, 1999, between Bechtel
Limited, ViCaMe Infrastructure Development GmbH, Viatel
German Asset GmbH, Metromedia Fiber Network GmbH and
Carrier 1 Fiber Network GmbH & Co. OHG.
27 Financial Data Schedule
- - ----------------------
* Confidential portions of this contract have been redacted pursuant to a
request for confidential treatment and redacted material has been filed
separately with the Securities and Exchange Commission.
</TABLE>
25
CERTIFICATE OF TRUST
OF
VIATEL FINANCING TRUST I
This Certificate of Trust of Viatel Financing Trust I (the
''Trust''), dated March 30, 2000, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C, Section 3801, et seq.) (the ''Act'').
1. Name. The name of the business trust formed by this Certificate
of Trust is Viatel Financing Trust I.
2. Delaware Trustee. The name and business address of the trustee
of the Trust with its principal place of business in the State of Delaware arc
The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711.
3. Effective Date. This Certificate of Trust shall be effective
upon filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the trustees of the
Trust, have executed this Certificate of Trust in accordance with Section 3811
(a)(1) of the Act.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but
solely as trustee
By: /s/ William T. Lewis
-----------------------------
Name: William T. Lewis
Title: Senior Vice President
THE BANK OF NEW YORK,
not in its individual capacity but
solely as trustee
By: /s/ Ming Shiang
-----------------------------
Name: Ming Shiang
Title: Vice President
James P. Prenetta, Jr.
not in his individual capacity but
solely as trustee
/s/ James Prenetta, Jr.
------------------------------------
EXECUTION COPY
Amended and Restated
Declaration of Trust
of
VIATEL FINANCING TRUST I
Dated and Effective as of
April 12, 2000
<PAGE>
TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions............................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act: Application.......................8
SECTION 2.2. Lists of Holders of Securities.........................9
SECTION 2.3. Reports by the Institutional Trustee...................9
SECTION 2.4. Periodic Reports to Institutional Trustee..............9
SECTION 2.5. Evidence of Compliance with Conditions Precedent......10
SECTION 2.6. Events of Default; Waiver.............................10
SECTION 2.7. Event of Default; Notice..............................12
ARTICLE III
ORGANIZATION
SECTION 3.1. Name..................................................12
SECTION 3.2. Office................................................12
SECTION 3.3. Purpose...............................................13
SECTION 3.4. Authority.............................................13
SECTION 3.5. Title to Property of the Trust........................13
SECTION 3.6. Powers and Duties of the Regular Trustees.............14
SECTION 3.7. Prohibition of Actions by the Trust and the Trustees..17
SECTION 3.8. Powers and Duties of the Institutional Trustee........18
SECTION 3.9. Certain Duties and Responsibilities of the
Institutional Trustee.................................20
SECTION 3.10. Certain Rights of Institutional Trustee...............22
SECTION 3.11. Delaware Trustee......................................24
SECTION 3.12. Execution of Documents................................24
SECTION 3.13. Not Responsible for Recitals or Issuance of
Securities............................................25
SECTION 3.14. Duration of Trust.....................................25
SECTION 3.15. Mergers...............................................25
ARTICLE IV
SPONSOR
SECTION 4.1. Sponsor's Purchase of Common Securities...............27
SECTION 4.2. Responsibilities of the Sponsor.......................27
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ARTICLE V
TRUSTEES
SECTION 5.1. Number of Trustees...................................28
SECTION 5.2. Delaware Trustee.....................................28
SECTION 5.3. Institutional Trustee; Eligibility...................29
SECTION 5.4. Certain Qualifications of Regular Trustees and
Delaware Trustee Generally...........................29
SECTION 5.5. Regular Trustees.....................................30
SECTION 5.6. Appointment, Removal and Resignation of Trustees.....30
SECTION 5.7. Vacancies Among Trustees.............................32
SECTION 5.8. Effect of Vacancies..................................32
SECTION 5.9. Meetings.............................................32
SECTION 5.10. Delegation of Power..................................33
SECTION 5.11. Merger, Conversion, Consolidation or Succession to
Business........................................... 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. Distributions........................................33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. General Provisions Regarding Securities..............34
SECTION 7.2. Execution and Authentication.........................34
SECTION 7.3. Form and Dating......................................35
SECTION 7.4. Paying Agent.........................................35
SECTION 7.5. CUSIP Numbers........................................36
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1. Termination of Trust..................................36
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. Transfer of Securities................................37
SECTION 9.2. Transfer of Certificates..............................40
SECTION 9.3. Deemed Security Holders...............................40
SECTION 9.4. Book Entry Interests..................................41
SECTION 9.5. Notices to Clearing Agency............................43
SECTION 9.6. Appointment of Successor Clearing Agency..............43
SECTION 9.7. Definitive Convertible Preferred Security
Certificates Under Certain Circumstances..............43
SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates.....44
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ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. Liability............................................45
SECTION 10.2. Exculpation..........................................46
SECTION 10.3. Fiduciary Duty.......................................46
SECTION 10.4. Indemnification......................................47
SECTION 10.5. Outside Business.....................................50
ARTICLE XI
ACCOUNTING
SECTION 11.1. Fiscal Year..........................................50
SECTION 11.2. Certain Accounting Matters...........................50
SECTION 11.3. Banking..............................................51
SECTION 11.4. Withholding..........................................51
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. Amendments...........................................52
SECTION 12.2. Meetings of the Holders of Securities; Action
by Written Consent...................................54
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. Representations and Warranties of Institutional
Trustee..............................................56
SECTION 13.2. Representations and Warranties of Delaware Trustee...57
ARTICLE XIV
MISCELLANOUS
SECTION 14.1. Notices..............................................58
SECTION 14.2. Governing Law........................................59
SECTION 14.3. Intention of the Parties.............................59
SECTION 14.4. Headings.............................................59
SECTION 14.5. Successors and Assign................................59
SECTION 14.6. Partial Enforceability...............................59
SECTION 14.7. Counterparts.........................................60
Annex 1 Terms of 7 3/4% Convertible Preferred Securities and
7 3/4% Convertible Common Securities
Exhibit A-1 Form of Convertible Preferred Security Certificate
Exhibit A-2 Form of Common Security Certificate
Exhibit B Form of Convertible Debenture
Exhibit C Form of Placement Agreement
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<PAGE>
AMENDED
AND RESTATED
DECLARATION OF TRUST
OF
VIATEL FINANCING TRUST I
April 12, 2000
AMENDED AND RESTATED DECLARATION OF TRUST ("DECLARATION") dated and
effective as of April 12, 2000, by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Viatel Financing Trust I
(the "TRUST"), a trust under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of March 30, 2000 (the "ORIGINAL DECLARATION"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on March 30, 2000, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures (as defined
herein) of the Debenture Issuer (as defined herein); and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitutes the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. DEFINITIONS.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
<PAGE>
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits of or to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"144A Global Certificate" has the meaning assigned such term in Section
9.4(b).
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent or Conversion Agent.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, Sunday or any other day
on which banking institutions in New York, New York or Wilmington, Delaware are
permitted or required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Certificate" means a Common Security Certificate or a Convertible
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Convertible Preferred Securities and in whose name or in the name of a nominee
of that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Convertible
Preferred Securities.
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"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means April 12, 2000.
"Closing Price" has the meaning specified in Annex I.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities Guarantee" means the guarantee agreement to be dated as
of April 12, 2000 of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Common Stock" means the common stock of Viatel, Inc., a Delaware
corporation, par value $.01 per share, and any other shares of common stock as
may constitute "Common Stock" under the Indenture.
"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Conversion Agent" has the meaning specified in Section 7.4.
"Convertible Preferred Securities Guarantee" means the guarantee agreement
to be dated as of April 12, 2000, of the Sponsor in respect of the Convertible
Preferred Securities.
"Convertible Preferred Security" has the meaning specified in Section 7.1.
"Convertible Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Convertible Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
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"Corporate Trust Office" means the office of the Institutional Trustee at
which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, Floor 21 West, New
York, New York 10286, Attention: Corporate Trust Administration.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Viatel, Inc., a Delaware corporation, in its
capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the series of Debentures to be issued by the Debenture
Issuer under the Indenture to be held by the Institutional Trustee, a specimen
certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in Section 5.1.
"Definitive Convertible Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4(a).
"Holder" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
4
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"Indemnified Person" means each Company Indemnified Person and each
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of April 12, 2000 between the
Debenture Issuer and the Debenture Trustee.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidated Distribution" has the meaning specified in the terms of the
Securities as set forth in Annex I.
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Convertible Preferred Securities or by the Trust
Indenture Act, Holders of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Convertible
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
Securities as set forth in Annex I.
"Offered Securities" means the Convertible Preferred Securities, the
Convertible Preferred Securities Guarantee, the Debentures, the shares of Common
Stock issuable upon conversion of the Debentures and the rights attached
thereto.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
5
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(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Option Closing Date" means the date of closing of any sale of Additional
Securities (as defined in the Placement Agreement).
"Paying Agent" has the meaning specified in Section 3.8(h).
"Payment Amount" has the meaning set forth in Section 6.1.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement for the offering and
sale of Convertible Preferred Securities in the form of Exhibit C.
"PORTAL Market" means the Private Offerings, Resales and Trading through
Automated Linkages Market operated by the National Association of Securities
Dealers, Inc. or any successor thereto.
"Preferred Securities Registration Rights Agreement" means the registration
rights agreement dated April 6, 2000, among Viatel, Inc., the Trust and Morgan
Stanley & Co. Incorporated, Salomon Smith Barney Inc. and Bank of America
Securities LLC as initial purchasers (the "Initial Purchasers"), relating to the
Convertible Preferred Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there are only two
Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
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"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Institutional Trustee, any
officer within the Corporate Trust Office of the Institutional Trustee,
including any vice president, any assistant vice president, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Institutional Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject and who has direct responsibility for the administration of
this Declaration.
"Restricted Security" has the meaning specified in Section 9.1(d).
"Rule 144A" means Rule 144A as promulgated under the Securities Act, or any
successor rule.
"Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act, or
any successor rule.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule.
"Securities" means the Common Securities and the Convertible Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Convertible Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" or "Viatel" means Viatel, Inc., a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
7
<PAGE>
"Transfer Restriction Termination Date" means the earlier of the first date
on which (i) the Securities and any Common Stock issued or issuable upon the
conversion or exchange thereof (other than (A) Securities acquired by the Trust
or any Affiliate thereof and (B) Common Stock issued upon the conversion or
exchange of any Security described in clause (A) above) may be sold pursuant to
Rule 144(k) and (ii) all the Securities have been sold pursuant to an effective
registration statement.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trust Property" means (i) the Debentures, (ii) any cash on deposit in, or
owing to, the Institutional Trustee Account and (iii) all proceeds and rights in
respect of the foregoing to be held by the Institutional Trustee pursuant to the
terms of this Declaration for the benefit of the Holders of the Securities.
"25% in liquidation amount of the Securities" means, except as provided in
the terms of the Convertible Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Convertible Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 25% or more of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT: APPLICATION.
(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the extent
applicable, be governed by such provisions. The Trust Indenture Act shall be
8
<PAGE>
applicable to this Declaration except as otherwise set forth herein, as if the
Securities had been sold pursuant to an effective registration statement.
(b) The Institutional Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If, and to the extent that, any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such duties imposed under the Trust
Indenture Act shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Institutional Trustee (i) within 14 days after each record
date for payment of Distributions, a list in such form as the Institutional
Trustee may reasonably require of the names and addresses of the Holders of the
Securities ("LIST OF HOLDERS") as of such record date, provided that, neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Institutional Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Institutional Trustee. The Institutional Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in the
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity), provided that, the Institutional Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Institutional Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE INSTITUTIONAL TRUSTEE.
Within 60 days after May 15 of each year, the Institutional Trustee shall
provide to the Holders of the Convertible Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Institutional Trustee such documents, reports and information as
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required by Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Institutional
Trustee is for informational purposes only and the Institutional Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Sponsor's compliance with any of its covenants hereunder (as to which the
Institutional Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Convertible
Preferred Securities may by vote on behalf of the Holders of all of the
Convertible Preferred Securities, waive any past Event of Default in respect of
the Convertible Preferred Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "SUPER MAJORITY") to
be waived under the Indenture, the Event of Default under the Declaration
may only be waived by the vote of the Holders of at least the proportion in
liquidation amount of the Convertible Preferred Securities that the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Convertible Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or an Event of Default with respect to the
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Convertible Preferred Securities or impair any right consequent thereon. Any
waiver by the Holders of the Convertible Preferred Securities of an Event of
Default with respect to the Convertible Preferred Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any
such Event of Default with respect to the Common Securities for all purposes of
this Declaration without any further act, vote, or consent of the Holders of the
Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in liquidation
amount of the Common Securities that the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Convertible Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Institutional Trustee shall act solely on behalf of
the Holders of the Convertible Preferred Securities and only the Holders of the
Convertible Preferred Securities will have the right to direct the Institutional
Trustee to act in accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Convertible
Preferred Securities, constitutes a waiver of the corresponding Event of Default
under this Declaration. The foregoing provisions of this Section 2.6(c) shall be
in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
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316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7. EVENT OF DEFAULT; NOTICE.
(a) The Institutional Trustee shall, within 90 days after the occurrence of
an Event of Default actually known to a Responsible Officer of the Institutional
Trustee, transmit by mail, first class postage prepaid, to the Holders of the
Securities, notices of all such defaults with respect to the Securities unless
such defaults have been cured before the giving of such notice (the term
"DEFAULTS" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the Institutional
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Institutional Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities. Any such notice given pursuant to this Section 2.7(a) shall state
that an Event of Default under the Indenture also constitutes an Event of
Default under this Declaration.
(b) The Institutional Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.1(a) and 5.1(b) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have
received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1. NAME.
The Trust is named "Viatel Financing Trust I" as such name may be modified
from time to time by the Regular Trustees following written notice to the
Holders of Securities. The Trust's activities may be conducted under the name of
the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2. OFFICE.
The address of the principal office of the Trust is c/o Viatel, Inc., 685
Third Avenue, 24th Floor, New York, New York 10017, Attention: General Counsel.
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On at least ten Business Days written notice to the Holders of Securities, the
Regular Trustees may designate another principal office.
SECTION 3.3. PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Securities and use the proceeds from such sale to acquire the Debentures, and
(b) except as otherwise limited herein, to engage in only those other activities
necessary, or incidental thereto. The Trust shall not borrow money, issue debt
or reinvest proceeds derived from investments, pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would cause
the Trust not to be classified for United States federal income tax purposes as
a grantor trust.
SECTION 3.4. AUTHORITY
(a) Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(c) Except as otherwise required by the Business Trust Act or applicable
law, any Regular Trustee is authorized to execute on behalf of the Trust any
documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration
statement referred to in Section 3.6, including any amendments thereto, shall,
subject to Section 3.4(d), be signed by all of the Regular Trustees; and
(d) A Regular Trustee may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purposes of executing any documents which the Regular Trustees have
power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST
Except as provided in Section 3.8 with respect to the Debentures and the
Institutional Trustee Account or as otherwise provided in this Declaration,
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legal title to all assets of the Trust shall be vested in the Trust. The Holders
of Securities shall not have legal title to any part of the assets of the Trust,
but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE REGULAR TRUSTEES
The Regular Trustees shall have the exclusive power, duty and authority to
cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than one
series of Convertible Preferred Securities and no more than one series of
Common Securities, and provided further, that there shall be no interests
in the Trust other than the Securities, and the issuance of Securities
shall be limited to a simultaneous issuance of both Convertible Preferred
Securities and Common Securities on the Closing Date and Option Closing
Date, if any;
(b) in connection with the issue and sale of the Securities to:
(i) execute, if necessary, an offering memorandum (the "OFFERING
MEMORANDUM") in preliminary and final form prepared by the Sponsor, in
relation to the offering and sale of Convertible Preferred Securities
to qualified institutional buyers in reliance on Rule 144A under the
Securities Act and to execute and file with the Commission, at such
time as determined by the Sponsor, a registration statement on Form
S-3 prepared by the Sponsor, including any amendments thereto in
relation to the Convertible Preferred Securities;
(ii) execute and deliver letters, documents, or instruments with
The Depository Trust Company relating to the Convertible Preferred
Securities;
(iii) execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement on Form 8-A,
including any amendments thereto, prepared by the Sponsor relating to
the registration of the Convertible Preferred Securities under Section
12(b) of the Exchange Act;
(iv) execute and enter into any agreements, other than the
Placement Agreement and the Preferred Securities Registration Rights
Agreement, providing for the sale of the Securities;
(v) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Convertible Preferred
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Securities in any State in which the Sponsor has determined to qualify
or register such Convertible Preferred Securities for sale or resale,
as the case may be; and
(vi) take all actions and perform such duties as may be required
of the Regular Trustees to open checking, deposit or similar banking
accounts as may be necessary in connection with the issuance and sale
of the Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Convertible Preferred Securities and the Common Securities; provided,
however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee
for the benefit of the Holders of the Convertible Preferred Securities and
the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation
to a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316 (c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Convertible Preferred Securities and
Holders of Common Securities as to such actions and applicable record
dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("LEGAL ACTION"), unless pursuant to Section 3.8(e), the Institutional
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants, and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
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(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar,
transfer agent, Paying Agent and Conversion Agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Convertible Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as
set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes,
provided that such action does not adversely affect the interests of
Holders or vary the terms of the Convertible Preferred Securities;
(q) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust;
(r) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to Section 11.2 herein; and
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(s) to the extent provided in this Declaration, the winding up of the
affairs of and liquidation of the Trust and the preparation, execution and
filing of any certificate of cancellation with the Secretary of State of
the State of Delaware.
The Regular Trustees must exercise the powers set forth in this Section 3.6
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Regular Trustees shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Institutional Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6
shall be reimbursed by the Sponsor.
The Trust initially appoints the Institutional Trustee as transfer agent
and registrar for the Convertible Preferred Securities.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES
(a) The Trust shall not, and the Trustees (including the Institutional
Trustee) shall cause the Trust not to engage in any activity other than as
required or authorized by this Declaration. In particular the Trust shall not
and the Trustees (including the Institutional Trustee) shall cause the Trust not
to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever except as
permitted by the terms of this Declaration;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
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(vii) other than as provided in this Declaration or Annex I hereto,
(A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B)
waive any past default that is not waivable under the Indenture, (C)
exercise any right to rescind or annul any declaration that the principal
of all the Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or the Debentures
where such consent shall be required unless the Trust shall have received
an opinion of counsel to the effect that such modification will not cause
more than an insubstantial risk that (x) the Trust will be deemed an
Investment Company required to be registered under the Investment Company
Act or (y) the Trust will not be classified as a grantor trust for United
States federal income tax purposes.
SECTION 3.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE
(a) The legal title to the Debentures shall be owned by and held of record
in the name of the Institutional Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. To the fullest extent permitted by law, such vesting and cessation
of title shall be effective whether or not conveyancing documents with regard to
the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "INSTITUTIONAL TRUSTEE ACCOUNT") in the name of and under the
exclusive control of the Institutional Trustee on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in respect
of the Debentures held by the Institutional Trustee, deposit such funds
into the Institutional Trustee Account and make payments to the Holders of
the Convertible Preferred Securities and Holders of the Common Securities
from the Institutional Trustee Account in accordance with Section 6.1.
Funds in the Institutional Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration. The Institutional Trustee
Account shall be an account that is maintained with a banking institution
the rating on whose long-term unsecured indebtedness is at least equal to
the rating assigned to the Convertible Preferred Securities (or, if the
Convertible Preferred Securities are not rated, the rating assigned to
Viatel's senior debt) by a "nationally recognized statistical rating
organization," as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
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(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Convertible Preferred
Securities and the Common Securities to the extent the Debentures are
redeemed or mature;
(iii) engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Trust Property in accordance
with the terms of this Declaration; and
(iv) to the extent provided for in this Declaration, take such
ministerial actions necessary in connection with the winding up of the
affairs of and liquidation of the Trust.
(d) The Institutional Trustee shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action which arises out
of or in connection with, an Event of Default of which a Responsible Officer of
the Institutional Trustee has actual knowledge, or the Institutional Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
provided, however, that if a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of Convertible Preferred Securities may directly institute
a proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Convertible Preferred Securities of such Holder (a
"DIRECT ACTION") on or after the respective due date specified in the Debentures
and provided, further, that if the Institutional Trustee fails to enforce its
rights under the Debentures, any Holder of Convertible Preferred Securities may,
to the fullest extent permitted by law, institute a legal proceeding against any
Person to enforce the Institutional Trustee's rights under the Debentures. In
connection with such Direct Action, the Holders of the Common Securities will be
subrogated to the rights of such Holder of Convertible Preferred Securities to
the extent of any payment made by the Debenture Issuer to such Holder of
Convertible Preferred Securities in such Direct Action. Except as provided in
the preceding sentences, the Holders of Convertible Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures.
(f) The Institutional Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of Securities pursuant to the terms
of the Securities; or
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(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer of the
Institutional Trustee occurs and is continuing, the Institutional Trustee shall,
for the benefit of Holders of the Securities, enforce its rights as holder of
the Debentures subject to the rights of the Holders pursuant to the terms of
such Securities.
(h) The Institutional Trustee may authorize one or more Persons (each, a
"PAYING AGENT") to pay Distributions, redemption payments or Liquidation
Distributions on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Institutional Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
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(A) the duties and obligations of the Institutional Trustee shall
be determined solely by the express provisions of this Declaration and
the Institutional Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of the Institutional
Trustee, the Institutional Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Institutional Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Institutional Trustee, the Institutional Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Declaration (but need not confirm or
investigate the accuracy of any mathematical calculations or other
facts stated therein);
(ii) the Institutional Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation amount of the Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Institutional
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Institutional Trustee against such risk or
liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the
Institutional Trustee Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust
Indenture Act;
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(vi) the Institutional Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor. Money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise required
by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Institutional
Trustee be liable for any default or misconduct of the Regular Trustees or
the Sponsor.
SECTION 3.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document (whether in its original or
facsimile form) believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(iv) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
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(v) the Institutional Trustee may consult with counsel of its
selection or other experts and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Sponsor or any of its Affiliates, and may
include any of its employees. The Institutional Trustee shall have the
right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Institutional Trustee security and indemnity, reasonably
satisfactory to the Institutional Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Institutional Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Institutional
Trustee provided, that, nothing contained in this Section 3.10(a)(vi) shall
be taken to (a) require the Holders of Convertible Preferred Securities to
offer such indemnity in the event such Holders direct the Institutional
Trustee to take any action it is empowered to take under this Declaration
following an Event of Default or (b) relieve the Institutional Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Declaration;
(vii) the Institutional 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 Institutional Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit at the expense of the Sponsor;
(viii) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Institutional
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Institutional
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Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Institutional Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Institutional Trustee (i) may request written
instructions from the Holders of the Securities which instructions may only
be given by the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Institutional Trustee under
the terms of the Securities in respect of such remedy, right or action,
(ii) may refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be protected
in conclusively relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration; and
(xii) the Institutional Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Institutional Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Regular Trustees, the Institutional Trustee or the Trustees generally (except as
may be required under the Business Trust Act) described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
SECTION 3.12. EXECUTION OF DOCUMENTS.
Except as otherwise required by the Business Trust Act or other applicable
law, any Regular Trustee is authorized to execute on behalf of the Trust any
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documents that the Regular Trustees have the power and authority to execute
pursuant to Section 3.6; provided that, the registration statement referred to
in Section 3.6(b)(i), including any amendments thereto, shall, subject to
Section 3.4(d), be signed by all of the Regular Trustees.
SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14. DURATION OF TRUST.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence for 35 years from April 15, 2000.
SECTION 3.15. MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any corporation or other body,
except as described in Section 3.15(b) and (c) or in Section 3 of Annex I.
(b) The Trust may, with the consent of the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees and without the consent of
the Holders of the Securities, the Delaware Trustee or the Institutional
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State; provided that
(i) such successor entity (the "SUCCESSOR ENTITY") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Convertible Preferred Securities other
securities having substantially the same terms as the Convertible
Preferred Securities (the "SUCCESSOR SECURITIES") so long as the
Successor Securities rank the same as the Convertible Preferred
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
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(iii) such merger, consolidation, amalgamation or replacement does not
cause the Convertible Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(iv) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders' interest in the
Successor Entity);
(v) such Successor Entity has a purpose identical to that of the
Trust;
(vi) prior to such merger, consolidation, amalgamation or replacement,
the Sponsor has received an opinion of nationally recognized independent
counsel to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the Successor Entity);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or such Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(vii) the Sponsor guarantees the obligations of the Successor Entity
under the Successor Securities at least to the extent provided by the
Securities Guarantees.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger or replacement would cause the Trust or
the Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON SECURITIES.
On the Closing Date and the Option Closing Date the Sponsor will purchase
all of the Common Securities issued by the Trust, in an amount equal to at least
3% of the capital of the Trust, at the same time as the Convertible Preferred
Securities are sold.
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Convertible Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) prepare and execute, if necessary, the Offering Memorandum in
preliminary and final form, in relation to the offering and sale by the
Trust of Convertible Preferred Securities to qualified institutional buyers
in reliance on Rule 144A under the Securities Act;
(b) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Securities, including
any amendments thereto;
(c) prepare, execute and file an application to the PORTAL Market and,
at such time as determined by the Sponsor, to the New York Stock Exchange
or any other national stock exchange or the Nasdaq Stock Market's National
Market for listing or quotation of the Convertible Preferred Securities;
(d) prepare for execution and filing by the Trust of documents, or
instruments to be delivered to The Depository Trust Company relating to the
Convertible Preferred Securities;
(e) prepare for execution and filing by the Trust of a registration
statement on Form 8-A, including any amendments thereto, prepared by the
Sponsor relating to the registration of the Convertible Preferred
Securities under Section 12(b) of the Exchange Act;
(f) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Convertible Preferred
Securities and to do any and all such acts, other than actions which must
be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by
the Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such States;
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(g) to negotiate the terms of, and execute, the Placement Agreement
providing for the sale of the Convertible Preferred Securities; and
(h) to negotiate the terms of, and execute, the Preferred Securities
Registration Rights Agreement providing for, among other things, the
registration under the Securities Act of resales from time to time of the
Convertible Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1. NUMBER OF TRUSTEES.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities; provided, however, that the number
of Trustees shall in no event be less than two (2); provided further, that
(i) one Trustee, in the case of a natural person, shall be a person who is
a resident of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of Delaware
(the "DELAWARE TRUSTEE"); (ii) there shall be at least one Trustee who is
an employee or officer of, or is affiliated with the Sponsor (a "REGULAR
TRUSTEE"); and (iii) one Trustee shall be the Institutional Trustee, and
such Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.
SECTION 5.2. DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law;
provided that, if the Institutional Trustee has its principal place of business
in the State of Delaware and otherwise meets the requirements of applicable law,
then the Institutional Trustee shall also be the Delaware Trustee and Section
3.11 shall have no application.
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The Initial Delaware Trustee shall be: The Bank of New York (Delaware).
SECTION 5.3. INSTITUTIONAL TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be eligible to
so act under Section 5.3(a), the Institutional Trustee shall immediately resign
in the manner and with the effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Institutional Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Convertible Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Institutional Trustee shall be: The Bank of New York.
SECTION 5.4. CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Institutional
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
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SECTION 5.5. REGULAR TRUSTEES.
The initial Regular Trustees shall be:
Michael J. Mahoney
Allan L. Shaw
James P. Prenetta
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall, subject to Section
3.4(d), be signed by all of the Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purposes of signing any documents which the Regular Trustees have power
and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without
cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Institutional
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Institutional Trustee and delivered to
the Regular Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 5.6(a) until a successor Trustee possessing the
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qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"SUCCESSOR DELAWARE TRUSTEE") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional
Trustee shall be effective:
(A) until a Successor Institutional Trustee has been appointed
and has accepted such appointment by instrument executed by such
Successor Institutional Trustee and delivered to the Trust, the
Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the holders of the Securities;
and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Delaware Trustee or Successor Institutional Trustee
as the case may be if the Institutional Trustee or the Delaware Trustee delivers
an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Institutional Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition, at the expense of the Sponsor, any court of competent
jurisdiction for appointment of a Successor Institutional Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Institutional
Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
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SECTION 5.7. VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8. EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.9. MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular Trustees
shall be held from time to time upon the call of any Regular Trustee. Regular
meetings of the Regular Trustees may be held at a time and place fixed by
resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustee or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
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SECTION 5.10. DELEGATION OF POWER.
A Regular Trustee may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 his or her power for the
purposes of executing any documents contemplated in Section 3.6, including any
registration statement or amendment thereto filed with the Commission, or making
any other governmental filing.
The Regular Trustees shall have power to delegate from time to time to such
of their number or to officers of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to
the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS.
Holders of Securities shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Convertible Preferred Securities and the
Common Securities in accordance with the preferences set forth in their
respective terms. If and to the extent that the Debenture Issuer makes a payment
of interest (including Compound Interest (as defined in the Indenture) and
Additional Sums (as defined in the Indenture)), premium and/or principal on the
Debentures held by the Institutional Trustee (the amount of any such payment
being a "PAYMENT AMOUNT"), the Institutional Trustee shall and is directed, to
the extent funds are available for that purpose, to make a distribution (a
"DISTRIBUTION") of the Payment Amount to Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall on behalf of the Trust issue one class of
convertible preferred securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"CONVERTIBLE PREFERRED SECURITIES") and one class of convertible common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "COMMON SECURITIES").
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Convertible Preferred Securities and the Common Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(d) Every Person, by virtue of having become a Holder or a Convertible
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of and shall be bound by this Declaration.
SECTION 7.2. EXECUTION AND AUTHENTICATION.
(a) The Certificates shall be signed on behalf of the Trust by a Regular
Trustee. In case any Regular Trustee of the Trust who shall have signed any of
the Securities shall cease to be such Regular Trustee before the Certificates so
signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Regular Trustee; and any Certificate may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Security, shall be
the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee.
(b) One Regular Trustee shall sign the Convertible Preferred Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
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A Convertible Preferred Security shall not be valid until authenticated by
the manual signature of an authorized signatory of the Institutional Trustee.
The signature shall be conclusive evidence that the Convertible Preferred
Security has been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular Trustee, the
Institutional Trustee shall authenticate the Convertible Preferred Securities
for original issue.
The Institutional Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Convertible Preferred Securities. An authenticating
agent may authenticate Convertible Preferred Securities whenever the
Institutional Trustee may do so. Each reference in this Declaration to
authentication by the Institutional Trustee includes authentication by such
agent. An authenticating agent has the same rights as the Institutional Trustee
to deal with the Company or an Affiliate.
SECTION 7.3. FORM AND DATING.
The Convertible Preferred Securities and the Institutional Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Securities shall be substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates may be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof. The Securities may have
letters, numbers, notations, other marks of identification or designation or
other changes or additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice and such legends or endorsements required by
law, stock exchange rule and agreements to which the Trust is subject, if any
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Institutional Trustee in writing.
Each Convertible Preferred Security Certificate shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in Annex I
and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the
terms of this Declaration and, to the extent applicable, the Institutional
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
SECTION 7.4. PAYING AGENT.
The Trust shall maintain in the Borough of Manhattan, City of New York,
State of New York, an office or agency where Convertible Preferred Securities
not held in book-entry only form may be presented for payment ("PAYING Agent").
The Trust shall maintain an office or agency where Securities may be presented
for conversion ("CONVERSION AGENT"). The Trust may appoint the Paying Agent and
the Conversion Agent and may appoint one or more additional paying agents and
one or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent and the
term "Conversion Agent" includes any additional conversion agent. The Trust may
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change any Paying Agent or Conversion Agent without prior notice to any Holder.
The Trust shall notify the Institutional Trustee in writing of the name and
address of any Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Paying Agent or Conversion Agent, the
Institutional Trustee shall act as such. The Trust or any of its Affiliates may
act as Paying Agent or Conversion Agent. The Trust shall act as Paying Agent and
Conversion Agent for the Common Securities.
The Trust initially appoints The Bank of New York, 101 Barclay Street,
Floor 21 West, New York, New York 10286, Attention: Corporate Trust
Administration, as Paying Agent and Conversion Agent for the Convertible
Preferred Securities.
SECTION 7.5. CUSIP NUMBERS
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; PROVIDED that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1. DISSOLUTION AND TERMINATION OF TRUST.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor or the Holder of the Common
Securities;
(ii) upon the filing of a certificate of dissolution or its equivalent
with respect to the Sponsor or the Holder of the Common Securities; upon
the consent of at least a Majority in liquidation amount of the Securities
voting together as a single class to dissolve the Trust; or the revocation
of the Sponsor's charter or the charter of the Holder of the Common
Securities and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor, the Trust or the Holder of the Common Securities;
(iv) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to
the Holders in accordance with the terms of the Securities;
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(v) upon the occurrence and continuation of a Special Event pursuant
to which the Trust shall have been dissolved in accordance with the terms
of the Securities and all of the Debentures held by the Institutional
Trustee shall have been distributed to the Holders of Securities in
exchange for all of the Securities;
(vi) upon the written direction to the Institutional Trustee from the
Sponsor at any time to dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, the
distribution of Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of the Convertible Preferred
Securities and the Common Securities to the Holders of the Convertible
Preferred Securities and the Common Securities in liquidation of such
Holders' interests in the Trust, subject to the Regular Trustees' receipt
of an opinion of nationally recognized independent counsel experienced in
such matters to the effect that the Holders will not recognize any income,
gain or loss for United States federal income tax purposes as a result of
the dissolution of the Trust and such distribution to Holders of
Convertible Preferred Securities;
(vii) upon the distribution of the Sponsor's Common Stock to all
Holders of Convertible Preferred Securities upon conversion of all
outstanding Convertible Preferred Securities;
(viii) the expiration of the term of the Trust on April 15, 2035; or
(ix) before the issuance of any Securities, with the consent of all of
the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1(a) and after liquidation of the assets of the Trust in accordance
with applicable law, the Regular Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Sections 3.9 and 3.10 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in accordance
with the terms and conditions set forth in this Declaration and in the terms of
the Securities. To the fullest extent permitted by law, any transfer or
purported transfer of any Security not made in accordance with this Declaration
shall be null and void.
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(b) Subject to this Article IX, Convertible Preferred Securities shall be
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only
transfer Common Securities (i) to the Sponsor or a Related Party of the Sponsor
or (ii) to a Person in accordance with Article IX of the Indenture; provided
that, any such transfer is subject to the condition precedent that the
transferor obtain the written opinion of nationally recognized independent
counsel experienced in such matters that such transfer would not cause more than
an insubstantial risk that:
(i) the Trust would not be classified for United States federal income
tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company required to register
under the Investment Company Act or the transferee would become an
Investment Company required to register under the Investment Company Act.
(d) Each Security that bears or is required to bear the legend set forth in
this Section 9.1(d) (a "RESTRICTED SECURITY") shall be subject to the
restrictions on transfer provided in the legend set forth in this Section
9.1(d), unless such restrictions on transfer shall be waived by the written
consent of the Regular Trustees, and the Holder of each Restricted Security, by
such securityholder's acceptance thereof, agrees to be bound by such
restrictions on transfer. As used in this Section 9.1(d) and in Section 9.1(e),
the term "transfer" encompasses any sale, pledge, transfer or other disposition
of any Restricted Security.
Prior to the Transfer Restriction Termination Date, any certificate
evidencing a Security shall bear a legend in substantially the following form,
unless otherwise agreed by the Regular Trustees (with written notice thereof to
the Institutional Trustee):
THE SECURITY EVIDENCED HEREBY 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 IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2)
AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE
TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY OR THE COMMON STOCK, ISSUABLE UPON CONVERSION OR EXCHANGE OF
THIS SECURITY EXCEPT (A) TO VIATEL, INC. (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (D) TO AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2)(3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR
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TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE CONVERTIBLE PREFERRED
SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF THIS
CERTIFICATE EVIDENCES COMMON STOCK, THE TRANSFER AGENT FOR THE COMMON STOCK), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT), (E) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY
EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION), 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 FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE
CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES
COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR VIATEL
FINANCING TRUST I ("THE TRUST") MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTIONS NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT). IF THIS
CERTIFICATE DOES NOT EVIDENCE COMMON STOCK AND IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR THE CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR THE TRUST
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. THIS LEGEND WILL BE REMOVED AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
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HEREBY UNDER RULE 144(K) UNDER 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.
Following the Transfer Restriction Termination Date, any Security or
security issued in exchange or substitution therefor (other than (i) Securities
acquired by Viatel or any Affiliate and (ii) Common Stock issued upon the
conversion or exchange of any Security described in clause (i) above) may upon
surrender of such Security for exchange to any Regular Trustee on behalf of the
Trust in accordance with the provisions of Section 9.2, be exchanged for a new
Security or Securities, of like tenor and aggregate liquidation amount, which
shall not bear the restrictive legend required by this Section 9.1(d).
Any Convertible Preferred Security or Common Stock issued upon the
conversion or exchange of a Convertible Preferred Security that, prior to the
Transfer Restriction Termination Date, is purchased or owned by Viatel or any
Affiliate thereof may not be resold by Viatel or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Convertible Preferred Securities or Common Stock, as the case may be, no
longer being "restricted securities" (as defined under Rule 144).
SECTION 9.2. TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates, which will be effected without charge, but only
upon payment in respect of any tax or other government charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.3. DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate shall be
registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 9.4. BOOK ENTRY INTERESTS.
(a) So long as Convertible Preferred Securities are eligible for book-entry
settlement with the Clearing Agency or unless otherwise required by law, all
Convertible Preferred Securities that are so eligible may be represented by one
or more fully registered Convertible Preferred Security Certificates (each a
"GLOBAL CERTIFICATE") in global form to be delivered to DTC, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Convertible Preferred Security Beneficial
Owner will receive a definitive Convertible Preferred Security Certificate
representing such Convertible Preferred Security Beneficial Owner's interests in
such Global Certificates, except as provided in Section 9.7 below. The transfer
and exchange of beneficial interests in any such Security in global form shall
be effected through the Clearing Agency in accordance with this Declaration and
the procedures of the Clearing Agency therefor.
(b) Convertible Preferred Securities that upon initial issuance are
beneficially owned by QIBs may, at the option of the Trust, be represented by
one or more Global Certificates (a "144A GLOBAL SECURITY").
Except as provided below, beneficial owners of a Convertible Preferred
Security in global form shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Convertible Preferred Security in global form.
(c) So long as the Convertible Preferred Securities are eligible for
book-entry settlement and to the extent Convertible Preferred Securities held by
QIBs, are held in a global form, or unless otherwise required by law, upon any
transfer of a definitive Convertible Preferred Security to a QIB in accordance
with Rule 144A, unless otherwise requested by the transferor, and upon receipt
of the definitive Convertible Preferred Security or Convertible Preferred
Securities being so transferred, together with a certification from the
transferor that the transfer is being made in compliance with Rule 144A (or
other evidence satisfactory to the Institutional Trustee on behalf of the
Trust), the Institutional Trustee on behalf of the Trust shall make an
endorsement on any 144A Global Security to reflect an increase in the number of
Convertible Preferred Securities represented by such Global Certificate, and the
Institutional Trustee on behalf of the Trust shall cancel such definitive
Convertible Preferred Security or Convertible Preferred Securities in accordance
with the standing instructions and procedures of the Clearing Agency, the number
of Convertible Preferred Securities represented by such Convertible Preferred
Security in global form to be increased accordingly; provided that no definitive
Convertible Preferred Security, or portion thereof, in respect of which the
Trust or an Affiliate of the Trust held any beneficial interest shall be
included in such Convertible Preferred Security in global form until such
definitive Convertible Preferred Security is freely tradeable in accordance with
Rule 144(k); provided further that the Trust shall issue Convertible Preferred
Securities in definitive form upon any transfer of a beneficial interest in the
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Convertible Preferred Security in global form to the Company or any Affiliate of
the Company.
(d) Any Global Certificate may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Declaration as may be required by the Clearing Agency, by any
national securities exchange or by the National Association of Securities
Dealers, Inc. in order for the Convertible Preferred Securities to be tradeable
on the PORTAL Market or as may be required for the Convertible Preferred
Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange upon which the Convertible Preferred Securities may be listed or traded
or to conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Convertible Preferred
Securities are subject.
(e) Unless and until definitive, fully registered Convertible Preferred
Security Certificates (the "DEFINITIVE CONVERTIBLE PREFERRED SECURITY
CERTIFICATES") have been issued to the Convertible Preferred Security Beneficial
Owners of a Convertible Preferred Security in global form pursuant to Section
9.7:
(i) the provisions of this Section 9.4 shall be in full force and
effect with respect to such Convertible Preferred Securities;
(ii) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Certificates and receiving approvals, votes
or consents hereunder) as the Holder of such Convertible Preferred
Securities and the sole holder of the Global Certificates and shall have no
obligation to the Convertible Preferred Security Beneficial Owners of such
Convertible Preferred Securities;
(iii) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(iv) the rights of the Convertible Preferred Security Beneficial
Owners of Convertible Preferred Securities in global form shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Convertible Preferred
Security Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants. The Clearing Agency will make book-entry transfers
among Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing Agency
Participants provided, that solely for the purposes of determining whether
the Holders of the requisite amount of Convertible Preferred Securities
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have voted on any matter provided for in this Declaration, so long as
Definitive Convertible Preferred Security Certificates have not been
issued, the Trustees may conclusively rely on, and shall be protected in
relying on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Convertible Preferred
Securities Beneficial Owners' votes or assigning the right to vote on any
matter to any other Persons either in whole or in part.
(f) Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in this Section 9.4(f)), a Convertible Preferred
Security in global form may not be transferred as a whole except by the Clearing
Agency to a nominee of the Clearing Agency or by a nominee of the Clearing
Agency to the Clearing Agency or another nominee to a successor Clearing Agency
or a nominee of such successor Clearing Agency.
SECTION 9.5. NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Convertible Preferred
Security Holders is required under this Declaration, unless and until Definitive
Convertible Preferred Security Certificates shall have been issued to the
Convertible Preferred Security Beneficial Owners pursuant to Section 9.7, the
Regular Trustees shall give all such notices and communications specified herein
to be given to the Convertible Preferred Security Holders to the Clearing
Agency, and shall have no notice obligations to the Convertible Preferred
Security Beneficial Owners.
SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency notifies the Trust that it is unwilling or unable to
continue its services as securities depositary with respect to the Convertible
Preferred Securities, if such Clearing Agency ceases to perform such services,
or if at any time such Clearing Agency ceases to be a clearing agency registered
as such under the Exchange Act when such Clearing Agency is required to be so
registered to act as such depositary, then the Regular Trustees may, in their
sole discretion, appoint a successor Clearing Agency with respect to such
Convertible Preferred Securities.
SECTION 9.7. DEFINITIVE CONVERTIBLE PREFERRED SECURITY CERTIFICATES UNDER
CERTAIN CIRCUMSTANCES.
If:
(a) a Clearing Agency notifies the Trust that it is unwilling or
unable to continue its services as securities depositary with respect to
the Convertible Preferred Securities, if at any time such Clearing Agency
ceases to be a clearing agency registered as such under the Exchange Act
when such Clearing Agency is required to be so registered to act as such
depositary and no successor Clearing Agency shall have been appointed
pursuant to Section 9.6 within 90 days of such notification;
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(b) the Regular Trustees (with the consent of the Sponsor), in their
sole discretion determine that the Convertible Preferred Securities in
global from shall be exchanged for certificated Convertible Preferred
Securities; or
(c) there shall have occurred and be continuing an Event of Default;
then:
(d) Definitive Convertible Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect to
such Convertible Preferred Securities; and
(e) upon surrender of the Global Certificates by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
Definitive Convertible Preferred Security Certificates to be delivered to
Convertible Preferred Security Beneficial Owners of such Convertible
Preferred Securities in accordance with the instructions of the Clearing
Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and each of them may conclusively rely on and shall be
protected in relying on, said instructions of the Clearing Agency. The
Definitive Convertible Preferred Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Convertible Preferred Securities may be listed, or to conform to usage.
At such time as all interests in a Convertible Preferred Security in global
form have been redeemed, converted, exchanged, repurchased or canceled, such
Convertible Preferred Security in global form shall be, upon receipt thereof,
canceled by the Trust in accordance with standing procedures and instructions of
the Clearing Agency.
Convertible Preferred Securities that upon initial issuance are
beneficially owned by persons that are neither QIBs nor Non-U.S. Persons will be
issued as Definitive Convertible Preferred Security Certificates and may not be
represented by a Global Certificate. Convertible Preferred Securities that upon
initial issuance are beneficially owned by persons that are Non-U.S. Persons
may, at the option of the Trust, be issued as Definitive Convertible Preferred
Security Certificates.
SECTION 9.8. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
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(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Institutional Trustee or the
Regular Trustees such security or indemnity as may be required by them to
keep each of them harmless,
then:
in the absence of notice that such Certificate shall have been acquired by a
bona fide purchaser, the Institutional Trustee or any Regular Trustee on behalf
of the Trust shall execute and deliver, in exchange for, or in lieu of, any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 9.8, the Institutional Trustee or the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS
SECTION 10.1. LIABILITY.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; or
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
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(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Convertible Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2. EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Trust or any Covered Person for any loss, liability,
expense, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Trust and upon such information, opinions, reports or
statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons and any Indemnified Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
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that is, or provides terms that are, fair and reasonable to the Trust or
any Holder of Securities;
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4. INDEMNIFICATION.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Trust) by reason of the fact that he is or
was a Company Indemnified Person against expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful.
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(ii) The Debenture Issuer shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees and expenses) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified Person shall
have been adjudged to be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 10.4(a), or in defense of any claim, issue or matter therein, he shall
be indemnified, to the full extent permitted by law, against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Debenture Issuer only
as authorized in the specific case upon a determination that indemnification of
the Company Indemnified Person is proper in the circumstances because he has met
the applicable standard of conduct set forth in paragraphs (i) or (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Regular Trustees
by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) by the Common Security Holder of the Trust, that, based upon the facts
known to the Regular Trustees, counsel or the Common Security Holder at the time
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such determination is made, such Company Indemnified Person acted in bad faith
or in a manner that such person did not believe to be in or not opposed to the
best interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Convertible Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer or Convertible
Preferred Security Holders of the Trust or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 10.4(a) shall be deemed
to be provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section 10.4(a) shall
not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to fully indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each
of the Persons in (i) through (iv) being referred to as a "FIDUCIARY INDEMNIFIED
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PERSON") for, and to hold each Fiduciary Indemnified Person harmless against,
any and all loss, liability, claim, damage or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration or the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The provisions
of this Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration or the resignation or removal of the Institutional Trustee or the
Delaware Trustee, as the case may be.
SECTION 10.5. OUTSIDE BUSINESS.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee (subject to Section 5.3(c)) may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Securities shall have no rights by virtue of this Declaration in
and to such independent ventures or the income or profits derived therefrom, and
the pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor,
the Delaware Trustee, or the Institutional Trustee shall be obligated to present
any particular investment or other opportunity to the Trust even if such
opportunity is of a character that, if presented to the Trust, could be taken by
the Trust, and any Covered Person, shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Institutional Trustee may engage or be interested in
any financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. FISCAL YEAR.
The fiscal year ("FISCAL YEAR") of the Trust shall be the same as the
fiscal year of the Company.
SECTION 11.2. CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular Trustees
shall keep, or cause to be kept, full books, records and supporting documents,
which shall reflect in detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting in compliance
with generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for the United States federal income
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tax purposes. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
(b) The Sponsor shall cause to be prepared and delivered to each of the
Holders of Securities, within 90 days after the end of each Fiscal Year of the
Sponsor, annual financial statements of the Sponsor, including a balance sheet
of the Sponsor as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Regular Trustees shall cause to be duly prepared and delivered to
each of the Holders of Securities, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return,
on a Form 1041 or such other form required by United States federal income tax
law, and any other annual income tax returns required to be filed by the Regular
Trustees on behalf of the Trust with any state or local taxing authority.
SECTION 11.3. BANKING.
The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4. WITHHOLDING.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
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withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over-withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding. Furthermore, if withholding is imposed on
payments of interest on the Debentures, to the extent such withholding is
attributable to ownership by a specific Holder of Convertible Preferred
Securities, the amount withheld shall be deemed a distribution in the amount of
the withholding to such specific Holder.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. AMENDMENTS.
Except as otherwise provided in this Declaration or by any applicable terms
of the Securities,
(a) this Declaration may only be amended by a written instrument
approved and executed by the Regular Trustees (or, if there are more than
two Regular Trustees a majority of the Regular Trustees) and:
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, also by the
Institutional Trustee; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, also by the
Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
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(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Institutional Trustee; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act;
(c) at such time after the Trust has issued any securities that remain
outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities;
(f) the rights of the holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be amended
from time to time by the Holders of a Majority in liquidation amount of the
Common Securities and the Institutional Trustee, without the consent of the
Holders of the Convertible Preferred Securities to:
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision, or
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to make any other provisions with respect to matters or questions
arising under this Declaration, which shall not be inconsistent with
the other provisions of this Declaration; or
(ii) to modify, eliminate or add to any provisions of this
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or
to ensure that the Trust will not be required to register as an
investment company under the Investment Company Act;
provided, however, such action shall not adversely affect in any
material respect the interests of any Holder of Securities;
(h) this Declaration may be amended by the Holders of a Majority in
liquidation amount of the Common Securities and the Institutional Trustee
if:
(i) the Holders of a Majority in liquidation amount of the
Convertible Preferred Securities consent to such amendment and
(ii) the Regular Trustees have received an opinion of nationally
recognized independent counsel experienced in such matters to the
effect that such amendment or the exercise of any power granted to the
Regular Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status as an "investment
company" under the Investment Company Act,
provided, that without the consent of each Holder of Securities,
this Declaration may not be amended to:
(x) change the amount or timing of any distribution on the Securities
or otherwise adversely affect the amount of any distribution required to be
made in respect of the Securities as of a specified date or
(y) restrict the right of a Holder of Securities to institute suit for
the enforcement of any such payment on or after such date; and
(i) Any amendments of this Declaration shall become effective when
notice thereof is given to Holders of Securities.
SECTION 12.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be called at any
time by the Regular Trustees (or as provided in the terms of the Securities) to
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consider and act on any matter on which Holders of such class of Securities are
entitled to act under the terms of this Declaration, the terms of the Securities
or the rules of any stock exchange on which the Convertible Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 25% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities,
the following provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least 7 days and not more than
60 days before the date of such meeting. The presence of any Holder or such
Holder's proxy at a meeting shall constitute a waiver of notice of such
meeting except when such Holder or proxy attends a meeting for the express
purpose of objecting to the transaction of any activity on the grounds that
the meeting has not been lawfully called or convened. Whenever a vote,
consent or approval of the Holders of Securities is permitted or required
under this Declaration or the rules of any stock exchange on which the
Convertible Preferred Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not
less than the minimum amount of Securities in liquidation amount that would
be necessary to authorize or take such action at a meeting at which all
Holders of Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not consented
in writing. The Regular Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time specified
by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it
by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration of
11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to
the giving, voting or validity of proxies shall be governed by the General
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Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and
the Holders of the Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted
by the Regular Trustees or by such other Person that the Regular Trustees
may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Convertible Preferred Securities are then listed or
trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting in person
or by proxy or any other matter with respect to the exercise of any such
right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND
DELAWARE TRUSTEE
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants, as applicable, to
the Trust and the Sponsor at the time of the Successor Institutional Trustee's
acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a New York banking corporation with
trust powers, duly organized, validly existing and in good standing, with
trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Institutional Trustee. The Declaration
has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general
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principles of equity and the discretion of the court (regardless of whether
the enforcement of such remedies is considered in a proceeding in equity or
at law);
(c) the execution, delivery and performance of the Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee, of the
Declaration.
SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation, duly
organized, validly existing and in good standing, with corporate power and
authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The
Declaration under Delaware law constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with or
notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of the
Declaration.
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. NOTICES.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
Viatel Financing Trust I
c/o Viatel, Inc.
685 Third Avenue, 24th Floor
New York, New York 10017
Attention: General
Counsel
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
The Bank of New York (Delaware)
c/o The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
(c) if given to the Institutional Trustee, at its Corporate Trust
Office's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities).
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder
of the Common Securities may give notice to the Trust):
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Viatel, Inc.
685 Third Avenue, 24th Floor
New York, New York 10017
Attention: General Counsel
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2. GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
SECTION 14.3. INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
SECTION 14.4. HEADINGS
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5. SUCCESSORS AND ASSIGN.
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor and the Trustees
shall bind and inure to the benefit of their respective successors and assigns,
whether so expressed.
SECTION 14.6. PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
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SECTION 14.7. COUNTERPARTS.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ Michael J. Mahoney
--------------------------------------------------
Michael J. Mahoney, as Regular Trustee
Solely as trustee and not in his individual
capacity
/s/ Allan L. Shaw
--------------------------------------------------
Allan L. Shaw, as Regular Trustee
Solely as trustee and not in his individual
capacity
/s/ James P. Prenetta
--------------------------------------------------
James P. Prenetta, as Regular Trustee
Solely as trustee and not in his individual
capacity
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ William T. Lewis
-----------------------------------------------
Name: William T. Lewis
Title: Senior Vice President
THE BANK OF NEW YORK,
as Institutional Trustee
By: /s/ Ming J. Shiang
-----------------------------------------------
Name: Ming J. Shiang
Title: Vice President
VIATEL, INC.,
as Sponsor and Debenture Issuer
By: /s/ James P. Prenetta
-----------------------------------------------
Name: James P. Prenetta
Title: Senior Vice President and
General Counsel
<PAGE>
ANNEX I
TERMS OF
7 3/4% CONVERTIBLE PREFERRED SECURITIES
7 3/4% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of April 12, 2000 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Convertible Preferred Securities and the Common Securities
are set out below (each capitalized term used but not defined herein has the
meaning set forth in the Declaration or, if not defined in such Declaration, as
defined in the Offering Memorandum referred to below):
1. DESIGNATION AND NUMBER.
(a) CONVERTIBLE PREFERRED SECURITIES. 3,000,000 Convertible Preferred
Securities of the Trust (3,600,000 Convertible Preferred Securities if the
Initial Purchasers' over-allotment option is exercised in full) with an
aggregate liquidation amount with respect to the assets of the Trust of One
Hundred Fifty Million Dollars ($150,000,000) (One Hundred Eighty Million Dollars
($180,000,000) if the Initial Purchasers' over-allotment option is exercised in
full), and a liquidation amount with respect to the assets of $50 per
convertible preferred security, are hereby designated for the purposes of
identification only as "7% Trust Convertible Preferred Securities" (the
"CONVERTIBLE PREFERRED SECURITIES"). The Convertible Preferred Security
Certificates evidencing the Convertible Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such letters,
numbers, notations, other means of identification or designation or other
changes or additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice and such legends or endorsements required by
law, state exchange rule and agreements to which the Trust is subject, if any
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust).
(b) COMMON SECURITIES. 92,783.5 Common Securities of the Trust (111,340.2
Common Securities if the Initial Purchasers' over-allotment option is exercised
in full) with an aggregate liquidation amount with respect to the assets of the
Trust of Four Million Six Hundred Thirty-Nine Thousand Two Hundred Dollars
($4,639,175) (Five Million Five Hundred Sixty-Seven Thousand Dollars
($5,567,010) if the Initial Purchasers' over-allotment option is exercised in
full), and a liquidation amount with respect to the assets of the Trust of $50
per common security, are hereby designated for the purposes of identification
only as "7 3/4% Common Securities" (the "COMMON SECURITIES"). The Common
Securities Certificates evidencing the Common Securities shall be in the form of
Exhibit A-2 to the Declaration, with such letters, numbers, notations, other
means of identification or designation or other changes or additions thereto or
deletions
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therefrom as may be required by ordinary usage, custom or practice and such
legends or endorsements required by law, state exchange rule and agreements to
which the Trust is subject, if any (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust).
2. DISTRIBUTIONS.
(a) Distributions payable on each Security will be fixed at a rate per
annum of 7 3/4% (the "COUPON RATE") of the stated liquidation amount of $50
per Security, such rate being the rate of interest payable on the Debentures to
be held by the Institutional Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used herein
includes such interest payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any period
will be computed for any full quarterly Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period shorter than a full
quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 30-day month.
(b) Distributions on the Securities will be cumulative, will accrue from
April 12, 2000 and will be payable quarterly in arrears, on January 15, April
15, July 15 and October 15 of each year, commencing on July 15, 2000, except as
otherwise described below. So long as the Debenture Issuer shall not be in
default in the payment of interest on the Debentures, the Debenture Issuer has
the right under the Indenture to defer payments of interest on the Debentures by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "EXTENSION PERIOD"),
during which Extension Period no interest shall be due and payable on the
Debentures, provided that no Extension Period shall last beyond the date of
maturity or any redemption date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the maturity or
any redemption date of the Debentures. Payments of accrued Distributions and, to
the extent permitted by applicable law, accrued interest thereon shall be
payable on the Distribution payment date on which the relevant Extension Period
terminates and shall be payable to Holders as they appear on the books and
records of the Trust at the close of business on the record date next preceding
such Distribution payment date. Upon the termination of any Extension Period and
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the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements. Each Extension Period, if
any, will end on an interest payment date for the Debentures; such date will
also be a Distribution payment date for the Securities. In the event that the
Debenture Issuer exercises its right to defer payment of interest, then during
such Extension Period the Debenture Issuer shall not (a) declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital
stock, or (b) make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Debenture Issuer
that rank pari passu with or junior in interest to the Debentures or make any
guarantee payments with respect to any guarantee by the Debenture Issuer of the
debt securities of any subsidiary of the Debenture Issuer if such guarantee
ranks pari passu with or junior in interest to the Debentures (other than (i) as
a result of a reclassification of the capital stock of the Debenture Issuer or
the exchange or conversion of one class or series of the capital stock of the
Debenture Issuer for another class or series of the capital stock of the
Debenture Issuer, (ii) the purchase of fractional interests in shares of the
capital stock of the Debenture Issuer pursuant to the conversion or exchange
provisions of such capital stock or the security being converted into or
exchanged for such capital stock, (iii) dividends or distributions in Common
Stock of the Debenture Issuer, (iv) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (v) payments under the Securities Guarantees, (vi)
purchases of Common Stock of the Debenture Issuer related to the issuance of
Common Stock of the Debenture Issuer or rights under any of the Debenture
Issuer's benefit plans for its directors, officers or employees and (vii)
obligations under any dividend reinvestment and stock purchase plans).
(c) Distributions on the Securities will be payable to the Holders thereof
as they appear on the books and records of the Trust on the relevant record
dates, which shall be fifteen days prior to the relevant payment dates, which
payment dates correspond to the record and interest payment dates on the
Debentures. The relevant record dates for the Common Securities shall be the
same record dates as for the Convertible Preferred Securities. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) In the event of an election by the Holder to convert its Securities
through the Conversion Agent into Common Stock pursuant to the terms of the
Securities as set forth in this Annex I to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
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that Holders of Securities at the close of business on any record date for the
payment of Distributions will be entitled to receive the Distributions payable
on such Securities on the corresponding payment date notwithstanding the
conversion of such Securities into Common Stock following such record date;
provided, further that if the date of any redemption of related Debentures falls
between such record date and such corresponding payment date, the amount of such
Distribution shall include accumulated and unpaid Distributions accrued to but
excluding such date of redemption and such payment shall be made to the
converting holder.
(e) In the event that there is any money or other property held by or for
the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
The Sponsor will have the right at any time to cause the Trust to be
dissolved with the result that, after satisfaction of creditors of the Trust, as
provided by applicable law, Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of the Convertible Preferred
Securities and the Common Securities will be distributed on a pro rata basis to
the Holders of the Convertible Preferred Securities and the Common Securities in
liquidation of such Holders' interests in the Trust, within 90 days following
notice given to the Holders of the Convertible Preferred Securities, subject to
the Regular Trustees' receipt of an opinion of nationally recognized independent
counsel experienced in such matters to the effect that the Holders will not
recognize any income, gain or loss for United States federal income tax purposes
as a result of the dissolution of the Trust and such distribution to Holders of
Convertible Preferred Securities.
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "LIQUIDATION"), the Holders of
the Securities on the date of the Liquidation will be entitled to receive out of
the assets of the Trust available for distribution to Holders of Securities
after satisfaction of liabilities of creditors an amount equal to the aggregate
of the stated liquidation amount of $50 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "LIQUIDATION
DISTRIBUTION"), unless, in connection with such Liquidation, Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Coupon Rate of,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, such Securities, shall have been distributed on a Pro
Rata basis to the Holders of the Securities in exchange for such Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.
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4. REDEMPTION AND DISTRIBUTION.
(a) The Debentures will mature on April 15, 2015, and may be redeemed, in
whole or in part, at any time on or after April 18, 2003, or at any time in
certain circumstances upon the occurrence of a Tax Event (as defined below).
Upon the repayment of the Debentures in whole or in part, whether at maturity,
upon redemption (either at the option of the Debenture Issuer or pursuant to a
Tax Event as described below) or otherwise, the proceeds from such repayment or
payment shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed at a redemption price per Security equal to the redemption
price of the Debentures, together with accrued and unpaid Distributions thereon
to, but excluding, the date of the redemption, payable in cash (the "REDEMPTION
Price"). Holders will be given not less than 30 nor more than 60 days' notice of
such redemption.
(b) If fewer than all the outstanding Securities are to be so redeemed, the
Common Securities and the Convertible Preferred Securities will be redeemed Pro
Rata and the Convertible Preferred Securities to be redeemed will be as
described in Section 4(f) below.
(c) If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "SPECIAL EVENT") shall occur and be continuing, the Regular
Trustees may with the consent of the Debenture Issuer, except in certain limited
circumstances in relation to a Tax Event described in this Section 4(c),
dissolve the Trust and, after satisfaction of creditors, cause Debentures held
by the Institutional Trustee, having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Securities,
to be distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis, within 90 days following
the occurrence of such Special Event (the "90 DAY PERIOD"); provided, however,
that such dissolution and distribution shall be conditioned on (i) the Regular
Trustees' receipt of an opinion of nationally recognized independent tax counsel
experienced in such matters (a "NO RECOGNITION OPINION"), which opinion may rely
on published revenue rulings of the Internal Revenue Service, to the effect that
the Holders of the Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of the dissolution of the Trust
and the distribution of Debentures, (ii) in the case of a Tax Event, the
Debenture Issuer or the Trust being unable to avoid, within the 90 Day Period,
the Tax Event by taking some ministerial action, such as filing a form or making
an election, or pursuing some other similar reasonable measure that has no
adverse effect on the Trust, the Debenture Issuer, the Sponsor or the Holders of
the Securities ("MINISTERIAL ACTION"), and (iii) the Debenture Issuer's prior
written consent to such dissolution and distribution.
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Furthermore, if (i) after receipt of a Dissolution Tax Opinion (as defined
hereinafter) by the Regular Trustees, the Debenture Issuer has received an
opinion (a "REDEMPTION TAX OPINION") of nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that the Debenture Issuer would be precluded
from deducting the interest on the Debentures for United States federal income
tax purposes even after the Debentures were distributed to the Holders of
Securities in liquidation of such Holders' interests in the Trust as described
in this Section 4(c), or (ii) the Regular Trustees shall have been informed by
such tax counsel that it cannot deliver a No Recognition Opinion to the Trust,
the Debenture Issuer shall have the right, upon not less than 30 nor more than
60 days' notice, to redeem the Debentures, in whole or in part, at a redemption
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon (including Additional Sums (as such term is defined in the
Indenture), if any, and, to the extent permitted by applicable law, Compound
Interest (as such term is defined in the Indenture), if any), for cash within 90
days following the occurrence of such Tax Event. Following such redemption,
Securities with an aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so redeemed shall be redeemed by the Trust at the
Redemption Price on a Pro Rata basis; provided, however, that, if at the time
there is available to the Debenture Issuer or the Trust the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some Ministerial
Action, the Trust or the Debenture Issuer will pursue such Ministerial Action in
lieu of redemption.
"TAX EVENT" means that the Regular Trustees shall have received an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"DISSOLUTION TAX OPINION") to the effect that on or after April 12, 2000, as a
result of (a) any amendment to, clarification of, or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein affecting taxation, (b) any judicial decision, official administrative
pronouncement, ruling, regulatory procedure, notice or announcement, including
any notice or announcement of intent to adopt such procedures or regulations (an
"ADMINISTRATIVE ACTION") or (c) any amendment to, clarification of, or change in
the official position or the interpretation of such Administrative Action or
judicial decision that differs from the theretofore generally accepted position,
in each case, by any legislative body, court, governmental authority or
regulatory body, irrespective of the manner in which such amendment,
clarification, change or Administrative Action is made known, which amendment,
clarification, change or Administrative Action is effective or such
pronouncement or decision is announced, in each case, on or after, April 6,
2000, there is the creation by such amendment, clarification, change or
Administrative Action of more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income accrued or received on the Debentures, (ii)
the Trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of taxes (other than withholding taxes), duties or
other governmental charges, or (iii) interest paid in cash by the Debenture
Issuer to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible, in whole or in part, by the Debenture Issuer
for United States federal income tax purposes. Notwithstanding the foregoing, a
Tax Event shall not include any change in tax law that requires the Debenture
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Issuer for United States federal income tax purposes to defer taking a deduction
for any original issue discount ("OID") that accrues with respect to the
Debentures until the interest payment related to such OID is paid by the
Debenture Issuer in cash; provided, that such change in tax law does not create
more than an insubstantial risk that the Debenture Issuer will be prevented from
taking a deduction for OID accruing with respect to the Debentures at a date
that is no later than the date the interest payment related to such OID is
actually paid by the Debenture Issuer in cash.
"INVESTMENT COMPANY EVENT" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
such matters to the effect that, as a result of the occurrence of a change in
law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority on or after April 6, 2000 (a "CHANGE IN 1940 ACT LAW"), there is more
than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 ACT").
After the date fixed by the Regular Trustees for any distribution of
Debentures upon dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding, (ii) The Depository Trust Company (the "DEPOSITORY")
or its nominee (or any successor Clearing Agency or its nominee), as the record
Holder of the Convertible Preferred Securities held in global form, will receive
a registered certificate or certificates representing the Debentures held in
global form to be delivered upon such distribution, and (iii) certificates
representing Securities held in definitive form, except for certificates
representing Convertible Preferred Securities held by the Depository or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent Debentures having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the Coupon Rate
of, and accrued and unpaid interest (including Compound Interest (as defined in
the Indenture)) equal to accrued and unpaid Distributions on such Securities
until such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or prior to the date of
redemption.
(e) (i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "REDEMPTION/DISTRIBUTION NOTICE")
will be given by the Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(e), a Redemption/Distribution Notice shall be deemed
to be given on the day such notice is first mailed by first-class mail, postage
prepaid, or by such other means suitable to assure delivery of such written
notice, to Holders of Securities. Each Redemption/Distribution Notice shall be
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addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder of Securities shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder of Securities.
(ii) In addition to the Redemption/Distribution Notice to be provided to
the Holders of Securities pursuant to clause (i) of this Section 4(e), the
Debenture Issuer or the Trust shall give public notice of any such redemption by
the issuance of a press release through the services of the Dow Jones Broad
Tape, Reuters News Service and Bloomberg News Service.
(f) In the event that fewer than all the outstanding Securities are to be
redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each
Holder of Convertible Preferred Securities, it being understood that, in respect
of Convertible Preferred Securities registered in the name of and held of record
by the Depository or its nominee (or any successor Clearing Agency or its
nominee) or any nominee, the distribution of the proceeds of such redemption
will be made to each Clearing Agency Participant (or Person on whose behalf such
nominee holds such securities) in accordance with the procedures applied by such
agency or nominee.
(g) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued for a redemption
if the Debentures are redeemed as set out in Article X of the Indenture (which
notice will be irrevocable), then (i) with respect to Convertible Preferred
Securities held in book-entry form by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has paid the Institutional
Trustee a sufficient amount of cash in connection with the related redemption of
the Debentures, the Institutional Trustee will deposit irrevocably with the
Depository or its nominee (or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to such
Convertible Preferred Securities and will give the Depository irrevocable
instructions and authority to pay the Redemption Price to the Holders of such
Convertible Preferred Securities, and (ii) with respect to Convertible Preferred
Securities issued in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient amount of cash
in connection with the related redemption of the Debentures, the Institutional
Trustee will pay the relevant Redemption Price to the Holders of such Securities
by check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given in connection with a redemption and funds deposited as
required, then from and after the required date of such deposit, distributions
will cease to accrue on the Securities so called for redemption and all rights
of Holders of such Securities so called for redemption will cease, except the
right of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding Business Day (and without any
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interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
in respect of any Securities is improperly withheld or refused and not paid
either by the Institutional Trustee or by the Sponsor as guarantor pursuant to
the relevant Securities Guarantee, Distributions on such Securities will
continue to accrue from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price.
Neither the Regular Trustees nor the Trust shall be required (i) in the
event of any redemption in part, to issue, register the transfer of or exchange
any Securities during a period beginning at the opening of business 15 days
before any selection for redemption of Securities and ending at the close of
business on the earliest date in which the relevant Redemption/Distribution
Notice is deemed to have been given to all holders of Securities to be so
redeemed or (ii) to register the transfer of or exchange any Securities selected
for redemption, in whole or in part, except for the unredeemed portion of any
Securities being redeemed in part.
(h) Redemption/Distribution Notices shall be sent by the Regular Trustees
on behalf of the Trust to (i) in respect of Convertible Preferred Securities
held in global form, the Depository or its nominee (or any successor Clearing
Agency or its nominee), (ii) with respect to Convertible Preferred Securities
held in definitive form, to the Holders thereof, and (iii) in respect of the
Common Securities, to the Holders thereof.
(i) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding
Convertible Preferred Securities by tender, in the open market or otherwise.
5. CONVERSION RIGHTS.
The Holders of Securities shall have the right at any time, after April 12,
2000, through the close of business on April 14, 2015 (or, in the case of
Securities called for redemption, prior to the close of business on the Business
Day prior to the redemption date), at their option, to cause the Conversion
Agent to convert Securities, on behalf of the converting Holders, into shares of
Common Stock in the manner described herein on and subject to the following
terms and conditions:
(a) The Securities will be convertible at the office of the Conversion
Agent into fully paid and nonassessable shares of Common Stock pursuant to
the Holder's direction to the Conversion Agent to exchange such Securities
for a portion of the Debentures theretofore held by the Trust on the basis
of one Security per $50 principal amount of Debentures, and immediately
convert such amount of Debentures into fully paid and nonassessable shares
of Common Stock at an initial rate of 1.048 shares of Common Stock per $50
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principal amount of Debentures (which is equivalent to a conversion price
of $47.71 per share of Common Stock, subject to certain adjustments set
forth in Article XII of the Indenture (as so adjusted, "CONVERSION
PRICE")).
(b) In order to convert Securities into Common Stock, the Holder shall
submit to the Conversion Agent at its office an irrevocable request to
convert Securities on behalf of such Holder (the "CONVERSION REQUEST"),
together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder,
in which the shares of Common Stock should be issued and (ii) direct the
Conversion Agent (a) to exchange such Securities for a portion of the
Debentures held by the Trust (at the rate of exchange specified in the
preceding paragraph) and (b) to immediately convert such Debentures on
behalf of such Holder, into Common Stock (at the conversion rate specified
in the preceding paragraph). The Conversion Agent shall notify the Trust of
the Holder's election to exchange Securities for a portion of the
Debentures held by the Trust and the Trust shall, upon receipt of such
notice, deliver to the Conversion Agent the appropriate principal amount of
Debentures for exchange in accordance with this Section. The Conversion
Agent shall thereupon notify Viatel of the Holder's election to convert
such Debentures into shares of Common Stock. Holders of Securities at the
close of business on a Distribution record date will be entitled to receive
the Distribution payable on such securities on the corresponding
Distribution payment date notwithstanding the conversion of such Securities
following such record date but prior to such distribution payment date;
provided, however, that if the date of any redemption of the related
Debentures falls between such record date and the related Distribution
payment date, the amount of such Distribution shall include accumulated and
unpaid Distributions accrued to but excluding such date of redemption, and
such payment shall be made to the converting Holder. Holders who convert
Securities after April 15, 2014 shall be paid accrued and unpaid
Distributions payable on such Securities within 5 Business Days of the
conversion of such Securities. Except as provided above, neither the Trust
nor the Sponsor will make, or be required to make, any payment, allowance
or adjustment upon any conversion on account of any accumulated and unpaid
Distributions accrued on the Securities (including any Additional Amounts
accrued thereon) surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common Stock issued upon
such conversion, except to the extent that such shares are held of record
on the record date for any such distributions. Securities shall be deemed
to have been converted immediately prior to the close of business on the
day on which a Notice of Conversion relating to such Securities is received
by the Trust in accordance with the foregoing provision (the "CONVERSION
DATE"). The Person or Persons entitled to receive Common Stock issuable
upon conversion of the Debentures shall be treated for all purposes as the
record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, Viatel shall issue and deliver
at the office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion,
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together with the cash payment, if any, in lieu of any fraction of any
share to the Person or Persons entitled to receive the same, unless
otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints The
Bank of New York as "Conversion Agent" for the purpose of effecting the
conversion of Securities in accordance with this Section. In effecting the
conversion and transactions described in this Section, the Conversion Agent
shall be acting as agent of the Holders of Securities directing it to
effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Securities from time to time for Debentures held
by the Trust in connection with the conversion of such Securities in
accordance with this Section and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Section and to deliver to
the Trust a new Debenture or Debentures for any resulting unconverted
principal amount.
(d) No fractional shares of Common Stock will be issued as a result of
conversion of Securities, but in lieu thereof such fractional interest will
be paid in cash by Viatel, in an amount based on the Closing Price of the
Common Stock on the date such Securities are surrendered for conversion, to
the Conversion Agent, which in turn will make such payment to the Holder or
Holders of Securities so converted.
(e) Viatel shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar
rights, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all the Debentures then outstanding.
Notwithstanding the foregoing, Viatel shall be entitled to deliver upon
conversion of Debentures, shares of Common Stock reacquired and held in the
treasury of Viatel (in lieu of the issuance of authorized and unissued
shares of Common Stock), so long as any such treasury shares are free and
clear of all liens, charges, security interests or encumbrances. Any shares
of Common Stock issued upon conversion of the Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The Trust
shall deliver the shares of Common Stock received upon conversion of the
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States withholding
taxes. Each of Viatel and the Trust shall prepare and shall use its best
efforts to obtain and keep in force such governmental or regulatory permits
or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of Common
Stock (and all requirements to list Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable Viatel
to lawfully issue Common Stock to the Trust upon conversion of the
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Debentures and the Trust to lawfully deliver Common Stock to each Holder
upon conversion of the Securities.
(f) Viatel will pay any and all taxes that may be payable in respect
of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. Viatel shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in
which the Securities so converted were registered, and no such issue or
delivery shall be made unless and until the person requesting such issue
has paid to the Trust the amount of any such tax, or has established to the
satisfaction of the Trust that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities or
as set forth in this Annex I to the Declaration or to the Declaration
itself or otherwise require the Institutional Trustee or the Trust to pay
any amounts on account of such withholdings.
(h) The term "Closing Price" with respect to any security on any day
means the last reported sale price, regular way on such day, or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the NYSE
Composite Tape, or, if such security is not listed or admitted to trading
on the NYSE, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not
listed or admitted to trading on a national securities exchange, on the
National Market System of the National Association of Securities Dealers,
Inc., or, if such security is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which such security
is listed or admitted to trading or quoted, or, if not listed or admitted
to trading or quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of such security in
the over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished by
any NYSE member firm selected from time to time by the board of Directors
(or any committee duly authorized by the Board of Directors) of the
Debenture Issuer for that purpose or, if not so available in such manner,
as otherwise determined in good faith by the Board of Directors (or any
committee duly authorized by the Board of Directors) of the Debenture
Issuer.
6. VOTING AND OTHER RIGHTS - CONVERTIBLE PREFERRED SECURITIES.
(a) Except as provided under Sections 6(b) and 8 of this Annex I to the
Declaration and as otherwise required by law and the Declaration, the Holders of
the Convertible Preferred Securities will not have voting rights.
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(b) Subject to the requirements set forth in this paragraph, the Holders of
a Majority in liquidation amount of the Convertible Preferred Securities then
outstanding, voting separately as a class, may direct the time, method, and
place of conducting any proceeding for any remedy available to the Institutional
Trustee, or may direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available under the Indenture with respect to the Debentures, (ii) waive any
past default and its consequences that is waivable under Section 5.9 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, provided, however,
that if an Event of Default under the Indenture has occurred and is continuing
then the holders of 25% of the aggregate liquidation amount of the Convertible
Preferred Securities then outstanding may direct the Institutional Trustee to
declare the principal of and interest on the Debentures immediately due and
payable; and provided, further, that, where a consent under the Indenture would
require the consent or act of the Holders of greater than a majority of the
Holders in principal amount of Debentures then outstanding (a "SUPER MAJORITY")
affected thereby, the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Convertible Preferred Securities which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
then outstanding. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Convertible
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any remedy available to the Institutional Trustee as set
forth above, the Institutional Trustee shall not take any action in accordance
with the directions of the Holders of the Convertible Preferred Securities under
this paragraph unless the Institutional Trustee has obtained an opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust as a result of such action. If
the Institutional Trustee fails to enforce its rights under the Debentures, any
Holder of Convertible Preferred Securities may, to the fullest extent permitted
by law, institute a legal proceeding against any Person to enforce the
Institutional Trustee's rights under the Debentures. If a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Convertible Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Convertible Preferred
Securities of such Holder (a "DIRECT ACTION") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of Common Securities will be subrogated to the rights of
such Holder of Convertible Preferred Securities to the extent of any payment
made by the Issuer to such Holder of Convertible Preferred Securities in such
Direct Action. Except as provided in the preceding sentences, the Holders of
Convertible Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
I-13
<PAGE>
Any approval or direction of Holders of Convertible Preferred Securities
may be given at a separate meeting of Holders of Convertible Preferred
Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees
will cause a notice of any meeting at which Holders of Convertible Preferred
Securities are entitled to vote, or of any matter upon which action by written
consent of such Holders is to be taken, to be mailed to each Holder of record of
Convertible Preferred Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Convertible Preferred Securities
will be required for the Trust to redeem and cancel Convertible Preferred
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.
Notwithstanding that Holders of Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Convertible Preferred Securities that are owned by the Sponsor or any
Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
7. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under Sections 7(b), 7(c) and 8 of this Annex I of
the Declaration and as otherwise required by law and the Declaration, the
Holders of the Common Securities will not have voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after any Event of
Default with respect to the Convertible Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 5.9 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable, provided that, where a consent or
action under the Indenture would require the consent or act of the relevant
Super Majority, the Institutional Trustee may only give such consent or take
I-14
<PAGE>
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. The
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Convertible Preferred Securities. Other
than with respect to directing the time, method and place of conducting any
remedy available to the Institutional Trustee or the Debenture Trustee as set
forth above, the Institutional Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under this paragraph
unless the Institutional Trustee has obtained an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
Holder of Common Securities may, to the fullest extent permitted by law,
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter upon which
action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Common Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
8. AMENDMENTS TO DECLARATION AND INDENTURE.
(a) In addition to any requirements under Section 12.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than as described in Section 8.1 of the
Declaration, then the Holders of outstanding Securities voting together as a
single class, will be entitled to vote on such amendment or proposal (but not on
any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities then outstanding affected thereby;
I-15
<PAGE>
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Convertible Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities then outstanding.
(b) In the event the consent of the Institutional Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Securities then outstanding, voting
together as a single class; provided, however, that where a consent under the
Indenture would require the consent of the relevant Super Majority, the
Institutional Trustee may only give such consent at the direction of the Holders
of at least the proportion in liquidation amount of the Securities then
outstanding which the relevant Super Majority represents of the aggregate
principal amount of the Debentures then outstanding; provided, further, that the
Institutional Trustee shall not take any action in accordance with the
directions of the Holders of the Securities under this Section 8(b) unless the
Institutional Trustee has obtained an opinion of nationally recognized
independent tax counsel experienced in such matters to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust as a result of such action.
9. PRO RATA.
A reference in these terms of the Securities to any distribution or
treatment as being "PRO RATA" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first in cash to each Holder of the
Convertible Preferred Securities pro rata according to the aggregate liquidation
amount of Convertible Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Convertible Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Convertible Preferred Securities, to each Holder of Common Securities pro
rata according to the aggregate liquidation amount of Common Securities held by
the relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
10. RANKING.
The Convertible Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where a
I-16
<PAGE>
Declaration Event of Default occurs and is continuing, the rights of Holders of
the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Convertible Preferred Securities.
11. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.
Each Holder of Convertible Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Convertible Preferred
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
12. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no preemptive rights to subscribe
for any additional securities.
13. MISCELLANEOUS.
These terms constitute a part of the Declaration. The Sponsor will provide
a copy of the Declaration, the Convertible Preferred Securities Guarantee or the
Common Securities Guarantee (as may be appropriate), and the Indenture to a
Holder without charge on written request to the Sponsor at its principal place
of business.
<PAGE>
EXHIBIT A-1
[FORM OF CONVERTIBLE PREFERRED SECURITY CERTIFICATE]
[IF THE CONVERTIBLE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT
- - - THIS CONVERTIBLE PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE DECLARATION HEREIN AFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY. THIS
CONVERTIBLE PREFERRED SECURITY IS EXCHANGEABLE FOR CONVERTIBLE PREFERRED
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CONVERTIBLE PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS
CONVERTIBLE PREFERRED SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CONVERTIBLE PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CONVERTIBLE PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
CERTIFICATE NUMBER:
NUMBER OF CONVERTIBLE PREFERRED SECURITIES:
CUSIP NO.: [ ]
[COMMON CODE: . - ONLY IF REGULATION S]
A1-1
<PAGE>
Certificate Evidencing Convertible Preferred Securities
of
VIATEL FINANCING TRUST I
[PRIOR TO THE TRANSFER RESTRICTION TERMINATION DATE, ANY CERTIFICATE
EVIDENCING A CONVERTIBLE PREFERRED SECURITY SHALL BEAR A LEGEND IN SUBSTANTIALLY
THE FOLLOWING FORM, UNLESS OTHERWISE AGREED BY THE REGULAR TRUSTEES (WITH
WRITTEN NOTICE TO THE INSTITUTIONAL TRUSTEE): THE SECURITY EVIDENCED HEREBY 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 IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION
OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR IF THIS SECURITY IS
CONVERTIBLE INTO COMMON STOCK THE COMMON STOCK ISSUABLE UPON CONVERSION OR
EXCHANGE OF THIS SECURITY EXCEPT (A) TO VIATEL, INC. (THE "COMPANY") OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (D) TO AN "INSTITUTIONAL ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF
THIS CERTIFICATE EVIDENCES COMMON STOCK, THE TRANSFER AGENT FOR THE COMMON
STOCK), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT), (E)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT
OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), 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 FOR THE CONVERTIBLE
A1-2
<PAGE>
PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF
THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR VIATEL FINANCIAL TRUST I (THE "TRUST") 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). IF THIS CERTIFICATE DOES NOT EVIDENCE COMMON STOCK AND IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR
THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE
MAY BE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY
OR THE TRUST 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. THIS LEGEND WILL BE REMOVED
AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER 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.]
7 3/4% Trust Convertible Preferred Securities (liquidation amount $50 per
Trust Convertible Preferred Security)
Viatel Financing Trust I, a statutory business trust created under the laws
of the State of Delaware (the "TRUST"), hereby certifies that __________________
(the "HOLDER") is the registered owner of convertible preferred securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the 7% Trust Convertible Preferred Securities (liquidation
amount $50 per Trust Convertible Preferred Security) (the "CONVERTIBLE PREFERRED
SECURITIES"). The Convertible Preferred Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other
terms and provisions of the Convertible Preferred Securities represented hereby
are issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of April 12, 2000, as
the same may be amended from time to time (the "DECLARATION"), including the
designation of the terms of the Convertible Preferred Securities as set forth in
Annex I to the Declaration.
A1-3
<PAGE>
Capitalized terms used herein but not defined shall have the meaning given
them in the Declaration. The Holder is entitled to the benefits of the
Convertible Preferred Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Convertible Preferred
Securities Guarantee and the Indenture to the Holder without charge upon written
request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Convertible Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
Unless the Institutional Trustee's Certificate of Authentication hereon has
been properly executed, these Convertible Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate this 12th day
of April, 2000.
Viatel Financing Trust I
By:
-----------------------------------------
Name:
Title: Regular Trustee
Solely as trustee and not in his
individual capacity
A1-4
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
INSTITUTIONAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Preferred Securities referred to in the
within-mentioned Declaration.
Dated: April __, 2000
THE BANK OF NEW YORK,
as Institutional Trustee or as Authentication Agent
By: By:
------------------------------- -----------------------------------
Authorized Signatory Authorized Signatory
A1-5
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Preferred Security will be fixed
at a rate per annum of 7 3/4% (the "COUPON RATE") of the stated liquidation
amount of $50 per Preferred Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Distributions
in arrears for more than one quarter will bear interest thereon compounded
quarterly at the Coupon Rate (to the extent permitted by applicable law). The
term "Distributions" as used herein includes such cash distributions and any
such interest payable unless otherwise stated. A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Convertible
Preferred Securities will be cumulative, will accrue from April 12, 2000 and
will be payable quarterly in arrears, on January 15, April 15, July 15 and
October 15 of each year, commencing on July 15, 2000, which payment dates shall
correspond to the interest payment dates on the Debentures, to Holders of record
at the close of business on the regular record date for such Distribution which
shall be the close of business 15 days prior to such Distribution payment date
unless otherwise provided in the Declaration. The Debenture Issuer has the right
under the Indenture to defer payments of interest by extending the interest
payment period from time to time on the Debentures for a period not exceeding 20
consecutive quarters (each an "EXTENSION PERIOD"); provided that no Extension
Period shall last beyond the date of the maturity or any redemption date of the
Debentures and, as a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at the Coupon
Rate compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity or any redemption date of the Debentures.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
The Convertible Preferred Securities shall be redeemable as provided in the
Declaration.
The Convertible Preferred Securities shall be convertible into shares of
Common Stock, through (i) the exchange of Convertible Preferred Securities for a
portion of the Debentures and (ii) the immediate conversion of such Debentures
into Debenture Issuer Common Stock, in the manner and according to the terms set
forth in the Declaration.
A1-6
<PAGE>
CONVERSION REQUEST
To: The Bank of New York,
as Institutional Trustee of Viatel Financing Trust I
The undersigned owner of these Convertible Preferred Securities hereby
irrevocably exercises the option to convert these Convertible Preferred
Securities, or the portion below designated, into Common Stock of Viatel, Inc.
(the "COMMON STOCK") in accordance with the terms of the Amended and Restated
Declaration of Trust (the "DECLARATION"), dated as of April 12, 2000, by Michael
J. Mahoney, Allan L. Shaw and James P. Prenetta, as Regular Trustees, The Bank
of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Institutional Trustee, Viatel, Inc., as Sponsor, and by the Holders, from time
to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to the Declaration. Pursuant to the aforementioned exercise of
the option to convert these Convertible Preferred Securities, the undersigned
hereby directs the Conversion Agent (as that term is defined in the Declaration)
to (i) exchange such Convertible Preferred Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration) and (ii) immediately convert
such Debentures on behalf of the undersigned, into Common Stock (at the
conversion rate specified in the terms of the Convertible Preferred Securities
set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date: _______________, ____
in whole _____ in part _____
Number of Convertible Preferred Securities to be
converted: ____________________
If a name or names other than the undersigned, please
indicate in the spaces below the name or names in
which the shares of Common Stock are to be issued,
along with the address or addresses of such person or
persons
A1-7
<PAGE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Signature Guarantee:/*/-------------------------------
- - --------------------
/*/(Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A1-8
<PAGE>
[FORM OF ASSIGNMENT FOR DEFINITIVE CONVERTIBLE
PREFERRED SECURITY]
For value received, ______________________ hereby sell(s), assign(s) and
transfer(s) unto ________________________________________________________
(Please insert social security or other taxpayer identification number of
assignee.)
the within security and hereby irrevocably constitutes and appoints ____________
attorney to transfer the said security on the books of the Company, with full
power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
[_] To Viatel, Inc. or a subsidiary thereof; or
[_] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[_] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended; or
[_] Pursuant to an effective registration statement.
and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "AFFILIATE"):
A1-9
<PAGE>
[_] The transferee is an Affiliate of the Company.
Dated: ___________________________
Signature(s) --------------------------------------------
--------------------------------------------
--------------------------------------------
Signature Guarantee/*/
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
- - -------------------
/*/ (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A1-10
<PAGE>
SCHEDULE I
CHANGES TO NUMBER OF CONVERTIBLE PREFERRED SECURITIES
IN GLOBAL SECURITY
Number of Convertible
Preferred Securities by
which this Global
Security Is To Be Remaining Convertible
Reduced or Increased, Preferred Securities
and Reason for Represented by this Notation
Date Reduction or Increase Global Security Made By
- - ----------- ----------------------- --------------------- --------
A1-11
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
CERTIFICATE NUMBER:
NUMBER OF COMMON SECURITIES:
Certificate Evidencing Common Securities
of
VIATEL FINANCING TRUST I
7 3/4% Common Securities
(liquidation amount $50 per Common Security)
THE SECURITY EVIDENCED HEREBY 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 UNLESS SUCH OFFER AND SALE ARE
REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO THE
RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.
Viatel Financing Trust I, a statutory business trust created under the laws
of the State of Delaware (the "TRUST"), hereby certifies that Viatel, Inc. (the
"HOLDER") is the registered owner of common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the 7 3/4%
Common Securities (liquidation amount $50 per Common Security) (the "COMMON
SECURITIES"). The Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities represented hereby are issued and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of April 12, 2000, as the same may be
amended from time to time (the "DECLARATION"), including the designation of the
terms of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given
them in the Declaration. The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Common Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Trust at its principal place
of business.
A2-1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this 12th day
of April, 2000.
Viatel Financing Trust I
By: _____________________________
Name:
Title: Regular Trustee
Solely as trustee and not in his individual
capacity
A2-2
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum, of 7 3/4% (the "COUPON RATE") of the stated liquidation amount of $50 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Institutional Trustee. Distributions in arrears for more than
one quarter will bear interest thereon compounded quarterly at the Coupon Rate
(to the extent permitted by applicable law). The term "Distributions" as used
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed 30-day per month.
Except as otherwise described below, Distributions on the Common Securities
will be cumulative, will accrue from April 12, 2000 and will be payable
quarterly in arrears, on January 15, April 15, July 15 and October 15 of each
year, commencing on July 15, 2000, which payment dates shall correspond to the
interest payment dates on the Debentures, to Holders of record at the close of
business on the regular record date for such Distribution which shall be the
close of business 15 days prior to such Distribution payment date unless
otherwise provided in the Declaration. The Debenture Issuer has the right under
the Indenture to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not exceeding 20
consecutive quarters (each an "EXTENSION PERIOD"), provided that no Extension
Period shall last beyond the date of maturity of the Debentures and, as a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, quarterly Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Coupon Rate compounded
quarterly during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further extend such Extension Period;
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
date of maturity of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for a portion of the Debentures
and (ii) the immediate conversion of such Debentures into Debenture Issuer
Common Stock, in the manner and according to the term set forth in the
Declaration.
A2-3
<PAGE>
CONVERSION REQUEST
To: The Bank of New York,
as Institutional Trustee of Viatel Financing Trust I
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of Viatel, Inc. (the "COMMON STOCK") in accordance
with the terms of the Amended and Restated Declaration of Trust (the
"DECLARATION"), dated as of April 12, 2000, by Michael J. Mahoney, Allan L. Shaw
and James P. Prenetta, as Regular Trustees, The Bank of New York (Delaware), as
Delaware Trustee, The Bank of New York, as Institutional Trustee, Viatel, Inc.,
as Sponsor, and by the Holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to the Declaration.
Pursuant to the aforementioned exercise of the option to convert these Common
Securities, the undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Common Securities for a portion
of the Debentures (as that term is defined in the Declaration) held by the Trust
(at the rate of exchange specified in the terms of the Common Securities set
forth as Annex I to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Common Stock (at the conversion
rate specified in the terms of the Common Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date: _______________, ____
in whole _____ in part _____
Number of Common Securities to be converted:
--------------------
A2-4
<PAGE>
If a name or names other than the undersigned, please indicate
in the spaces below the name or names in which the shares of
Common Stock are to be issued, along with the address or
addresses of such person or persons
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Signature Guarantee:/*/ __________________________
/*/ (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A2-5
<PAGE>
[FORM OF ASSIGNMENT FOR SECURITY OR
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF]
For value received ______________________ hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
(Please insert social security or other taxpayer identification number of
assignee.)
the within security and hereby irrevocably constitutes and appoints ____________
attorney to transfer the said security on the books of the Company, with full
power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
[_] To Viatel, Inc. or a subsidiary thereof; or
[_] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[_] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended; or
[_] Pursuant to an effective registration statement.
and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "AFFILIATE"):
A2-6
<PAGE>
[_] The transferee is an Affiliate of the Company.
Dated: ____________________________
Signature(s)
--------------------------------------
--------------------------------------
--------------------------------------
Signature Guarantee/*/
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
- - ----------------------
/*/ (Signature must be guaranteed by an "eligible guarantor institution,"
that is, a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Conversion Agent, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Conversion Agent in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A2-7
<PAGE>
EXHIBIT B
[FORM OF CONVERTIBLE DEBENTURE]
B-1
<PAGE>
EXHIBIT C
[FORM OF PLACEMENT AGREEMENT]
C-1
COPY
VIATEL, INC.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
Senior Euro Notes Indenture
Dated as of April 20, 2000
12 3/4 % Senior Euro Notes due 2008
<PAGE>
CROSS-REFERENCE TABLE
TIA SECTIONS INDENTURE SECTIONS
ss. 310(a)(1).......7.10
(a)(5).......7.10
(b)..........7.03; 7.08
ss. 311.............7.03
ss. 313(a)..........7.06
(c)..........7.05; 7.06
ss. 314(a)..........4.17
(c)(1).......1.01
(e)..........1.01
ss. 315(a)..........7.02
(b)..........7.05
ss. 316(a)..........6.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of this 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 NOTES
SECTION 2.01. Form and Dating.........................................21
SECTION 2.02. Restrictive Legends.....................................22
SECTION 2.03. Execution, Authentication and Denominations.............25
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 Notes..................27
SECTION 2.08. Special Transfer Provisions.............................29
SECTION 2.09. Replacement Notes.......................................32
SECTION 2.10. Outstanding Notes.......................................32
SECTION 2.11. Temporary Notes.........................................33
SECTION 2.12. Cancellation............................................33
SECTION 2.13. Cusip Numbers...........................................33
SECTION 2.14. Defaulted Interest......................................34
SECTION 2.15. Issuance of Additional Notes............................34
ARTICLE THREE
[RESERVED]
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes........................................34
SECTION 4.02. Maintenance of Office or Agency.........................35
SECTION 4.03. Limitation On Indebtedness..............................35
NOTE: The Table of Contents shall not for any purposes be deemed to be a part of
this Indenture
i
<PAGE>
SECTION 4.04. Limitation On Restricted Payments.......................38
SECTION 4.05. Limitation On Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries..........41
SECTION 4.06. Limitation On the Issuance and Sale of Capital Stock
of Restricted Subsidiaries..............................43
SECTION 4.07. Limitation On Issuances of Guarantees by Restricted
Subsidiaries............................................43
SECTION 4.08. Limitation On Transactions With Shareholders and
Affiliates..............................................44
SECTION 4.09. Limitation On Liens.....................................45
SECTION 4.10. Limitation On Sale-leaseback Transactions...............45
SECTION 4.11. Limitation On Asset Sales...............................46
SECTION 4.12. Repurchase of Notes Upon a Change of Control............47
SECTION 4.13. Existence...............................................47
SECTION 4.14. Payment of Taxes and Other Claims.......................47
SECTION 4.15. Maintenance of Properties and Insurance.................48
SECTION 4.16. Notice of Defaults......................................48
SECTION 4.17. Compliance Certificates.................................48
SECTION 4.18. Commission Reports and Reports to Holders...............48
SECTION 4.19. Waiver of Stay, Extension or Usury Laws.................49
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.............................49
SECTION 5.02. Successor Substituted...................................50
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.......................................51
SECTION 6.02. Acceleration............................................52
SECTION 6.03. Other Remedies..........................................53
SECTION 6.04. Waiver of Past Defaults.................................53
SECTION 6.05. Control by Majority.....................................53
SECTION 6.06. Limitation On Suits.....................................53
SECTION 6.07. Rights of Holders to Receive Payment....................54
ii
<PAGE>
SECTION 6.08. Collection Suit by Trustee..............................54
SECTION 6.09. Trustee May File Proofs of Claim........................55
SECTION 6.10. Priorities..............................................55
SECTION 6.11. Undertaking for Costs...................................55
SECTION 6.12. Restoration of Rights and Remedies......................56
SECTION 6.13. Rights and Remedies Cumulative..........................56
SECTION 6.14. Delay or Omission Not Waiver............................56
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General.................................................56
SECTION 7.02. Certain Rights of Trustee...............................57
SECTION 7.03. Individual Rights of Trustee............................58
SECTION 7.04. Trustee's Disclaimer....................................58
SECTION 7.05. Notice of Default.......................................58
SECTION 7.06. Reports by Trustee to Holders...........................59
SECTION 7.07. Compensation and Indemnity..............................59
SECTION 7.08. Replacement of Trustee..................................60
SECTION 7.09. Successor Trustee by Merger, Etc........................60
SECTION 7.10. Eligibility.............................................61
SECTION 7.11. Money Held in Trust.....................................61
SECTION 7.12. Withholding Taxes.......................................61
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations................61
SECTION 8.02. Defeasance and Discharge of Indenture...................62
SECTION 8.03. Defeasance of Certain Obligations.......................63
SECTION 8.04. Application of Trust Money..............................64
SECTION 8.05. Repayment to Company....................................64
SECTION 8.06. Reinstatement...........................................65
SECTION 8.07. Defeasance and Certain Other Events of Default..........65
iii
<PAGE>
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders..............................65
SECTION 9.02. With Consent of Holders.................................66
SECTION 9.03. Revocation and Effect of Consent........................67
SECTION 9.04. Notation on or Exchange of Notes........................67
SECTION 9.05. Trustee to Sign Amendments, Etc.........................68
SECTION 9.06. Conformity With Trust Indenture Act.....................68
ARTICLE TEN
[RESERVED]
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939.............................68
SECTION 11.02. Notices.................................................68
SECTION 11.03. Certificate and Opinion as to Conditions Precedent......70
SECTION 11.04. Statements Required in Certificate or Opinion...........70
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar.............70
SECTION 11.06. Payment Date Other Than a Business Day..................70
SECTION 11.07. Governing Law; Submission to Jurisdiction; Agent
for Service.............................................71
SECTION 11.08. No Adverse Interpretation of Other Agreements...........71
SECTION 11.09. No Recourse Against Others..............................71
SECTION 11.10. Successors..............................................71
SECTION 11.11. Duplicate Originals.....................................71
SECTION 11.12. Separability............................................71
SECTION 11.13. Table of Contents, Headings, Etc........................72
SECTION 11.14. Method of Payment.......................................72
SECTION 11.15. Judgment Currency.......................................72
EXHIBIT A Form of Restricted Global Note...........................A-1
EXHIBIT B Form of Regulation S Global Note.........................B-1
EXHIBIT C Form of U.S. Certificated Note...........................C-1
EXHIBIT D Form of Certificate......................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S.......................E-1
iv
<PAGE>
EXHIBIT F Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors................F-1
v
<PAGE>
INDENTURE, dated as of April 20, 2000, between VIATEL, INC., a
Delaware corporation, as issuer (the "COMPANY"), and THE BANK OF NEW YORK, a New
York banking corporation, as trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 12 3/4% Senior Euro
Notes due 2008 (the "NOTES") issuable as provided in this Indenture. Pursuant to
the terms of a Placement Agreement dated as of April 14, 2000 (the "PLACEMENT
AGREEMENT") between the Company and Morgan Stanley & Co. International Limited,
as the manager for itself and the several placement agents named on Schedule I
thereto (the "MANAGER"), the Company has agreed to issue and sell an aggregate
of Euro 300,000,000 of Notes.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the legal, valid and binding obligations of the Company as hereinafter
provided.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and 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.
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by the Company or a Restricted Subsidiary and not Incurred
in connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with generally accepted accounting
principles; PROVIDED that the following items shall be excluded in computing
Adjusted Consolidated Net Income (without duplication): (i) the net income (or
loss) of any Person that is not a Restricted Subsidiary, except (x) with respect
to net income, to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries by such
Person during such period and (y) with respect to net losses, to the extent of
the amount of Investments made by the Company or any Restricted Subsidiary in
1
<PAGE>
such Person 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 hereof (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 the Company or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by the
Company 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 and sales of capacity or
dark fibers; (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 hereof, any amount paid or accrued as dividends on Preferred Stock
of the Company or any Restricted Subsidiary owned by Persons other than the
Company and any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses; and (vii) any compensation expense paid or payable solely
with Capital Stock (other than Disqualified Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Stock) of the Company.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company 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 the Company 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 most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.18 hereof.
"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) hereof.
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
2
<PAGE>
with the Company or any of its Restricted Subsidiaries; PROVIDED that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company or any of its Restricted Subsidiaries on the date of
such investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company 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 the
Company or any of its Restricted Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company
or any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company 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 a
division or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed by
Article Five hereof; PROVIDED that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 4.04 hereof, (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1 million in any transaction or series
of related transactions, (d) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received would constitute
property or assets of the kind described in clause (B) of Section 4.11 hereof,
(e) any liquidation of Temporary Cash Investments, (f) a transfer, directly or
indirectly, of receivables or other payment rights arising from a transfer of
indefeasible rights of use or dark fiber, which transfer of receivables or
rights is to a special purpose entity created for the purpose of issuing
securities to be paid or redeemed from, or beneficial interests in, the cash or
revenues generated from the assets transferred; PROVIDED that the consideration
received by the Company is at least equal to the fair market value of the asset
transferred and the proceeds are used by the Company (A) to repay unsubordinated
Indebtedness of the Company owed to a Person other than the Company or a
Restricted Subsidiary, (B) to invest in the manner described in clause (i)(B) of
Section 4.11 hereof or (C) for working capital purposes or (g) other transfers
of capacity or dark fiber.
"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
3
<PAGE>
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 the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York, in the city of the Corporate
Trust Office of the Trustee or in the city in which any Paying Agent or
Registrar is located are authorized or required 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 outstanding on the
Closing Date or issued thereafter, 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.
"Capitalized Lease Obligations" means the discounted present value of
the rental obligations under a Capitalized Lease.
"Certificated Notes" has the meaning provided in Section 2.01 hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes
the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of more than 50% of the total voting power of the Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
for election by the Company's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Clearstream" means Clearstream Banking, SOCIETE ANONYME.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
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"Common Depositary" means The Bank of New York, London Branch, or any
of its successors acting in the capacity of common depositary for Euroclear and
Clearstream.
"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 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.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to the applicable provisions of
this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of
the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
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, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) 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 the Company 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 percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
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 interest
in respect of Indebtedness that is Guaranteed or secured by the Company or any
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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 the Company and its Restricted Subsidiaries during such
periods).
"Consolidated Leverage Ratio" means, on any Transaction Date, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) four times Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission or provided to the Trustee pursuant to Section 4.18 hereof; PROVIDED
that, in making the foregoing calculation, (A) PRO FORMA effect shall be given
to the Incurrence or repayment of any Indebtedness to be Incurred or repaid on
the Transaction Date; (B) PRO FORMA effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving PRO FORMA effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the then
most recent four fiscal quarters through the Transaction Date (the "REFERENCE
PERIOD"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and (C) PRO FORMA effect shall be given to
asset dispositions and asset acquisitions (including giving PRO FORMA effect to
the application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period and that
would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; PROVIDED
that to the extent that clause (B) or (C) of this sentence requires that PRO
FORMA effect be given to an Asset Acquisition or Asset Disposition, such PRO
FORMA calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company 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),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of the Company 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).
"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 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
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"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"Depository" shall mean, with respect to the Regulation S Global and
European 144A Global, Euroclear and Clearstream and, with respect to the DTC
Rule 144A Global, DTC.
"Disqualified 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 Notes, (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 Notes 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 Notes; PROVIDED that any Capital
Stock that would not constitute Disqualified 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 Notes shall not constitute
Disqualified 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 Sections 4.11 and 4.12 hereof,
and such Capital Stock, or the agreements or instruments governing the
redemption rights thereof, specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.11 and 4.12 hereof.
"DTC" means The Depository Trust Company, its nominees, and their
respective successors.
"DTC Noteholder" has the meaning provided in Section 11.14.
"DTC Rule 144A Global" has the meaning provided in Section 2.01.
"Euroclear" means Morgan Guaranty Trust Company of New York (Brussels
office) as operator of the Euroclear system and any successor thereto.
"Euro Paying Agent" means The Bank of New York, London Branch, located
at 46 Berkeley Street, London WIX 6AA, United Kingdom and any successor paying
agent.
"European Government Obligations" means the securities that are
directly and unconditionally obligations of the Belgian, Dutch, French, German
or Swiss government which are not callable or redeemable at the option of the
issuer thereof (PROVIDED that at the time of determination the conversion rate
between the sovereign currency of such country and the Euro is fixed) and shall
also include a depository receipt issued by a bank or trust company as custodian
with respect to any such European Government Obligation or a specific payment of
interest on or principal of any such European Government Obligation held by such
custodian for the account of the holder of a depository receipt; PROVIDED that
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(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 European Government
Obligation or the specific payment of interest on or principal of the European
Government Obligation evidenced by such depository receipt.
"European 144A Global" has the meaning provided in Section 2.01.
"Event of Default" has the meaning provided in Section 6.01 hereof.
"Excess Proceeds" has the meaning provided in Section 4.11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means any notes of the Company containing terms
identical to the Notes (except that such Exchange Notes (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 Notes pursuant to the Registration Rights Agreement and this Indenture.
"Existing Stockholder Agreements" means the Stock Purchase Agreement,
dated as of September 30, 1993, between the Company and S-C V-Tel, the Stock
Purchase Agreement dated as of April 5, 1994, between the Company and COMSAT,
the S-C V-Tel Shareholders' Agreement and the COMSAT Shareholders' Agreement,
and, in each case, any amendments to such agreements.
"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, whose determination shall
be conclusive if evidenced by a Board Resolution; PROVIDED that, for purposes of
clause (viii) of the second paragraph of Section 4.03 hereof, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"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 or referred
to 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 and with other provisions of this
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Indenture shall be made without giving effect to (i) the amortization or
write-off of any expenses incurred in connection with the offering of the Notes,
and (ii) except as otherwise provided, the amortization of any amounts required
or permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness 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 of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), 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 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
hereof.
"Holder" or "Noteholder" means the registered holder of any Note.
"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 Acquired Indebtedness; 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, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (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 Capitalized
Lease Obligations of such Person, (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
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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 the maximum liability at such time with respect to contingent
obligations upon the occurrence of the contingency giving rise to the
obligation, which, in the case of a Guarantee, shall be the outstanding balance
of the Guaranteed Indebtedness, 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 remaining unamortized portion of the original
issue discount of such Indebtedness at the time of its issuance as determined in
conformity with GAAP, (B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the interest
on such Indebtedness shall not be deemed to be "Indebtedness" so long as such
money is held to secure the payment of such interest and (C) that Indebtedness
shall not include any liability for federal, state, local or other taxes.
"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.
"Institutional Accredited Investor" shall mean an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date on
April 15 and October 15 of each year, commencing October 15, 2000.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, option or future contract or other
similar agreement or arrangement.
"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 extensions of credit to customers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of the Company 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 the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of Section
4.06 hereof; PROVIDED that the fair market value of the Investment remaining in
any Person that has ceased to be a Restricted Subsidiary shall not exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made less the net reduction of such Investments. For
purposes of the definition of "Unrestricted Subsidiary" and Section 4.04 hereof,
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(i) "Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Judgment Currency" has the meaning provided in Section 11.15.
"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 or any
agreement to give any security interest).
"Manager" means Morgan Stanley & Co. International Limited, as lead
manager for the several initial purchasers named in the Placement Agreement.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"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, 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 the Company 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 the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made or required to be 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, (iv) payments made or required
to be made to Persons having a beneficial interest in the assets subject to the
Asset Sale, and (v) appropriate amounts to be provided by the Company 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 the Company or any Restricted Subsidiary) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
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other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof.
"Non-U.S. Person" means a Person who is not a U.S. person, as defined
in Regulation S.
"Notes" means any of the Notes, 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 "Notes" shall include any Exchange
Notes to be issued and exchanged for any Notes pursuant to the Registration
Rights Agreement and this Indenture and, for purposes of this Indenture, all
Notes and Exchange Notes shall vote together as one series of Notes under this
Indenture.
"Note Register" has the meaning provided in Section 2.04.
"Offer to Purchase" means an offer to purchase Notes by the Company
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
Notes 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 Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note 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 Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
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 or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; PROVIDED
that each Note purchased and each new Note issued shall be in a principal amount
of Euro 1,000 or an integral multiple thereof. On the Payment Date, the Company
shall (i) accept for payment on a PRO RATA basis Notes 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 Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; PROVIDED that each Note
purchased and each new Note issued shall be in a principal amount of Euro 1,000
or an integral multiple thereof. The Company will publicly announce the results
of an Offer to Purchase as soon as practicable after the Payment Date. The
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Trustee shall act as the Paying Agent for an Offer to Purchase. The Company 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 Company is required to repurchase Notes pursuant to an
Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"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).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Participant" means, with respect to DTC, Euroclear or Clearstream, a
Person who has an account with DTC, Euroclear or Clearstream, respectively (and,
with respect to DTC, shall include Euroclear and Clearstream).
"Paying Agent" has the meaning provided in Section 2.04, except that,
for the purposes of Article Eight, the Paying Agent shall not be the Company or
a Subsidiary of the Company or an Affiliate of any of them).
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent Regulation S Global" has the meaning provided in Section
2.01.
"Permitted Investment" means (i) an Investment in the Company or 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 the Company or
a Restricted Subsidiary; PROVIDED that such Person's primary business is
related, ancillary or complementary to the businesses of the Company or any of
its Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (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) Investments received in the bankruptcy or
reorganization of a Person or any exchange of such Investment with the issuer
thereof or taken in settlement of or other resolution of claims or disputes or
acquired as the result of foreclosure of any secured Investment and, in each
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case, extensions, modifications and renewal thereof; (v) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
worker's compensation, performance and other similar deposits; (vi) Interest
Rate Agreements and Currency Agreements designed solely to protect the Company
or its Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vii) loans or advances to officers or employees of the
Company or any Restricted Subsidiary that do not in the aggregate exceed $1
million at any time outstanding; (viii) investments consisting of securities
issued by or beneficial interests in a special purpose entity referred to in
clause (f) of the definition of "Asset Sale" and which are received in exchange
for assets that are transferred by the Company or a Restricted Subsidiary to
such special purpose entity and used for the purpose referred to therein; (ix)
Investments as a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.11 hereof, and (x) securities set aside
at the time of Incurrence of Indebtedness in order to prefund the payment of
interest on such Indebtedness.
"Permitted Joint Venture" means any joint venture between the Company
or any Restricted Subsidiary and (i) any Person, other than a Subsidiary,
engaged in the provision or sale of telecommunications services or (ii) any
Person engaged as an independent sale representative of the Company; PROVIDED
that, prior to making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the Company.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims not yet subject to penalty or 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
and common law 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 the Company or
any of its Restricted Subsidiaries; (vi) Liens (including extensions and
renewals thereof) upon real or personal (whether tangible or intangible)
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 hereof, to finance or refinance the cost (including the cost of
design, development, acquisition, construction, installation, improvement,
transportation or integration) of the item or related group of items of property
or assets subject thereto or the business in which such property or assets are
used and such Lien is created prior to, at the time of or within eighteen months
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after the later of the acquisition, the completion of (except in the case of
refinancing) construction or the commencement of full operation of such
property, (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 or group of items of property or
assets and any improvements on such item; (vii) leases or subleases granted to
others that do not materially interfere with the ordinary course of business of
the Company 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 the Company 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 Capital Stock or Indebtedness
of, any Person existing at the time such Person becomes, or becomes a part of,
any Restricted Subsidiary; PROVIDED that such Liens do not extend to or cover
any property or assets of the Company or any Restricted Subsidiary other than
the property or assets acquired; (xii) Liens in favor of the Company or any
Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against the Company 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 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 solely to protect the Company or any of its Restricted Subsidiaries
from fluctuations in interest rates, currencies 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 the Company or any of
its Restricted Subsidiaries in the ordinary course of business in accordance
with the past practices of the Company and its Restricted Subsidiaries prior to
the Closing Date; (xviii) Liens on or sales of receivables or other rights to
payment; (xix) Liens secured with assets that have a fair market value not in
excess of 15% of Adjusted Consolidated Net Tangible Assets when such Liens are
Incurred; (xx) any extension, renewal, or replacement (or successive extensions,
renewals, or replacements) in whole or in part of Liens described in clauses (i)
through (xix) above; and (xxi) Liens on securities that are referred to in
clause (x) of the definition of Permitted Investments.
"Permitted Wholesale Consortium" means any Person in which the Company
invests for the principal purpose of leasing or otherwise acquiring transmission
rights with respect to long distance telecommunications; PROVIDED that, prior to
making any Investment in such a Person, the Company's Board of Directors shall
have determined that such Investment will afford the Company greater economic
benefits than it could otherwise obtain from other sources of transmission
rights.
"Person" means an individual, a corporation, a partnership, a limited
liability company, a joint venture, an association, a trust, an unincorporated
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organization or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Placement Agreement" has the meaning provided in the recitals to this
Indenture.
"Preferred Stock" or "preferred stock" means, with respect to any
Person, any and all shares, interests, participation 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 Notes, 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
Notes in the form set forth in Section 2.02(a).
"Public Equity Offering" means an underwritten primary public offering
of Common Stock of the Company pursuant to an effective registration statement
under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 14, 2000, between the Company and Morgan Stanley &
Co. International Limited, on behalf of itself, Chase Securities Inc. and Credit
Suisse First Boston Corporation relating to the Notes.
"Registration Statement" means any registration statement of the
Company that covers any of the Exchange Notes, 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.
"Regular Record Date" for the interest payable on any Interest Payment
Date means April 1 or October 1 (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.
"Regulation S Certificated Notes" has the meaning provided in Section
2.01.
"Regulation S Global" has the meaning provided in Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
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this Indenture, 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 Global" has the meaning provided in Section 2.01.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"S&P" means Standard & Poor's Ratings Services and its successors.
"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.
"Strategic Subordinated Indebtedness" means Indebtedness of the
Company Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by the
Company or any of its Restricted Subsidiaries, which Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is Incurred, (i) is expressly made subordinate in right of payment
to the Notes and (ii) provides that no payment of principal, premium or interest
on, or any other payment with respect to, such Indebtedness may be made prior to
the payment in full of all of the Company's obligations under the Notes;
PROVIDED that such Indebtedness may provide for and be repaid at any time from
the proceeds of a capital contribution, the sale of Capital Stock (other than
Disqualified Stock) of the Company, or other Strategic Subordinated Indebtedness
Incurred after the Incurrence of such Indebtedness.
"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.
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"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, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition thereof and 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 of America, and which bank or trust company has capital, surplus and
undivided profits aggregating 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 one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year 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 S&P or Moody's, and (vi) shares or other interests in
an investment company the assets of which consist solely of (A) securities of
the type described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Moody's or Fitch Investor
Services, Inc.
"Temporary Regulation S Global" has the meaning provided in Section
2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date this
Indenture was executed, except as provided in Section 9.06; PROVIDED, HOWEVER,
that, in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" or "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company 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) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below; and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; PROVIDED that (A) any Guarantee by the Company 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 the
Company or such Restricted Subsidiary (or both, if applicable) 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, such designation would be permitted under Section 4.04 hereof and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 hereof and
Section 4.04 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred (and shall be deemed
to have been Incurred) for all purposes of this Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Certificated Notes" has the meaning provided in Section 2.01.
"U.S. Notes" has the meaning provided in Section 2.01.
"U.S. Paying Agent" means The Bank of New York and any successor U.S.
Paying Agent.
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"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.
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"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) 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 Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
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;
(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.
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ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate
of authentication with respect thereto shall be substantially in the form
annexed hereto as Exhibit A, in the case of a Restricted Global, Exhibit B, in
the case of the Regulation S Global, and Exhibit C, in the case of a U.S.
Certificated Note. The Notes may have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have letters, notations, legends or endorsements required by
law, stock exchange agreements to which the Company is subject or usage. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note. The Company shall approve
the form of the Notes and any notation, legend or endorsement on the Notes. Each
Note shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibits A, B and C shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company and the Trustee, by its execution
and delivery of this Indenture, expressly agrees to the terms and provisions of
the Notes applicable to it and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued
initially in the form of two or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "RESTRICTED GLOBALS"). The
Restricted Global initially offered and sold in reliance on Rule 144A to holders
electing settlement through DTC (the "DTC RULE 144A GLOBAL") shall be deposited
on behalf of the holders of the Notes represented thereby with the Trustee, at
its New York office, as custodian for DTC, duly executed by the Company and
authenticated by the Trustee as provided herein. The Restricted Global initially
offered and sold in reliance on Rule 144A to holders electing settlement through
Euroclear or Clearstream (the "EUROPEAN 144A GLOBAL") shall be deposited on
behalf of the holders of the Notes represented thereby with the Common
Depositary, as common depositary for Euroclear and Clearstream, and registered
in the name of the Common Depositary or its nominee, duly executed by the
Company and authenticated by the Trustee as provided herein, for credit to the
accounts of Euroclear and Clearstream (or such other accounts as they may
direct). The DTC Rule 144A Global, the European Rule 144A Global and all other
Notes evidencing the debt, or any portion of the debt, initially evidenced by
such Rule 144A Global or European Rule 144A Global, shall collectively be
referred to herein as the "U.S. NOTES." The aggregate principal amount of the
DTC Rule 144A Global may from time to time be increased or decreased by
adjustments made on the records of the Registrar, as hereinafter provided (or by
the issue of a further DTC Rule 144A Global), in connection with a corresponding
decrease or increase in the aggregate principal amount of the European Rule 144A
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Global or the Regulation S Global or in consequence of the issue of Certificated
Notes or additional U.S. Notes, as hereinafter provided. The aggregate principal
amount of the European Rule 144A Global may from time to time be increased or
decreased by adjustments made on the records of the Registrar as hereinafter
provided (or by the issue of a further European Rule 144A Global), in connection
with a corresponding decrease or increase in the aggregate principal amount of
any of the DTC Rule 144A Global or the Regulation S Global or in consequence of
the issue of Certificated Notes or additional U.S. Notes as hereinafter
provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more temporary
global Notes in registered form substantially in the form set forth in Exhibit B
(the "TEMPORARY REGULATION S GLOBAL") registered in the name of a nominee of the
Depository for the accounts of Euroclear and Clearstream, deposited on behalf of
the purchasers of the Notes represented thereby with the Common Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time following May 31, 2000, upon receipt by the Trustee and
the Company of a certificate substantially in the form of Exhibit D hereto, one
or more permanent global Notes in registered form substantially in the form set
forth in Exhibit B (the "PERMANENT REGULATION S GLOBAL" and, together with the
Temporary Regulation S Global, the "REGULATION S GLOBAL") duly executed by the
Company and authenticated by the Trustee as hereinafter provided shall be
deposited with the Common Depositary which shall reflect on its books and
records the date and a decrease in the principal amount of the Temporary
Regulation S Global in an amount equal to the principal amount of the beneficial
interest in the Temporary Regulation S Global transferred. The aggregate
principal amount of a Regulation S Global may from time to time be increased or
decreased by adjustments made in the records of the Trustee, as custodian for
the Depository or its nominee, as herein provided.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" of Euroclear and "The
General Terms and Conditions of Clearstream" and "Customer Handbook" of
Clearstream shall be applicable to interests in the Global Notes that are held
by Agent Members through Euroclear and Clearstream.
Notes which are transferred to Institutional Accredited Investors
which are not QIBs (excluding Non-U.S. Persons) shall be issued in the form of
permanent certificated Notes in registered form in substantially the form set
forth in Exhibit C (the "U.S. CERTIFICATED NOTES"). Notes issued pursuant to
Section 2.07 in exchange for interests in the Regulation S Global shall be in
the form of certificated Notes in registered form substantially in the form set
forth in Exhibit C (the "REGULATION S CERTIFICATED NOTES"). Notes issued
pursuant to Section 2.07 in exchange for interests in a Restricted Global shall
be in the form of the U.S. Certificated Note.
The Regulation S Certificated Notes and the U.S. Certificated Notes
are sometimes collectively referred to herein as the "CERTIFICATED NOTES." The
DTC Rule 144A Global, the European Rule 144A Global and the Regulation S Global
are sometimes collectively herein referred to as the "GLOBAL NOTES."
The definitive Notes 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 Notes may
be listed, all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
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SECTION 2.02. RESTRICTIVE LEGENDS. (a) NOTE LEGENDS. Unless and until
a Note is exchanged for an Exchange Note or otherwise disposed of in connection
with an effective Registration Statement pursuant to the Registration Rights
Agreement, (i) each Restricted Global and U.S. Certificated Note shall bear the
legend set forth below on the face thereof and (ii) each Temporary Regulation S
Global and each Regulation S Certificated Note shall bear the legend set forth
below on the face thereof until at least 41 days after the Closing Date and
receipt by the Company and the Trustee of a certificate substantially in the
form of Exhibit D hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE 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 NOT
A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 903 OF REGULATION S UNDER THE SECURITIES ACT; (2)
AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k)
AS IN EFFECT ON THE DATE OF SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO VIATEL, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) 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 EURO 100,000, AN OPINION OF COUNSEL ACCEPTABLE TO VIATEL, INC.,
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) TO A
PERSON OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S 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 GIVEN 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
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INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE
TRUSTEE AND VIATEL, INC. SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS SUCH PERSONS 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 PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) RESTRICTED GLOBAL NOTE LEGEND. The DTC Rule 144A Global, whether
or not an Exchange Note, shall also bear the following legend on the face
thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO VIATEL, INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN 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
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
(c) REGULATION S GLOBAL NOTE LEGEND. Each European 144A Global and
Regulation S Global, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
THIS NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING
THIS NOTE) IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND
IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1)
THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.08 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN
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WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07 OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.12 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE DELIVERED TO
A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS. Subject to
Article Four, the aggregate principal amount of Notes (including Exchange Notes)
which may be authenticated and delivered under this Indenture is unlimited. The
Notes shall be executed by two Officers of the Company, by facsimile or manual
signature, in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
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 Notes in the aggregate principal
amount specified in such Company Order. Such Company Order shall specify the
amount of Notes to be authenticated, the date on which the issue of Notes is to
be authenticated and, in case of an issuance of Notes pursuant to Section 2.15,
shall certify that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes 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 Company or an Affiliate of the
Company.
The Notes shall be issuable only in registered form without coupons in
principal amount of Euro 1,000 and any integral multiple of Euro 1,000 in excess
thereof.
SECTION 2.04. REGISTRAR AND PAYING AGENT. The Company shall maintain
an office or agency in the City of New York where Notes may be presented for
registration of transfer or for exchange (the "REGISTRAR"), an office or agency
in the City of New York and in the City of London, United Kingdom and, in the
event the Notes are included on the Frankfurt over-the-counter market, in
Frankfurt where Notes may be presented for payment (the "PAYING AGENT"), and an
office or agency where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served, which shall be in the City of New
York and, in the event the Notes are included on the
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Frankfurt over-the-counter market, in Frankfurt. The Company shall cause the
Registrar to keep a register of the Notes and of their transfer and exchange
(the "NOTE REGISTER"). The Company may have one or more co-Registrars and one or
more additional Paying Agents.
The Company 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 Company 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 Company 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. The Company 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 Company 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 Company, any Subsidiary of the
Company, 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 Company, a Subsidiary of the Company nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the Notes 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 Company
initially appoints the Euro Paying Agent, as Paying Agent with respect to the
European 144A Global and Regulation S Global. If, at any time, the Trustee is
not the Registrar, the Registrar shall make available to the Trustee on or
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
Note Register.
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Not later than
10:00 a.m. New York City time or 10:00 a.m. London time, as applicable, on each
due date of the principal, premium, if any, or interest on any Notes, the
Company shall deposit with the relevant Paying Agent money in immediately
available funds sufficient to pay such principal, premium, if any, or interest
so becoming due. The Company 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, or interest on the Notes (whether
such money has been paid to it by the Company or any other obligor on the
Notes), and that such Paying Agent shall promptly notify the Trustee of any
default by the Company (or any other obligor on the Notes) in making any such
payment. The Company at any time may require a Paying Agent to pay all money
held by it to the 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
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Agent shall have no further liability for the money so paid over to the Trustee.
If the Company or any Subsidiary of the Company 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 Notes, 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 of its action or failure to act
as required by this Section 2.05.
SECTION 2.06. TRANSFER AND EXCHANGE. The Notes are issuable only in
registered form. A Holder may transfer a Note 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 Note Register. Prior to the registration
of any transfer by a Holder as provided herein, the Company, the Trustee, and
any agent of the Company or the Trustee shall treat the Person in whose name the
Note is registered as the owner thereof for all purposes whether or not the Note
shall be overdue, and neither the Company, the Trustee, nor any such agent shall
be affected by notice to the contrary. Furthermore, any Holder of a Global Note
shall, by acceptance of such Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book-entry system
maintained by the Depository (or its agent), and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book entry. When
Notes 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 Notes
of other authorized denominations (including an exchange of Notes for Exchange
Notes), the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; PROVIDED that no
exchanges of Notes for Exchange Notes shall occur until a Registration Statement
shall have been declared effective by the Commission and that any Notes that are
exchanged for Exchange Notes shall be cancelled by the Trustee. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Company shall execute and the Trustee
shall authenticate Notes 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 Notes, but the Company may require payment 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, 4.11, 4.12 or
9.04).
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES. (a) Each
Restricted Global and Regulation S Global initially shall (i) be registered in
the name of the Depository for such Global Note or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian or the Common
Depositary, as applicable, for such Depository and (iii) bear legends as set
forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
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their behalf by the Depository, or the Trustee as its custodian or the Common
Depositary, as applicable, or under any Global Note, and the Depository may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of such Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees, or transfers between the Depository for the DTC Rule
144A Global and the Depository for the European 144A Global and Regulation S
Global. Transfers of interests in one Global Note to parties who will hold the
interests through the same Global Note will be effected in the ordinary way in
accordance with the respective rules and operating procedures of DTC, Euroclear
or Clearstream, as the case may be, and the provisions of Section 2.08 hereof.
In addition, U.S. Certificated Notes or Regulation S Certificated Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Restricted Global or a Regulation S Global, respectively, if (i) the
Depository with respect to such Global Notes notifies the Company that it is
unwilling or unable to continue as Depository for the Restricted Global or the
Regulation S Global, as the case may be, and a successor depository is not
appointed by the Company 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 Depository or the Trustee.
(c) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note will, upon transfer, cease to be an interest in such Global Note and
become an interest in such other Global Note and, accordingly, will thereafter
be subject to all transfer restrictions, if any, and other procedures applicable
to beneficial interests in such other Global Note 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 a Restricted
Global or Regulation S Global to beneficial owners who are required to hold
Certificated Notes, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of such Restricted Global or
Regulation S Global in an amount equal to the principal amount of the beneficial
interest in such Restricted Global or Regulation S Global to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more U.S. Certificated Notes or Regulation S Certificated Notes, as the case
may be, of like tenor and amount.
(e) In connection with the transfer of all the beneficial interests
in a Restricted Global or Regulation S Global to beneficial owners pursuant to
paragraph (b) of this Section 2.07, the Restricted Global or Regulation S
Global, as the case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Restricted Global or Regulation S Global, as
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the case may be, an equal aggregate principal amount of U.S. Certificated Notes
or Regulation S Certificated Notes, as the case may be, of authorized
denominations.
(f) Any U.S. Certificated Note delivered in exchange for an interest
in a Restricted Global pursuant to paragraph (b), (d) or (e) of this Section
2.07 shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of
Section 2.08 hereof, bear the legend regarding transfer restrictions applicable
to the U.S. Certificated Note set forth in Section 2.02.
(g) Any Regulation S Certificated Note delivered in exchange for an
interest in a Regulation S Global pursuant to paragraph (b), (d) or (e) of this
Section 2.07 shall, except as otherwise provided by paragraphs (f)(i)(x) and (d)
of Section 2.08 hereof, bear the legend regarding transfer restrictions
applicable to the Regulation S Certificated Note set forth in Section 2.02
hereof.
(h) The registered holder of a Global Note 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 Notes.
(i) QIBs that are beneficial owners of interests in a Global Note
may receive Certificated Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the relevant
Depository. In connection with the execution, authentication and delivery of
such Certificated Notes, the Registrar shall reflect on its books and records a
decrease in the principal amount of the relevant Global Note equal to the
principal amount of such Certificated Notes and the Company shall execute and
the Trustee shall authenticate and deliver one or more Certificated Notes having
an equal aggregate principal amount.
(j) All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a Note is
exchanged for an Exchange Note 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. Certificated Note
or an interest in a Restricted Global to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Certificated
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company 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
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provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the 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 QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A or (y) an
interest in a Restricted Global, the transfer of such interest may be
effected only through the book-entry system maintained by the relevant
Depository.
(ii) If the proposed transferee is an Agent Member, and the Note to be
transferred consists of U.S. Certificated Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions given
in accordance with the relevant Depository'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 relevant Restricted Global
in an amount equal to the principal amount of the U.S. Certificated Notes
to be transferred, and the Trustee shall cancel the Certificated Note so
transferred.
(b) TRANSFERS OF INTERESTS IN REGULATION S GLOBAL OR REGULATION S
CERTIFICATED NOTES TO U.S. PERSONS. The following provisions shall apply with
respect to any transfer of interests in a Regulation S Global or Regulation S
Certificated Notes to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a
Regulation S Global or a Regulation S Certificated Note pursuant to Section
2.02, the Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer of
any such Note without requiring any additional certification.
(c) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any Non-U.S.
Person if the Note to be transferred is a U.S. Certificated Note or an
interest in a Restricted Global only upon receipt of a certificate
substantially in the form of Exhibit E from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
of (x) the documents required by paragraph (i) and (y) instructions in
accordance with the relevant Depository'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 such Restricted Global in an amount
equal to the principal amount of the beneficial interest in the Restricted
Global to be transferred, and (b) if the proposed transferee is an Agent
Member, upon receipt by the Registrar of instructions given in accordance
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with the relevant Depository'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 such Regulation S Global in an amount equal to
the principal amount of the U.S. Certificated Notes or the Restricted
Global, as the case may be, to be transferred, and the Trustee shall cancel
the Certificated Note, if any, so transferred or decrease the amount of the
relevant Restricted Global.
(d) PRIVATE PLACEMENT LEGEND. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the Private Placement Legend is no
longer required by Section 2.02 or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company 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 Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture. The Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes to an Institutional
Accredited Investor, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; PROVIDED that
the Registrar shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. The Company 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 Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether or
not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount of the Notes being transferred is less than Euro 100,000
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at the time of such transfer, an Opinion of Counsel acceptable to the
Company that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
and the Company of (x) the documents, if any, required by paragraph (i) and
(y) instructions given in accordance with the relevant Depository'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 such Restricted
Global in an amount equal to the principal amount of the beneficial
interest in the Restricted Global to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more U.S.
Certificated Notes of like tenor and amount.
SECTION 2.09. REPLACEMENT NOTES. If a mutilated Note is surrendered to
the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; PROVIDED that the requirements of this Section
2.09 and the second paragraph of Section 2.10 are met. If required by the
Trustee or the Company, an indemnity bond must be furnished that is sufficient
in the judgment of both the Trustee and the Company to protect the Company, the
Trustee or any Agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge such Holder for its expenses and the expenses
of the Trustee in replacing a Note. In case any such mutilated, lost, destroyed
or wrongfully taken Note has become or is about to become due and payable, the
Company in its discretion may pay such Note instead of issuing a new Note in
replacement thereof.
Every replacement Note is an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.
SECTION 2.10. OUTSTANDING NOTES. Notes outstanding at any time are all
Notes 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 Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Note is held by a BONA FIDE
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money sufficient to pay
all principal, premium, if any, and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or payable on that date, then
on and after that date such Notes cease to be outstanding and interest on them
shall cease to accrue.
A Note does not cease to be outstanding because the Company or one of
its Affiliates holds such Note; PROVIDED, HOWEVER, that, in determining whether
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the Holders of the requisite principal amount of the outstanding Notes have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company 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 Notes which a Responsible Officer of
the Trustee knows to be so owned shall be so disregarded. Notes 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 Notes and that the pledgee is not the Company or any other
obligor upon the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.11. TEMPORARY NOTES. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Notes, as
evidenced by their execution of such temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. CANCELLATION. The Company at any time may deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange, purchase or payment. The Trustee shall
cancel all Notes surrendered for registration of transfer, exchange, purchase,
payment or cancellation and shall return all such Notes to the Company. The
Company shall not issue Notes to replace Notes it has paid in full or delivered
to the Trustee for cancellation.
SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Notes may use
"CUSIP," "CINS," or "ISIN" numbers, or common codes (if then generally in use),
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 Notes or as
contained in any notice of redemption or exchange and that reliance may be
placed only on the other
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identification numbers printed on the Notes. The Company shall promptly advise
the Trustee of any change in the CUSIP, CINS or ISIN numbers or common codes for
the Notes.
SECTION 2.14. DEFAULTED INTEREST. If the Company defaults in a payment
of interest on the Notes, 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) interest 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 Company 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 Company 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.
SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES. The Company may, subject
to Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
[RESERVED]
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes 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 Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the Company 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 Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Notes.
The Company 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 Notes.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain an office or agency in the Borough of Manhattan, the City of New York,
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company 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 Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 11.02
hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York, for such purposes. The
Company 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 Company in accordance with Section 2.04. The Company hereby
initially designates the Euro Paying Agent as an office where the Regulation S
Global and European 144A Global may be surrendered for presentation for payment.
SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the Notes and Indebtedness existing on the Closing
Date); PROVIDED that the Company may Incur Indebtedness if, after giving effect
to the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Consolidated Leverage Ratio would be greater than zero
and less than 6:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $100 million of Indebtedness that is PARI PASSU with
or subordinated to the Notes and $150 million of Indebtedness that is
subordinated to the Notes, less any amount of such Indebtedness permanently
repaid as provided under Section 4.11 hereof;
(ii) Indebtedness owed (A) by any Restricted Subsidiary to the Company
or another Restricted Subsidiary or (B) by the Company to any Restricted
Subsidiary; PROVIDED that any event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer
of such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute an Incurrence of
such Indebtedness not permitted by this clause (ii);
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(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to repay, redeem, defease, refinance, refund, extend, renew,
replace, discharge or otherwise retire any then outstanding Indebtedness
(other than Indebtedness Incurred under clause (i), (ii), (iv), (vi),
(viii), (xi) or (xii) of this paragraph) and any refinancings thereof in an
amount not to exceed the amount so refinanced or refunded (plus premiums,
penalties, accrued interest, fees and expenses); PROVIDED that Indebtedness
the proceeds of which are used to refinance or refund the Notes or
Indebtedness that is PARI PASSU with, or subordinated in right of payment
to, the Notes shall only be permitted under this clause (iii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced
is PARI PASSU with the Notes, 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 Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the
Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes
at least to the extent that the Indebtedness to be refinanced is
subordinated to the Notes 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 the Company be
refinanced by means of any Indebtedness of any Restricted Subsidiary
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 (a)
are designed solely to protect the Company or any of its Restricted
Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates and (b) 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 the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred
in connection with the disposition of any business, assets or Restricted
Subsidiary (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 the Company or
any Restricted Subsidiary in connection with such disposition;
(v) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under Article Eight hereof;
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(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary PROVIDED the Guarantee of such
Indebtedness is permitted by and made in accordance with Section 4.07
hereof;
(vii) Indebtedness (including Guarantees) Incurred to finance the cost
(including the cost of design, development, acquisition, construction,
installation, improvement, transportation or integration) to acquire
equipment, inventory or network assets (including acquisitions by way of
Capitalized Lease and acquisitions of the Capital Stock of a Person that
becomes a Restricted Subsidiary to the extent of the fair market value of
the equipment, inventory or network assets so acquired) by the Company or a
Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by the Company
after March 19, 1999 as a capital contribution or from the issuance and
sale of its Capital Stock (other than Disqualified Stock) to a Person that
is not a Subsidiary of the Company, to the extent (I) such capital
contribution or Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clause (iii), (iv), (vi) or (vii) of the
second paragraph of Section 4.04 hereof to make a Restricted Payment and
(II) if such capital contribution or Net Cash Proceeds are used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, the amount of such Net Cash Proceeds exceeds one-half of the
amount of Acquired Indebtedness so Incurred and (B) 80% of the fair market
value of property (other than cash and cash equivalents) received by the
Company after March 19, 1999 from the sale of its Capital Stock (other than
Disqualified Stock) to a Person that is not a Subsidiary of the Company, to
the extent (I) such capital contribution or sale of Capital Stock has not
been used pursuant to clause (iii), (iv), (vi) or (vii) of the second
paragraph of Section 4.04 hereof to make a Restricted Payment and (II) if
such capital contribution or Capital Stock is used to consummate a
transaction pursuant to which the Company Incurs Acquired Indebtedness, 80%
of the fair market value of the property received exceeds one-half of the
amount of Acquired Indebtedness so Incurred PROVIDED that such Indebtedness
does not mature prior to the Stated Maturity of the Notes and has an
Average Life longer than the Notes;
(ix) Acquired Indebtedness;
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and letters of
credit, all in the ordinary course of business, in an aggregate amount
outstanding at any time of up to $10 million;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, PROVIDED that such Indebtedness
is extinguished within three Business Days of Incurrence.
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(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. 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 clauses (i)
through (xii) of Section 4.03(a), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, 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. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on or with
respect to its Capital Stock (other than (A) dividends or distributions
payable solely in shares of its Capital Stock (other than Disqualified
Stock) or in options, warrants or other rights to acquire shares of such
Capital Stock and (B) PRO RATA dividends or distributions on Common Stock
of Restricted Subsidiaries held by minority stockholders) held by Persons
other than the Company or any of its Restricted Subsidiaries,
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock)
held by any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more
of the Capital Stock of the Company,
(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 the Company that is subordinated
in right of payment to the Notes or
(iv) make any Investment (after the Closing Date), other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above 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) the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
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of Section 4.03 hereof 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 the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following March 19, 1999 and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed with the Commission or provided to the Trustee
pursuant to Section 4.18 hereof PLUS (2) the aggregate Net Cash Proceeds
received by the Company after March 19, 1999 as a capital contribution or from
the issuance and sale permitted by this Indenture of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by this Indenture of Indebtedness of the
Company for cash subsequent to March 19, 1999 upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of the Company,
or from the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company (in
each case, exclusive of any Disqualified 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 Notes), in each case except to the
extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to clause
(viii) of the second paragraph under Section 4.03 hereof, PLUS (3) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) 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 the Company or any Restricted Subsidiary or from the Net Cash
Proceeds from the return of capital, redemption, or sale of any such Investment
(except, in each case, to the extent any such payment or proceeds are 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"), or from the release of any
Guarantee that constituted a Restricted Payment, to the extent of such release,
not to exceed, in each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
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 Notes 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 part (a) of Section 4.03
hereof;
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(iii) the repurchase, redemption or other acquisition of Capital Stock
of the Company or an Unrestricted Subsidiary (or options, warrants or other
rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a capital contribution or a substantially concurrent offering
of, shares of Capital Stock (other than Disqualified Stock) of the Company
(or options, warrants or other rights to acquire such Capital Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of a capital contribution
or a substantially concurrent offering of, shares of the Capital Stock
(other than Disqualified Stock) of the Company (or options, warrants or
other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of Article Five
hereof;
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company or any
of its Restricted Subsidiaries on the date of such Investments; PROVIDED
that the aggregate amount of Investments made pursuant to this clause (vi)
does not exceed $65 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds from the
issuance and sale of such Capital Stock, PROVIDED that such proceeds are so
used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement or other acquisition of
any Capital Stock of the Company (or options, warrants or other rights to
acquire such Capital Stock) from an employee or former employee of the
Company or any of its Subsidiaries (or from such person's estate, heirs or
representatives) in connection with such employee's death, disability or
termination of employment, PROVIDED that the aggregate amount expended
pursuant to this clause does not exceed $1 million per annum plus the
cumulative amount of such per annum limit not used in prior years and the
cash proceeds from such Investments, PROVIDED that such proceeds are used
within 180 days of the receipt thereof;
(ix) Investments in permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment, the sum of (A)
15% of the consolidated revenue of the Company (excluding with respect to
Persons in whom an equity interest is owned by Persons other than the
Company and its Restricted Subsidiaries, the PRO RATA share of such revenue
attributable to such other equity holders) accrued on a cumulative basis
during the period (taken as one accounting period) beginning on the first
day of the first full fiscal quarter immediately following March 19, 1999
and ending on the last day of the last fiscal quarter preceding the date of
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such Investment and (B) the Net Cash Proceeds from the disposition of the
Company's interest in any such Permitted Wholesale Consortium or Permitted
Joint Venture; and
(x) other Restricted Payments in an aggregate amount not to exceed $10
million, increased by the amount of any Restricted Payment made pursuant to
this clause (x) that is an Investment and is not outstanding;
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 therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or 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 the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is PARI PASSU with the Notes, 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.
Any Restricted Payments made in other than cash shall be valued at
fair market value. The amount of any Investment "outstanding" at any time shall
be deemed to be equal to the amount of such Investment on the date made, less
the return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to the Company and its Restricted Subsidiaries
with respect to such Investment (up to the amount of such investment on the date
made).
SECTION 4.05. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES. The Company 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 the Company or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company 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
agreements in effect on the Closing Date, and any extensions, refinancings,
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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 the Company 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 the Company 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 the Company or any Restricted Subsidiary in any
manner material to the Company 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) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of a payment default or a default
with respect to a financial covenant contained in such Indebtedness or
agreement, (B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by the Company) and (C) the Company determines
that any such encumbrance or restriction will not materially affect the
Company's ability to make principal or interest payments on the Notes; or
(vii) imposed in connection with a transaction described in clause (f)
of the proviso to the definition of "Asset Sale" and relating solely to a
Restricted Subsidiary that transfers assets to the special purpose entity
referred to therein; PROVIDED that the Company determines that any such
encumbrance or restriction will not materially affect the Company's ability
to make principal or interest payments on the Notes.
Nothing contained in this Section 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 hereof or (2) restricting
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the sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Company 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 the Company or a
Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying
shares 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 and any Investment
in such Person remaining after giving effect to such issuance or sale would have
been permitted to be made under Section 4.04 hereof if made on the date of such
issuance or sale; (iv) a pledge or hypothecation of or Lien on any Capital Stock
of a Subsidiary to the extent not prohibited under Section 4.09 hereof; or (v)
sales by the Company or Restricted Subsidiaries of Common Stock of a Restricted
Subsidiary, PROVIDED that the Company or such Restricted Subsidiaries apply the
Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B)
of Section 4.11 hereof.
SECTION 4.07. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is PARI PASSU
with or subordinate in right of payment to the Notes ("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 Notes by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee; PROVIDED that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and 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 Notes,
then the Guarantee of such Guaranteed Indebtedness shall be PARI PASSU with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, 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 Notes.
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 the Company, of all of the Company'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
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not prohibited by this Indenture) or (ii) the release or discharge of the
Guarantee which resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.08. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND
AFFILIATES. The Company 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 of such holder) of 5% or more of any class of Capital Stock of the
Company or with any Affiliate of the Company or any Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to the Company 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 or (B) for which the Company 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 the Company or such Restricted Subsidiary from a financial point
of view;
(ii) any transaction solely between the Company and any of its
Restricted Subsidiaries or solely between Restricted Subsidiaries;
(iii) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary course of
business in connection with services actually rendered and consistent with
past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on March 19, 1999; or
(vii) any Restricted Payments not prohibited by Section 4.04 hereof.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, the aggregate amount of which exceeds $2.0
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) of this Section 4.08.
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SECTION 4.09. LIMITATION ON LIENS. The Company 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 (including, without
limitation, licenses), or any shares of Capital Stock or Indebtedness of any
Restricted Subsidiary, without making effective provision for all of the Notes
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 Notes, prior to) the obligation or
liability secured by such Lien.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of the
Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under clause
(iii) of the second paragraph of Section 4.03 hereof which is Incurred to
refinance secured Indebtedness; PROVIDED that such Liens do not extend to
or cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets securing the Indebtedness being
refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under Section 4.03 hereof;
(vi) Liens on the Capital Stock of Restricted Subsidiaries that own a
substantial portion of assets financed with Indebtedness Incurred under
clause (vii) of Section 4.03 hereof, if such liens secure only such
Indebtedness; or
(vii) Permitted Liens.
SECTION 4.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. The Company
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 the Company 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
the Company 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; PROVIDED that a sale-leaseback
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transaction shall not include any lease in connection with which the Company or
a Restricted Subsidiary acquires assets or property in anticipation of the
substantially contemporaneous sale or transfer to the lessor under such lease.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(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 the Company and any Restricted
Subsidiary or solely between Restricted Subsidiaries; or
(iv) the Company 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 4.11 hereof.
SECTION 4.11. LIMITATION ON ASSET SALES. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or any of 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 the Company and its Subsidiaries has
been filed with the Commission pursuant to Section 4.18 hereof), then the
Company 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 the Company,
or any Restricted Subsidiary providing a Subsidiary Guarantee pursuant to
Section 4.07 hereof or Indebtedness of any other Restricted Subsidiary, in each
case owing to a Person other than the Company 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), either in property or
assets (other than current 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, in either case similar or related to the nature or type
of the property and assets of, or the business of, the Company or any of its
Restricted Subsidiaries existing on the date of such investment (as determined
in good faith by the Board of Directors, 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 4.11. The amount of such
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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 4.11 totals at least $10 million, the Company 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
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
101% of the principal amount of the Notes on the relevant Payment Date, plus, in
each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. The
Company must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all the Notes then outstanding, at a
purchase price equal to 101% of the principal amount of the Notes on the
relevant Payment Date, plus accrued interest (if any) to the Payment Date.
SECTION 4.13. EXISTENCE. Except as otherwise provided or permitted in
Articles Four and Five of this Indenture, the Company 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 the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; PROVIDED that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. PAYMENT OF TAXES AND OTHER CLAIMS. The Company 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)
the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company 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 the Company or
any such Subsidiary; PROVIDED that the Company shall not be required to pay or
discharge, or cause to be paid or discharged, any such tax, assessment, charge
or claim the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings, for which adequate reserves have been
established.
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SECTION 4.15. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company
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
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED that nothing in this Section 4.15 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company 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, 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 the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16. NOTICE OF DEFAULTS. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. COMPLIANCE CERTIFICATES. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default and the nature and status thereof.
The Company shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
SECTION 4.18. 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 (as defined in the Registration Rights Agreement) or the effectiveness of
a Shelf Registration Statement (as defined in the Registration Rights Agreement)
(the "REGISTRATION") and (ii) the date that is 180 days 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 (to the extent
accepted by the Commission) all such reports
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and other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. In addition, at all times
prior to the earlier of the date of the Registration and the date that is 180
days after the Closing Date, the Company shall, at its cost, deliver to each
Holder of the Notes 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 Notes 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.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company
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 Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes 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) the Company hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC. The Company shall not
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 or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under the
laws of the United States of America or any jurisdiction thereof and shall
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expressly assume, by a supplemental indenture, executed and delivered to
the Trustee, all of the obligations of the Company on all of the Notes and
under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a PRO
FORMA basis, the Company or any Person becoming the successor obligor of
the Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a PRO
FORMA basis, the Company, or any Person becoming the successor obligor of
the Notes, as the case may be, could Incur at least $1.00 of Indebtedness
under the first paragraph of Section 4.03 hereof; PROVIDED that this clause
(iv) shall not apply to (1) a consolidation, merger or sale of all (but not
less than all) of the assets of the Company if all Liens and Indebtedness
of the Company or any Person becoming the successor obligor on the Notes,
as the case may be, and its Restricted Subsidiaries outstanding immediately
after such transaction would, if Incurred at such time, have been permitted
to be Incurred (and all such Liens and Indebtedness, other than Liens and
Indebtedness of the Company and its Restricted Subsidiaries outstanding
immediately prior to the transaction, shall be deemed to have been
Incurred) for all purposes of this Indenture or (2) a consolidation, merger
or sale of all or substantially all of the assets of the Company if,
immediately after giving effect to such transaction on a PRO FORMA basis,
the Company or any Person becoming the successor obligor of the Notes shall
have a Consolidated Leverage Ratio equal to or less than the Consolidated
Leverage Ratio of the Company immediately prior to such transaction; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv) of this Section 5.01) 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) of this Section 5.01 do not apply
if, in the good faith determination of the Board of Directors, whose
determination shall be evidenced by a Board Resolution, the principal purpose of
such transaction is to change the state of incorporation of the Company; and
PROVIDED FURTHER that any such transaction shall not have as one of its purposes
the evasion of the foregoing limitations.
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 in accordance with Section 5.01 of
this Indenture, the successor Person formed by such consolidation or into which
the Company is merged or to which such sale, conveyance, transfer or other
disposition is made shall succeed to,
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and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had been
named as the Company herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall occur
with respect to the Notes if:
(a) the Company defaults 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) the Company defaults 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 three
scheduled interest payments on the Notes in a timely manner will constitute
an Event of Default with no grace or cure period;
(c) the Company defaults in the performance or breach of the
provisions of Article Five hereof or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12 hereof;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) of this Section
6.01) 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;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 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;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 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 or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 consecutive days
following entry of the final judgment or order that causes the aggregate
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amount for all such final judgments or orders outstanding and not paid or
discharged against all such Persons to exceed $10 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;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company 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 or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary and, in each case, such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(h) the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors.
SECTION 6.02. ACCELERATION. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this 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 on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal amount of, 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 (e)
of Section 6.01 has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to clause (e) shall be remedied or cured by the
Company 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 (g) or (h) of
Section 6.01 occurs with respect to the Company, the principal amount of,
premium, if any, and accrued interest on the Notes 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.
The Holders of at least a majority in principal amount of the
outstanding Notes, by written notice to the Company and to the Trustee, may
waive all past defaults and rescind and annul a declaration of acceleration and
its consequences if (i) all existing Events of Default, other than the
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nonpayment of the principal of, premium, if any, and interest on the Notes 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.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may 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 Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Section 9.02, at any
time after such a declaration of acceleration, but before a judgment or decree
for the payment of the money due has been obtained by the Trustee, the Holders
of at least a majority in aggregate principal amount of the outstanding Notes by
written notice to the Company and to the Trustee may waive all past Defaults and
rescind and annul a declaration of acceleration and its consequences (except a
Default in the payment of principal of premium, if any, or interest on any Note
as specified in clause (a) or (b) of Section 6.01 (but not as a result of such
acceleration) 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 Note affected) if (i) all existing Events of Default, other than the
nonpayment of the principal amount of, premium, if any, and interest on the
Notes 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 Notes 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 the Notes, 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 the Notes.
SECTION 6.06. LIMITATION ON SUITS. A Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:
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(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 Notes make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer the Trustee indemnity satisfactory
to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the 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 Notes 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
Notes 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 Notes 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 Note to
receive payment of principal of, premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed on such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 of this Indenture occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor of the Notes 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 Notes, 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, and
any other amounts due the Trustee under Section 7.07 hereof.
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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 Company (or any other obligor of the Notes), its creditors or its property
and the Trustee shall be entitled and empowered to collect and receive any
monies, securities or other property payable or deliverable upon conversion or
exchange of the Notes 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 Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
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 Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes 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
Notes for principal, premium, if any, and interest, respectively; and
THIRD: to the Company.
The Trustee, upon prior written notice to the Company, 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 and
expenses, 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
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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 Notes.
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
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, the 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 Notes 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 therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
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SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document (whether in its original or facsimile form) 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 if required
under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(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 complying
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 Notes 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 to take 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 at the sole cost of the Company to examine the books,
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records and premises of the Company personally or by agent or attorney and
shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation;
(viii) the Trustee shall not be charged with knowledge of any Default
or Event of Default, the identity of any Restricted Subsidiary or of the
existence of any Change of Control or Asset Sale unless either (i) a
Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Notes; and
(ix) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted to be taken by it hereunder in good faith and in reliance thereon.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may otherwise deal with the Company or its 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 (a) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(b) shall not be accountable for the Company's use or application of the
proceeds of the Notes and (c) shall not be responsible for any statement in the
Notes 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 a Responsible Officer 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 90 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 Note, the Trustee shall be protected in withholding such notice
if and as 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.
If an Event of Default has occurred and is continuing, the Trustee shall use the
same degree of care and skill in its exercise of the rights and powers invested
in it under this Indenture as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
May 15, beginning with May 15, 2000, 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 Company shall pay to the
Trustee such compensation as shall be agreed upon from time to time 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 shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses 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 Company shall indemnify the Trustee and any predecessor trustee
for, and hold it harmless against, any and all loss, claim, damage or liability
or expense (including taxes other than taxes based upon the income of the
Trustee and reasonable compensation and expenses of the Trustee's agents and
counsel) 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 Notes, including 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 Notes.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel of its selection and the Company
shall pay the reasonable fees and expenses of such counsel; PROVIDED, that the
Company will not be required to pay such fees and expenses if it assumes the
Trustee's defense and there is no conflict of interest between the Company and
the Trustee in connection with such defense. The Company need not pay for any
settlement made without its written consent.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Noteholders on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (h) or (i) 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.
The rights, privileges, protections and benefits given to the Trustee,
including, without limitation, its rights to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder.
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The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
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 its appointment as provided in this
Section 7.08.
The Trustee may resign at any time by so notifying the Company 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 Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may at any time remove the
Trustee, by Company Order given at least 30 days prior to the date of the
proposed removal; PROVIDED that, at such date, no Event of Default shall have
occurred and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. 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 Company or the Holders
of a majority in principal amount of the outstanding Notes may petition at the
expense of the Company 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 Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07 of this Indenture, (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 of this
Indenture, 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.
The Company 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.
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
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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 Sections 310(a)(1) and 310(a)(5). The
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition.
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 with the
Company in writing. 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
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Notes 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 Notes, 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 Notes, 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 Note appropriate documentation evidencing 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 THE COMPANY'S OBLIGATIONS. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 hereof or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 8.05 hereof) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
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(ii) (A) all of the Notes 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 Company 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 European Government Obligations sufficient to pay
principal, premium, if, any, and interest on the Notes 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 Notes
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 is a party or by which it is bound, (E) if at such time the
Notes are listed on a national securities exchange, the Notes will not be
delisted as a result of such deposit, defeasance or discharge and (F) the
Company 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 Company's obligations
under Section 7.07 hereof shall survive. With respect to the foregoing clause
(ii), the Company'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, 7.07, 7.08, 8.04, 8.05 and 8.06 of this Indenture
shall survive until the Notes are no longer outstanding. Thereafter, only the
Company's obligations in Sections 7.07, 8.05 and 8.06 of this Indenture shall
survive. After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations, as the case
may be, under the Notes and this Indenture, except for those surviving
obligations specified above.
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE. The Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the deposit referred to below, and
the provisions of this Indenture will no longer be in effect with respect to the
Notes if:
(A) the Company has deposited with the Trustee, in trust, money and/or
European Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of this Indenture and the Notes;
(B) the Company has delivered to the Trustee (i) either (1) an Opinion
of Counsel to the effect that Holders will not recognize income, gain or
loss for federal income tax purposes as a result of the Company's exercise
of its option under this Section 8.02 and will be subject to 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, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and accompanied by a
copy of) a ruling of the Internal Revenue Service to the same effect unless
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there has been a change in applicable federal income tax law after the
Closing Date such that a ruling is no longer required or (2) a ruling
directed to the Trustee received from the Internal Revenue Service to the
same effect as the aforementioned Opinion of Counsel and (ii) an Opinion of
Counsel to the effect that the creation of the defeasance trust does not
violate the Investment Company Act of 1940 and after the passage of 123
days following the deposit, the trust fund will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or Section 15 of
the New York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a PRO FORMA
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have occurred
and be continuing on the date of such deposit or during the period ending
on the 123rd day after the date of such deposit, and such deposit shall not
result in a breach or violation of, or constitute a default under, any
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound; and
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge.
Notwithstanding the foregoing, prior to the end of the 123-day period
referred to in clause (B)(ii) of this Section 8.02, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.02, the Company'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,
4.17, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.05
and 8.06 shall survive. If and when a ruling from the 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 Company's obligations under Section 4.01, then the Company's
obligations under such Section 4.01 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.
After the 123 day period referred to in clause (B)(ii) of this Section
8.02, the Trustee upon Company Order shall acknowledge in writing the discharge
of the Company's obligations under the Notes and this Indenture except for those
surviving obligations in the immediately preceding paragraph.
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company 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 4.11 of this Indenture, and
clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of Section
5.01 of this Indenture and clause (d) of Section 6.01 with respect to Sections
4.01, 4.02 and 4.12 through 4.19 hereof, and clauses (e) and (f) of Section 6.01
hereof shall be deemed not to be Events of Default, upon:
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(a) the deposit, in trust, with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof) of money and/or
European Government Obligations that, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of this Indenture and the Notes;
(b) the satisfaction of the provisions described in clauses B(ii), (C)
and (D) of Section 8.02 hereof;
(c) delivery by the Company to the Trustee of an Opinion of Counsel to
the effect that, the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and
will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit
and defeasance had not occurred; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 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 European 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 European
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
SECTION 8.05. REPAYMENT TO COMPANY. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company any excess money, as determined by a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, and 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 Company upon request 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
Company once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Note Register) notice that such money remains unclaimed provided
that the Trustee or such Paying Agent before being required to make any payment
may give notice in accordance with Section 11.02(b) 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 Company. After payment to the
Company, Holders entitled to such money must look to the
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Company 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 the Paying Agent is
unable to apply any money or European 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 obligations under this Indenture and the Notes 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 European Government Obligations in
accordance with Section 8.01, 8.02 or 8.03, as the case may be; PROVIDED that,
if the Company has made any payment of principal of, premium, if any, or
interest on any Notes because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or European Government Obligations held by
the Trustee or Paying Agent.
SECTION 8.07. DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the
event that the Company exercises its option to omit compliance with certain
covenants and provisions of this Indenture with respect to the Notes pursuant to
Section 8.03 and such Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or European Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on such Notes at the time of their Stated
Maturity. If, in the event the Company exercises its option to omit compliance
with certain covenants and provisions of this Indenture with respect to the
Notes pursuant to Section 8.03 and such Notes are declared due and payable
because of the occurrence of an Event of Default that remains applicable, the
amount of money and/or European Government Obligations on deposit with the
Trustee is insufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Events of Default pursuant to Section 6.02, the
Company will remain liable for such payments.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when authorized
by resolutions of its Board of Directors (as evidenced by a Board Resolution),
and the Trustee may amend or supplement this Indenture or the Notes without
notice to, or the consent of, any Holder:
(a) to cure any ambiguity, defect or inconsistency in this Indenture;
PROVIDED that, in the good faith opinion of the Board of Directors of the
Company evidenced by a Board Resolution, such amendments or supplements do
not adversely affect the interests of the Holders in any material respect;
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(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 good faith opinion of the Board of
Directors of the Company 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 6.07 and
without prior notice to the Holders, the Company, when authorized by its Board
of Directors (as evidenced by a Board Resolution), and the Trustee may amend
this Indenture and the Notes with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding, and the
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may waive compliance by the Company
with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04 hereof, may not:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Note;
(b) reduce the principal amount of, or premium, if any, or interest
on, any Note;
(c) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(d) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity of any Note;
(e) reduce the above-stated percentage of outstanding Notes, the
consent of whose Holders is necessary to modify or amend this Indenture;
(f) waive a default in the payment of principal of, premium, if any,
or interest on the Notes; or
(g) reduce the percentage or aggregate principal amount of outstanding
Notes the consent of whose Holders is necessary for waiver of compliance
with certain provisions of this Indenture or for waiver of certain
defaults.
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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 Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such 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 Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. 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 Notes.
The Company 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 (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. NOTATION ON OR EXCHANGE OF NOTES. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.
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SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 11.03, 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
[RESERVED]
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. 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 or deemed 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 or deemed to be a part of this Indenture and shall, to the
extent applicable, be governed by such provisions.
SECTION 11.02. NOTICES. (a) 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:
IF TO THE COMPANY:
Viatel, Inc.
685 Third Avenue
New York, NY 10017
Telecopier Number: (212) 350-9250
Attention: General Counsel
With, in the case of any notice given pursuant to Article Six, a copy
to:
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Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Telecopier Number: (212) 808-7897
Attention: Patricia Lee, Esq.
IF TO THE TRUSTEE:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Note 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 11.02, it is duly given, whether or not the
addressee receives it.
(c) 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.
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SECTION 11.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate 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
(b) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 11.04. 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:
(a) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(c) 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
(d) 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 11.05. 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 11.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an Interest
Payment Date, Payment Date, Stated Maturity or date of maturity of any Note
shall not be a Business Day, then payment of principal of, premium, if any, or
interest on such Note, 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 or Payment Date, or at the Stated
Maturity or date of maturity of such Note; PROVIDED that no interest shall
accrue for the period from and after such Interest Payment Date, Payment Date,
Stated Maturity or date of maturity, as the case may be.
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SECTION 11.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; AGENT FOR
SERVICE. This Indenture and the Notes shall be governed by the laws of the State
of New York. The Company hereby appoints CT Corporation System as its agent for
service of process in any suit, action or proceeding with respect to this
Indenture or the Notes and for actions brought under the U.S. federal or state
securities laws brought in any federal or state court located in the City of New
York and the Company agrees to submit to the jurisdiction of any such court.
SECTION 11.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.09. NO RECOURSE AGAINST OTHERS. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Notes, 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 contained in this
Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, stockholder, other equity holder,
officer, director, employee or controlling person, as such, of the Company or of
any successor Person, either directly or through the Company 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 Notes.
SECTION 11.10. SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
SECTION 11.11. 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 11.12. SEPARABILITY. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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SECTION 11.13. 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.
SECTION 11.14. METHOD OF PAYMENT. (a) Euro is the sole currency of
account and payment for all sums payable by the Company under or in connection
with the Notes, including damages, except as otherwise set forth in this Section
11.14.
(b) Investors who hold beneficial interests in the Notes, directly
or indirectly, through DTC ("DTC NOTEHOLDERS") will be paid in U.S. dollars
converted from such payments in Euro by the Paying Agent unless the registered
holder, on behalf of any such owner of beneficial interests, elects to receive
payments in Euro.
Upon receipt of notice of such election and wire transfer instructions
on or prior to the fourth New York Business Day (as defined in clause (c) below)
after the record date for any payment of interest and on or prior to the sixth
New York Business Day prior to the payment of principal, the Paying Agent will
make such payments in Euro to the Euro accounts of the relevant Holders.
The Paying Agent shall convert the remainder of the aggregate amount
of such payments into U.S. dollars, based on the Paying Agent's bid quotation,
at or prior to 11:00 a.m., New York Time, on the second New York Business Day
preceding the date of such payment, for the purchase of U.S. dollars with Euro,
for settlement on the date of such payment. If such bid quotation is not
available, all such payments will be made in Euro, outside DTC to Euro accounts
maintained by such DTC Noteholders.
(c) All costs of conversion, if any, will be borne by such DTC
Noteholders, by deduction from such payments. All costs of payment by wire
transfer referred to in paragraph (b) above will be borne by registered holders
receiving such payments by deduction from such payments. For purposes of the
foregoing, "NEW YORK BUSINESS DAY" means a day all banking institutions are not
authorized or obligated by law or executive order to be closed in the City of
New York.
SECTION 11.15. JUDGMENT CURRENCY. Subject to Section 7.07, the Company
hereby agrees to indemnify the Trustee and any predecessor trustee (acting on
behalf of the Holders or otherwise) against any loss incurred by such person as
a result of any judgment or order being made or given against the Company for
any Euro amount due under this Indenture. The Company hereby also agrees to
indemnify such Trustee and any predecessor trustee against any loss incurred by
such person if such judgment or order is being expressed and paid in a currency
other than Euro (the "JUDGMENT CURRENCY"), as a result of any variation as
between (i) the rate of exchange at
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which the Euro amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the spot rate of exchange in the City of New
York on which such party on the date of payment of such judgment or order is
able to purchase Euro with the amount of the Judgment Currency actually received
by such party. The foregoing indemnity shall continue in full force and effect
notwithstanding any such judgment or order. The term "spot rate of exchange"
shall include any premiums or costs of exchange payable in connection with the
purchase of, or conversion into the Euro.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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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.
VIATEL, INC.
By: /s/ Michael Mahoney
---------------------------------
Name: Michael Mahoney
Title: Chief Executive Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
---------------------------------
Name: Ming J. Shiang
Title: Vice President
74
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EXHIBIT A
FORM OF REGISTERED GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE 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 NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO
IN RULE 144(k) AS IN EFFECT ON THE DATE OF SUCH TRANSFER, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO VIATEL, INC. OR ANY SUBSIDIARY THEREOF, (B) TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) 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
EURO 100,000, AN OPINION OF COUNSEL ACCEPTABLE TO VIATEL, INC. THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) TO A PERSON OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S 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 EACH OF THE TRUSTEE AND VIATEL, INC. SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO,
A-1
<PAGE>
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
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO VIATEL, INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN 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 INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF
THE INDENTURE.]*
[THIS NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS
NOTE) IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.08 OF
THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED
TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND
(4) THIS GLOBAL NOTE MAY BE DELIVERED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR
WRITTEN CONSENT OF VIATEL, INC.]**
- - -------------
* Bracketed language to be added if Restricted Global is a DTC Rule 144A
Global.
** Bracked language to be added if Restricted Global is a European 144A Global.
A-2
<PAGE>
VIATEL, INC.
12 3/4% Senior Euro Note Due 2008
[CUSIP][ISIN]*[COMMON CODE]* [___]
No. __________ Euro[_______]
Issue date: April 20, 2000
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of Euro _________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2000.
Record Dates: April 1 and October 1.
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.
- - -------------
* To be inserted for European 144A Global.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 20, 2000 VIATEL, INC.
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12 3/4% Senior Euro Notes due 2008 described in the
within-mentioned Indenture.
Date: April 20, 2000 THE BANK OF NEW YORK, as Trustee
By
----------------------------------
Authorized Signatory
A-4
<PAGE>
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12 3/4% Senior Euro Note due 2008
1. PRINCIPAL AND INTEREST.
The Company will pay the principal of this Note on April 15, 2008.
The Company 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 will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2000. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
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 the date that is 180 days after the Closing Date in accordance with
the terms of the Registration Rights Agreement, dated April 14, 2000, between
the Company and Morgan Stanley & Co. International Limited, as the manager for
itself and the several placement agents named on Schedule I to the Placement
Agreement, dated April 14, 2000, annual interest (in addition to interest
otherwise due on the Notes) will accrue, at an annual rate of .5% per annum of
the principal amount, payable in cash semiannually, in arrears on April 15 and
October 15 of each year, commencing October 15, 2000 until the consummation of a
registered exchange offer or the effectiveness of a shelf-registration statement
with respect to resale of this Note. The Holder of this Note is entitled to the
benefits of such Registration Rights Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12 3/4% per annum.
2. METHOD OF PAYMENT.
The Company will pay principal as provided above and interest (except
defaulted interest) on the principal amount of the Notes as provided above on
each April 15 and October 15 to the Persons who are Holders (as reflected in the
Note Register at the close of business on such April 1 and October 1,
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
Company will not make payment to the Holder unless this Note is surrendered to a
Paying Agent.
A-5
<PAGE>
The Company will pay principal, premium, if any, and as provided
above, interest in Euros. However, the Company may pay principal, premium, if
any, and interest by its check payable in such currency. It may mail an interest
check to a Holder's registered address (as reflected in the Note Register). 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 Paying Agent and Registrar and the
Trustee (through its London Branch) will act as Euro Paying Agent. The Company
will maintain a paying agent in Frankfurt in the event the Notes are listed on
the Frankfurt over-the-counter market. The Company may change any Paying Agent
or Registrar without notice. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-Registrar.
4. INDENTURE; ISSUANCE OF ADDITIONAL NOTES.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12 3/4% Senior Notes due 2008, issued and to be issued under an
Indenture, dated as of April 20, 2000 (the "Indenture"), between the Company and
the Trustee. Capitalized terms used 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.
5. 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 Company 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 Note Register. Notes in original denominations larger than Euro 1,000 of
principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes or portions of
Notes surrendered for purchase by the Company, unless the Company defaults in
the payment of the Change of Control Payment.
6. REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, to use its best
efforts to consummate an exchange offer pursuant to which the Holder of this
A-6
<PAGE>
Note shall have the right to exchange this Note for the Company's Exchange Notes
(as defined in the Registration Rights Agreement) which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the initial Notes. The Holders of the initial Notes
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of
Euro 1,000 of principal amount and any integral multiples of Euro 1,000 in
excess 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.
8. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all purposes.
9. 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 Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company deposits with the Trustee money and/or European
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to Stated
Maturity, the Company will be discharged from certain covenants set forth in the
Indenture.
11. 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.
A-7
<PAGE>
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
13. SUCCESSOR PERSONS.
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.
14. 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 three scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default specified in clause (a), (b)
or (c) of Section 6.01 of the Indenture) 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 or principal amount of
Notes; (e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal amount
of $10 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; (f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $10 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 or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 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
A-8
<PAGE>
exceed $10 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; (g) a
court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (h) the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 on the Notes to be immediately due and
payable.
If a bankruptcy or insolvency default with respect to the Company
occurs and is continuing, the Notes automatically become 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.
15. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company 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. The
waiver and release are part of the consideration for the issuance of the Notes.
17. AUTHENTICATION.
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<PAGE>
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. 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).
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
685 Third Avenue, New York, New York, 10017, Attention: General Counsel.
A-10
<PAGE>
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be Euro [__]. The following decreases/increases in the principal amount
evidenced by this Note have been made:
Decrease Increase
in in
Principal Principal Total Principal
Amount of Amount of Amount of this Notation Made
Date of this this Global Note by or on
Decrease/ Global Global Following such Behalf of
Increase Note Note Decrease/Increase Trustee
- - -------- --------- --------- ----------------- --------------
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A-11
<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 NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
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.
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.
A-12
<PAGE>
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-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant
to Section 4.11 or Section 4.12 of the Indenture, check the Box: |__|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): Euro _____________.
Date:
----------------------
Your Signature:
-----------------------
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
A-14
<PAGE>
EXHIBIT B
FORM OF REGULATION S GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE 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 NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO
IN RULE 144(k) AS IN EFFECT ON THE DATE OF SUCH TRANSFER, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO VIATEL, INC. OR ANY SUBSIDIARY THEREOF, (B) TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) 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
EURO 100,000, AN OPINION OF COUNSEL ACCEPTABLE TO VIATEL, INC. THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) TO A PERSON OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S 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 EACH OF THE TRUSTEE AND VIATEL, INC. SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO,
B-1
<PAGE>
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
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS
NOTE) IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.08 OF
THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED
TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND
(4) THIS GLOBAL NOTE MAY BE DELIVERED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR
WRITTEN CONSENT OF VIATEL, INC.
B-2
<PAGE>
VIATEL, INC.
12 3/4% Senior Euro Note Due 2008
[CUSIP][CINS][ISIN][Common Code] _________
No. __________ Euro_________
Issue date: April 20, 2000
VIATEL, INC., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to ___________, or its registered assigns, upon
surrender hereof the principal sum of Euro _________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October
15, 2000.
Record Dates: April 1 and October 1.
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.
B-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date: April 20, 2000 VIATEL, INC.
By
--------------------------------------
Name:
Title:
By
--------------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12-3/4 Senior Euro Notes due 2008 described in the
within-mentioned Indenture.
Date: April 20, 2000 THE BANK OF NEW YORK, as Trustee
By
------------------------------------
Authorized Signatory
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<PAGE>
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12 3/4% Senior Euro Note due 2008
1. PRINCIPAL AND INTEREST.
The Company will pay the principal of this Note on April 15, 2008.
The Company 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 will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2000. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
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 the date that is 180 days after the Closing Date in accordance with
the terms of the Registration Rights Agreement, dated April 14, 2000, between
the Company and Morgan Stanley & Co. International Limited, as the manager for
itself and the several placement agents named on Schedule I to the Placement
Agreement, dated April 14, 2000, annual interest (in addition to interest
otherwise due on the Notes) will accrue, at an annual rate of 0.5% per annum of
the principal amount, payable in cash semiannually, in arrears on April 15 and
October 15 of each year, commencing October 15, 2000 until the consummation of a
registered exchange offer or the effectiveness of a shelf-registration statement
with respect to resale of this Note. The Holder of this Note is entitled to the
benefits of such Registration Rights Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12 3/4% per annum.
2. METHOD OF PAYMENT.
The Company will pay principal as provided above and interest (except
defaulted interest) on the principal amount of the Notes as provided above on
each April 15 and October 15 to the Persons who are Holders (as reflected in the
Note Register at the close of business on such April 1 and October 1,
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
Company will not make payment to the Holder unless this Note is surrendered to a
Paying Agent.
B-5
<PAGE>
The Company will pay principal, premium, if any, and as provided
above, interest in Euros. However, the Company may pay principal, premium, if
any, and interest by its check payable in such currency. It may mail an interest
check to a Holder's registered address (as reflected in the Note Register). 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 Paying Agent and Registrar and the
Trustee (through its London Branch) will act as Euro Paying Agent. The Company
will maintain a paying agent in Frankfurt in the event the Notes are listed on
the Frankfurt over-the-counter market. The Company may change any Paying Agent
or Registrar without notice. The Company, any Subsidiary or any Affiliate of any
of them may act as Paying Agent, Registrar or co-Registrar.
4. INDENTURE; ISSUANCE OF ADDITIONAL NOTES.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12 3/4% Senior Notes due 2008, issued and to be issued under an
Indenture, dated as of April 20, 2000 (the "Indenture"), between the Company and
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.
5. 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 Company 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 Note Register. Notes in original denominations larger than Euro 1,000 of
principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes or portions of
Notes surrendered for purchase by the Company, unless the Company defaults in
the payment of the Change of Control Payment.
6. REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, to use its best
efforts to consummate an exchange offer pursuant to which the Holder of this
Note shall have the right to exchange this Note for the Company's Exchange Notes
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<PAGE>
(as defined in the Registration Rights Agreement) which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the initial Notes. The Holders of the initial Notes
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of
Euro 1,000 of principal amount and any integral multiples of Euro 1,000 in
excess 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.
8. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all purposes.
9. 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 Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company deposits with the Trustee money and/or European
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to Stated
Maturity, the Company will be discharged from certain covenants set forth in the
Indenture.
11. 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.
B-7
<PAGE>
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
13. SUCCESSOR PERSONS.
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.
14. 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 three scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default specified in clause (a), (b)
or (c) of Section 6.01 of the Indenture) 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 or principal amount of
Notes; (e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal amount
of $10 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; (f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $10 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 or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 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
B-8
<PAGE>
exceed $10 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; (g) a
court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (h) the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 on the Notes to be immediately due and
payable.
If a bankruptcy or insolvency default with respect to the Company
occurs and is continuing, the Notes automatically become 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.
15. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company 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. The
waiver and release are part of the consideration for the issuance of the Notes.
17. AUTHENTICATION.
B-9
<PAGE>
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. 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).
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
685 Third Avenue, New York, New York, 10017, Attention: General Counsel.
B-10
<PAGE>
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be Euro [___]. The following decreases/increases in the principal amount
evidenced by this Note have been made:
Decrease Increase
in in
Principal Principal Total Principal
Amount of Amount of Amount of this Notation Made
Date of this this Global Note by or on
Decrease/ Global Global Following such Behalf of
Increase Note Note Decrease/Increase Trustee
- - ------- --------- --------- ----------------- -------------
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B-11
<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 NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
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.
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.
B-12
<PAGE>
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
B-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: | X |
---
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): Euro _____________.
Date:
----------------------
Your Signature:
--------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
B-14
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE 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 NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF REGULATION S UNDER THE
SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO
IN RULE 144(k) AS IN EFFECT ON THE DATE OF SUCH TRANSFER, RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO VIATEL, INC. OR ANY SUBSIDIARY THEREOF, (B) TO
A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) 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
EURO 100,000, AN OPINION OF COUNSEL ACCEPTABLE TO VIATEL, INC. THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) TO A PERSON OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S 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 EACH OF THE TRUSTEE AND VIATEL, INC. SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO,
C-1
<PAGE>
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
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
C-2
<PAGE>
VIATEL, INC.
12 3/4% Senior Euro Note Due 2008
No.________ Euro____________
Issue Date: April 20, 2000
VIATEL, INC., a Delaware corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to _____________________, or its registered assigns,
upon surrender hereof the principal sum of Euro__________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October
15, 2000.
Record Dates: April 1 and October 1.
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.
C-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date: April 20, 2000 VIATEL, INC.
By____________________________________
Name:
Title:
By____________________________________
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12-3/4% Senior Euro Notes due 2008 described in the
within-mentioned Indenture.
Date: April 20, 2000 THE BANK OF NEW YORK, as Trustee
By____________________________________
Authorized Signatory
C-4
<PAGE>
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12 3/4% Senior Euro Note due 2008
1. PRINCIPAL AND INTEREST.
The Company will pay the principal of this Note on April 15, 2008.
The Company 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 will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2000. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
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 the date that is 180 days after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 14, 2000 between the
Company and Morgan Stanley & Co. International Limited, as the manager for
itself and the several placement agents named on Schedule I to the Placement
Agreement dated April 14, 2000, annual interest (in addition to interest
otherwise due on the Notes) will accrue, at an annual rate of 0.5% per annum of
the principal amount, payable in cash semiannually, in arrears on April 15 and
October 15 of each year, commencing October 15, 2000 until the consummation of a
registered exchange offer or the effectiveness of a shelf-registration statement
with respect to resale of this Note. The Holder of this Note is entitled to the
benefits of such Registration Rights Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12 3/4% per annum.
2. METHOD OF PAYMENT.
The Company will pay principal as provided above and interest (except
defaulted interest) on the principal amount of the Notes as provided above on
each April 15 and October 15 to the Persons who are Holders (as reflected in the
Note Register at the close of business on such April 1 and October 1,
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
Company will not make payment to the Holder unless this Note is surrendered to a
Paying Agent.
C-5
<PAGE>
The Company will pay principal, premium, if any, and as provided
above, interest in Euros. However, the Company may pay principal, premium, if
any, and interest by its check payable in such currency. It may mail an interest
check to a Holder's registered address (as reflected in the Note Register). 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 U.S. Paying Agent and Registrar and
the Trustee (through its London Branch) will act as Euro Paying Agent. The
Company will maintain a paying agent in Frankfurt in the event the Notes are
listed on the Frankfurt over-the-counter market. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. INDENTURE; ISSUANCE OF ADDITIONAL NOTES.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12 3/4% Senior Euro Notes due 2008, issued and to be issued under
an Indenture dated as of April 20, 2000 (the "Indenture"), between the Company
and 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.
5. 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 Company 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 Note Register. Notes in original denominations larger than Euro 1,000 of
principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes or portions of
Notes surrendered for purchase by the Company, unless the Company defaults in
the payment of the Change of Control Payment.
6. REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, to use its best
efforts to consummate an exchange offer pursuant to which the Holder of this
C-6
<PAGE>
Note shall have the right to exchange this Note for the Company's Exchange Notes
(as defined in the Registration Rights Agreement) which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the initial Notes. The Holders of the initial Notes
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of
Euro 1,000 of principal amount and any integral multiples of Euro 1,000 in
excess 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.
8. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all purposes.
9. 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 Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company deposits with the Trustee money and/or European
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes (a) to redemption or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) to Stated
Maturity, the Company will be discharged from certain covenants set forth in the
Indenture.
11. 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.
C-7
<PAGE>
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
13. SUCCESSOR PERSONS.
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.
14. 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 three scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default specified in clause (a), (b)
or (c) of Section 6.01 of the Indenture) 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 or principal amount of
Notes; (e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal amount
of $10 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; (f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $10 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 or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 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
C-8
<PAGE>
exceed $10 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; (g) a
court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (h) the Company 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 or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 on the Notes to be immediately
due and payable.
If a bankruptcy or insolvency default with respect to the Company
occurs and is continuing, the Notes automatically become 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.
15. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company 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. The
waiver and release are part of the consideration for the issuance of the Notes.
17. AUTHENTICATION.
C-9
<PAGE>
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. 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).
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
685 Third Avenue, New York, New York, 10017, Attention: General Counsel.
C-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 NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
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.
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.
C-11
<PAGE>
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
C-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box:
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): Euro _____________.
Date:
Your Signature:___________________________________
(Sign exactly as your name appears on the otherside of this Note)
Signature Guarantee: ______________________________
C-13
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE
The Bank of New York [DATE]
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12 3/4% Senior Euro Notes
DUE 2008 (THE "NOTES")
Ladies and Gentlemen:
This letter relates to Euro____________ principal amount of Notes
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 April 20, 2000 relating to the
Notes, we hereby certify that we are (or we will hold such Notes on behalf of) a
person outside the United States to whom the Notes 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 Notes, 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
D-1
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
PURSUANT TO REGULATION S
The Bank of New York [DATE]
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12 3/4% Senior Euro Notes
DUE 2008 (THE "NOTES")
Ladies and Gentlemen:
In connection with our proposed sale of Euro _______ aggregate
principal amount of the Notes, 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 Notes 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 U.S. Securities Act of 1933.
E-1
<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
E-2
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
The Bank of New York [DATE]
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12 3/4% Senior Euro Notes
DUE 2008 (THE "NOTES")
Dear Sirs:
In connection with our proposed purchase of Euro ___________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture dated as
of April 20, 2000 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes 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 Notes have not been
registered under the Securities Act, and that the Notes 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 Notes, we will do so only (A) to 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 to any person purchasing any of the Notes
from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will be
required to furnish to you and the Company such certifications, legal
F-1
<PAGE>
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 Notes 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
Notes, 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 Notes 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
F-2
EXECUTION COPY
- - ------------------------------------------------------------------------------
VIATEL, INC.
and
THE BANK OF NEW YORK,
as Trustee
-----------------
7 3/4% CONVERTIBLE JUNIOR SUBORDINATED DEBENTURES
-----------------
INDENTURE
Dated as of April 12, 2000
- - ------------------------------------------------------------------------------
<PAGE>
VIATEL, INC.
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture dated as of April 12, 2000
Trust Indenture
ACT SECTION INDENTURE SECTION
310(a)(1)...................................................6.10
(a)(2).................................................6.10
(a)(3).................................................Not Applicable
(a)(4).................................................Not Applicable
(a)(5).................................................6.10
(b)....................................................6.8, 6.10
311(a)......................................................6.11
(b)....................................................6.11
312(a)......................................................4.1 and 4.2
(b)....................................................4.2
(c)....................................................4.2
313(a)(1)-(5) & (7)(8)......................................6.6
(a)(6).................................................Not Applicable
(b)(1).................................................Not Applicable
(b)(2).................................................6.6
(c)....................................................6.6
(d)....................................................6.6
314(a)(1)-(3)............................................... 4.3
(a)(4).................................................3.4
(b)....................................................Not Applicable
(c)(1).................................................11.5
(c)(2).................................................11.5
(c)(3).................................................Not Applicable
(d)....................................................Not Applicable
(e)....................................................11.5
(f)....................................................Not Applicable
315(a)....................................................Not Applicable
(b)....................................................6.5
(c)....................................................6.1
(d)....................................................6.1
(d)(1).................................................6.1
(d)(2).................................................6.1
(d)(3).................................................6.1
(e)....................................................5.10
316(a)......................................................7.4
(a)(1)(A)............................................5.8
(a)(1)(B)............................................5.1, 5.9
(a)(2)...............................................Not Applicable
<PAGE>
(b)..................................................5.6
(c)..................................................7.1
317(a)(1)..............................................5.2
(a)(2)...............................................5.2
(b)..................................................3.3
318(a).................................................11.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms Defined..........................................1
ARTICLE II
THE CONVERTIBLE DEBENTURES
Section 2.1 Designation and Principal Amount..............................11
Section 2.2 Maturity......................................................11
Section 2.3 Form and Payment..............................................11
Section 2.4 Exchange and Registration of Transfer of Convertible
Debentures; Restrictions on Transfers; Depositary.............12
Section 2.5 Interest......................................................15
Section 2.6 Authentication and Delivery of Convertible Debentures.........16
Section 2.7 Execution of Convertible Debentures...........................18
Section 2.8 Certificate of Authentication.................................18
Section 2.9 Denomination and Date of Convertible Debentures;
Payments of Interest..........................................19
Section 2.10 Registration, Transfer and Exchange..........................20
Section 2.11 Mutilated, Defaced, Destroyed, Lost and Stolen Convertible
Debentures...................................................23
Section 2.12 Cancellation of Convertible Debentures.......................24
Section 2.13 Temporary Convertible Debentures.............................24
Section 2.14 CUSIP Numbers................................................24
ARTICLE III
COVENANTS OF THE COMPANY
Section 3.1 Payment of Principal and Interest.............................25
Section 3.2 Offices for Payment, etc......................................25
Section 3.3 Paying Agents.................................................25
Section 3.4 Written Statement to Trustee..................................26
Section 3.5 Limitation on Dividends; Transactions with Affiliates.........26
Section 3.6 Covenants as to Viatel Trust..................................27
Section 3.7 Existence.....................................................27
ARTICLE IV
HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE
Section 4.1 Company to Furnish Trustee Information as to Names and
Addresses of Holders of Convertible Debentures................27
Section 4.2 Preservation and Disclosure of Holders of Convertible
Debentures' Lists.............................................28
Section 4.3 Reports by the Company........................................29
i
<PAGE>
ARTICLE V
REMEDIES OF THE TRUSTEE AND HOLDERS OF CONVERTIBLE DEBENTURES ON EVENT OF
DEFAULT
Section 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default.............................................30
Section 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt.32
Section 5.3 Application of Proceeds.......................................34
Section 5.4 Restoration of Rights on Abandonment of Proceedings...........34
Section 5.5 Limitations on Suits by Holders of Convertible Debentures.....34
Section 5.6 Unconditional Right of Holders of Convertible Debentures
to Institute Certain Suits....................................35
Section 5.7 Powers and Remedies Cumulative; Delay or Omission Not Waiver
of Default....................................................35
Section 5.8 Control by Holders of Convertible Debentures..................35
Section 5.9 Waiver of Past Defaults.......................................36
Section 5.10 Right of Court to Require Filing of Undertaking to Pay Costs.36
Section 5.11 Suits for Enforcement........................................37
ARTICLE VI
CONCERNING THE TRUSTEE
Section 6.1 Duties of the Trustee.........................................37
Section 6.2 Rights of Trustee.............................................38
Section 6.3 Individual Rights of Trustee..................................39
Section 6.4 Trustee's Disclaimer..........................................39
Section 6.5 Notice of Defaults............................................39
Section 6.6 Reports by Trustee to Holders.................................39
Section 6.7 Compensation and Indemnity....................................40
Section 6.8 Replacement of Trustee........................................40
Section 6.9 Successor Trustee by Merger...................................42
Section 6.10 Eligibility; Disqualification................................42
Section 6.11 Preferential Collection of Claims Against Company............42
Section 6.12 Trustee's Application for Instructions from the Company......42
ARTICLE VII
CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES
Section 7.1 Evidence of Action Taken by Holders of Convertible Debentures.42
Section 7.2 Proof of Execution of Instruments.............................43
Section 7.3 Holders to be Treated as Owners...............................43
Section 7.4 Convertible Debentures Owned by Company Deemed Not
Outstanding...................................................43
Section 7.5 Right of Revocation of Action Taken...........................43
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.1 Supplemental Indentures Without Consent of Holders of
Convertible Debentures........................................44
ii
<PAGE>
Section 8.2 Supplemental Indentures With Consent of Holders of
Convertible Debentures........................................45
Section 8.3 Effect of Supplemental Indenture..............................45
Section 8.4 Documents to Be Given to Trustee..............................46
Section 8.5 Notation on Convertible Debentures in Respect of
Supplemental Indentures.......................................46
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, etc., on Certain Terms...............46
Section 9.2 Successor Corporation Substituted.............................47
Section 9.3 Opinion of Counsel to Trustee.................................47
ARTICLE X
REDEMPTION OF THE CONVERTIBLE DEBENTURES
Section 10.1 Tax Event Redemption.........................................47
Section 10.2 Optional Redemption by Company...............................48
Section 10.3 No Sinking Fund..............................................49
Section 10.4 Election to Redeem; Notice of Redemption; Partial
Redemptions..................................................49
Section 10.5 Payment of Convertible Debentures Called for Redemption......51
Section 10.6 Exclusion of Certain Convertible Debentures from Eligibility
for Selection for Redemption.................................51
ARTICLE XI
EXTENSION OF INTEREST PAYMENT PERIOD
Section 11.1 Extension of Interest Payment Period.........................51
Section 11.2 Notice of Extension..........................................52
ARTICLE XII
CONVERSION OF CONVERTIBLE DEBENTURES
Section 12.1 Conversion Rights............................................53
Section 12.2 Conversion Procedures........................................53
Section 12.3 Conversion Price Adjustments.................................55
Section 12.4 Merger, Consolidation or Sale of Assets......................60
Section 12.5 Notice of Adjustments of Conversion Price....................61
Section 12.6 Prior Notice of Certain Events...............................62
Section 12.7 Certain Additional Rights....................................64
Section 12.8 Trustee Not Responsible for Determining Conversion Price or
Adjustments..................................................63
Section 12.9 Reservation of Shares of Common Stock........................63
Section 12.10 Payment of Certain Taxes upon Conversion....................65
Section 12.11 Nonassessability............................................64
ARTICLE XIII
SUBORDINATION OF CONVERTIBLE DEBENTURES
Section 13.1 Convertible Debentures Subordinate to Senior Indebtedness.. .64
iii
<PAGE>
Section 13.2 Payment Over of Proceeds upon Dissolution, Etc...............64
Section 13.3 Prior Payment to Senior Indebtedness upon Acceleration
of Convertible Debentures....................................65
Section 13.4 No Payment When Senior Indebtedness in Default...............66
Section 13.5 Payment Permitted in Certain Situations......................66
Section 13.6 Subrogation to Rights of Holders of Senior Indebtedness......66
Section 13.7 Provisions Solely to Define Relative Rights..................67
Section 13.8 Trustee to Effectuate Subordination..........................67
Section 13.9 No Waiver of Subordination Provisions........................67
Section 13.10 Notice to Trustee...........................................68
Section 13.11 Reliance on Judicial Order or Certificate of Liquidating
Agent.......................................................68
Section 13.12 Trustee Not Fiduciary for Holders of Senior Indebtedness....69
Section 13.13 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights............................69
Section 13.14 Article Applicable to Paying Agents.........................69
Section 13.15 Certain Conversions Deemed Payment..........................69
ARTICLE XIV
EXPENSES
Section 14.1 Payment of Expenses..........................................70
Section 14.2 Payment Upon Resignation or Removal..........................70
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 Incorporators, Stockholders, Officers and Directors of
Company Exempt from Individual Liability.....................71
Section 15.2 Provisions of Indenture for the Sole Benefit of Parties and
Holders of Convertible Debentures............................71
Section 15.3 Right to Assign; Successors and Assigns Bound by Indenture...71
Section 15.4 Notices and Demands on Company, Trustee and Holders of
Convertible Debentures.......................................71
Section 15.5 Officers' Certificates and Opinions of Counsel; Statements to
Be Contained Therein.........................................72
Section 15.6 Payments Due on Saturdays, Sundays and Holidays..............73
Section 15.7 Conflict of Any Provision of Indenture with Trust Indenture
Act..........................................................73
Section 15.8 New York Law to Govern.......................................73
Section 15.9 Counterparts.................................................73
Section 15.10 Effect of Headings; Gender...................................74
Exhibit A Form of Convertible Debenture...............................A-1
iv
<PAGE>
THIS INDENTURE, dated as of April 12, 2000 between VIATEL, INC.,
a Delaware corporation (the "Company") and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company desires and has requested the Trustee to
join it in the execution and delivery of this Indenture in order to establish
and provide for the issuance by the Company of Convertible Debentures designated
as its 7 3/4% Convertible Junior Subordinated Debentures (the "Convertible
Debentures"), a specimen copy of which is attached hereto as Exhibit A, on the
terms set forth herein;
WHEREAS, Viatel Financing Trust I, a Delaware statutory business
trust ("Viatel Trust" or the "Trust"), has offered to Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc. and Banc of America Securities LLC (the
"Initial Purchasers") in a private placement $180,000,000 aggregate liquidation
amount of its 7 3/4% Trust Convertible Preferred Securities (the "Convertible
Preferred Securities"), representing undivided beneficial interests in the
assets of the Trust, and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Company
of 111,340.2 Common Securities, liquidation amount $50 per Common Security, in
$185,567,010 aggregate principal amount of the Convertible Debentures; and
WHEREAS, all things necessary to make this Indenture a valid and
legally binding agreement of the Company and the Trustee, in accordance with its
terms, have been done.
NOW, THEREFORE:
There is hereby established the terms of the Convertible
Debentures to be issued under this Indenture, which shall be as set forth herein
and in the form of Convertible Debentures attached hereto as Exhibit A, and in
consideration of the premises and the purchase and acceptance of the Convertible
Debentures by the holders thereof, the Company mutually covenants and agrees
with the Trustee, for the equal and proportionate benefit of all holders of the
Convertible Debentures, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 CERTAIN TERMS DEFINED. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section. All other terms
used in this Indenture that are defined in the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), or the definitions of which in the
Securities Act of 1933, as amended (the "Securities Act"), are referred to in
the Trust Indenture Act, including terms defined therein by reference to the
Securities Act (except as herein otherwise expressly provided or unless the
context otherwise clearly requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force at the
<PAGE>
2
date of this Indenture. All accounting terms used herein and not expressly
defined shall have the meanings assigned to such terms in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a
whole, as supplemented and amended from time to time, and not to any particular
Article, Section or other subdivision. The terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.
"Additional Sums" shall have the meaning set forth in Section
2.5(c).
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Fundamental Change, the average of the daily Closing
Price for one share of Common Stock during the 10 Trading Days immediately prior
to the record date for the determination of the holders of Common Stock entitled
to receive cash, securities, property or other assets in connection with such
Fundamental Change or, if there is no such record date, prior to the date upon
which the holders of the Common Stock shall have the right to receive such cash,
securities, property or other assets.
"Board of Directors" means either the Board of Directors of the
Company or any duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday, or
any other day on which banking institutions in New York, New York or Wilmington,
Delaware are permitted or required by any applicable law to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, units representing interests, participations, rights in or
other equivalents (however designated) of such Person's capital stock,
including, with respect to partnerships, partnership interests (whether general
or limited) and any other interest or participation that confers upon a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, such partnership, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Certificated Convertible Preferred Securities" means Convertible
Preferred Securities issued in definitive registered form.
"Clearing Agent" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Convertible Debentures and in whose name or in the name of a
<PAGE>
3
nominee of that organization shall be registered one or more Global Debentures
and which shall undertake to effect book entry transfers and pledges of the
Convertible Debentures.
"Closing Price" with respect to any security on any day means the
last reported sale price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite Tape, or, if such
security is not listed or admitted to trading on the New York Stock Exchange, on
the principal national securities exchange on which such security is listed or
admitted to trading, or, if such security is not listed or admitted to trading
on a national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc., or, if such security is not quoted or
admitted to trading on such quotation system, on the principal quotation system
on which such security is listed or admitted to trading or quoted, or, if not
listed or admitted to trading or quoted on any national securities exchange or
quotation system, the average of the closing bid and asked prices of such
security in the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or, if not so available in such manner, as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors (or any committee duly authorized by the Board of Directors) of the
Company for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors (or any committee duly
authorized by the Board of Directors) of the Company.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, as amended, or if
at any time after the execution and delivery of this Indenture such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Common Securities" means undivided beneficial interests in the
assets of the Viatel Trust which rank PARI PASSU with Convertible Preferred
Securities issued by the Viatel Trust; provided, however, that upon the
occurrence of an Event of Default, the rights of holders of Common Securities to
payment in respect to distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights of holders of Convertible Preferred
Securities.
"Common Securities Guarantee" means the Common Securities
Guarantee Agreement dated as of April 12, 2000 by the Guarantor.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company.
"Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that, for the 10 Trading Days immediately prior
to such Fundamental Change, has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
<PAGE>
4
quoted on The Nasdaq National Market; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change unless either (i) the
Company continues to exist after the occurrence of such Fundamental Change and
the outstanding Convertible Preferred Securities continue to exist as
outstanding Convertible Preferred Securities, or (ii) not later than the
occurrence of such Fundamental Change, the outstanding Convertible Preferred
Securities are converted into or exchanged for convertible preferred stock or
debentures of a corporation succeeding to the business of the Company, which
convertible preferred stock has powers, preferences and relative, participating,
optional or other rights, and qualifications, limitations and restrictions
substantially similar to those of the Convertible Preferred Securities and which
debentures have terms substantially similar to those of the Convertible
Debentures.
"Company" means Viatel, Inc., a Delaware corporation, until a
successor corporation shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall mean such successor
corporation.
"Compound Interest" shall have the meaning specified in Section
11.1.
"Convertible Debenture" or "Convertible Debentures" has the
meaning stated in the first recital of this Indenture and more particularly
means any Convertible Debentures authenticated and delivered under this
Indenture.
"Convertible Preferred Securities" has the meaning specified in
the recitals to this Indenture.
"Conversion Agent" has the meaning assigned thereto in the
Declaration.
"Conversion Price" has the meaning set forth in Section 12.1.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at 101 Barclay Street, Floor 21 West, New York, New York
10286, Attention: Corporate Trust Administration.
"Declaration" means the Amended and Restated Declaration of Trust
of Viatel Financing Trust I, a Delaware statutory business trust, dated as of
April 12, 2000.
"Debt" of a Person means, all indebtedness of such Person which
is for money borrowed.
"defaulted interest" has the meaning specified in Section 2.9.
"Deferred Interest" has the meaning specified in Section 11.1.
"Delaware Trustee" has the meaning specified in the Declaration.
"Depositary" means, with respect to the Convertible Debentures
issuable or issued in the form of one or more Global Debentures, the Person
designated as Depositary by the Company until a successor Depositary shall have
<PAGE>
5
become such pursuant to the applicable provisions of this Indenture, and
thereafter "Depositary" shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such person,
"Depositary" as used with respect to the Convertible Debentures shall mean the
Depositary with respect to the Global Debentures.
"Depositary Convertible Debenture" means a Convertible Debenture
executed by the Company and authenticated and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, all in accordance with
this Indenture, which (i) shall be registered as to principal and interest in
the name of the Depositary or its nominee and (ii) shall represent, and shall be
denominated in an amount equal to the aggregate principal amount of, all or a
portion of the Outstanding Convertible Debentures.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event (as described in the Declaration), the Trust is
to be dissolved in accordance with the Declaration, and the Convertible
Debentures held by the Institutional Trustee are to be distributed to the
holders of the Trust Securities issued by the Trust pro rata in accordance with
the Declaration.
"Dollar" means the coin or currency of the United States of
America which as of the time of payment is legal tender for the payment of
public and private debts.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Extension Period" has the meaning specified in Section 11.1.
"Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or substantially
all of the Common Stock shall be exchanged for, converted into, acquired for or
shall constitute solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of any such series of transactions or
events, for purposes of adjustment of the Conversion Price, such Fundamental
Change shall be deemed to have occurred when substantially all of the Common
Stock shall have been exchanged for, converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other
assets, but the adjustment shall be based upon the consideration that the
holders of Common Stock received in the transaction or event as a result of
which more than 50% of the Common Stock shall have been exchanged for, converted
into or acquired for, or shall constitute solely the right to receive, such
cash, securities, property or other assets.
"Global Debenture" has the meaning specified in Section 2.4(a).
"Government Obligations" means securities which are (i) direct
obligations of the United States government for which its full faith and credit
is pledged or (ii) obligations of a Person controlled or supervised by, or
acting as an agency or instrumentality of, the United States government, the
payment of which obligations is unconditionally guaranteed by the United States
government, and which, in either case, are full faith and credit obligations of
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6
the United States government, and which are not callable or redeemable at the
option of the issuer thereof prior to their stated maturity.
"Guarantor" means the Company in its capacity as guarantor under
any Trust Securities Guarantees.
"Holder" or "Holder of Convertible Debentures" or other similar
terms mean the person in whose name such Convertible Debenture is registered in
the Security Register.
"incur" means to issue, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
the payment of, any Debt.
"Indenture" means this instrument as originally executed and
delivered or as it may from time to time be amended or supplemented as herein
provided, as so amended or supplemented or both, and shall include the forms and
terms of the Convertible Debentures appearing as Exhibit A to this instrument.
"Institutional Trustee" has the meaning specified in the
Declaration.
"Interest Payment Date," when used with respect to any
Convertible Debenture, means the Stated Maturity of an installment of interest
on such Convertible Debenture.
"Lien" means any mortgage or deed of trust, pledge, assignment,
security interest, lien, charge, or other encumbrance or preferential
arrangement (including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Maturity" when used with respect to any Convertible Debenture
means the date on which the principal of such Convertible Debenture or an
installment of principal becomes due and payable as therein or herein provided,
whether at Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.
"Maturity Date" means the date on which the Convertible
Debentures mature and on which the principal shall be due and payable together
with all accrued and unpaid interest thereon including Additional Sums, if any,
and (to the extent permitted by applicable law) Compound Interest, if any.
"Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
"Officers' Certificate" means a certificate signed on behalf of
the Company by the Chairman of the Board of Directors or the vice chairman or
the president or any vice president and by the treasurer, the controller, any
assistant treasurer, the secretary or any assistant secretary of the Company and
delivered to the Trustee. Each such certificate shall include the statements
provided for in Section 15.5.
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7
"Opinion of Counsel" means a written opinion of legal counsel,
who may be an employee of or counsel to the Company. Each Opinion of Counsel
shall include the statements provided for in Section 15.5.
"Optional Redemption Price" has the meaning specified in Section
10.2.
"Outstanding" when used with reference to Convertible Debentures,
subject to the provisions of Section 7.4, means, as of any particular time, all
Convertible Debentures authenticated and delivered under this Indenture, except
(a) Convertible Debentures theretofore cancelled by the Trustee
or delivered to the Trustee for cancellation;
(b) Convertible Debentures, or portions thereof, for the payment
or redemption of which moneys in the necessary amount and in the
required currency shall have been deposited in trust with the Trustee
or with any Paying Agent (other than the Company) or shall have been
set aside, segregated and held in trust by the Company for the Holders
of such Convertible Debentures (if the Company shall act as its own
Paying Agent), provided that if such Convertible Debentures, or
portions thereof, are to be redeemed prior to the Maturity thereof,
notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving
such notice; and
(c) Convertible Debentures that have been paid pursuant to
Section 2.11, converted into Common Stock pursuant to Article XII, or
in exchange for or in lieu of which other Convertible Debentures have
been authenticated and delivered pursuant to the Indenture (except
with respect to any such Convertible Debenture as to which proof
satisfactory to the Trustee and the Company is presented that such
Convertible Debenture is held by a person in whose hands such
Convertible Debenture is a legal, valid and binding obligation of the
Company).
"Paying Agent" means any Person (which may include the Company)
authorized by the Company to pay the principal of or interest, if any, on any
Convertible Debenture on behalf of the Company.
"Persons" or "Person" means any individual, corporation,
partnership, joint venture, limited liability company, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Convertible
Debentures, means the place or places where the principal of and interest, if
any, on the Convertible Debentures are payable as specified pursuant to Section
3.2.
"Placement Agreement" means the Placement Agreement dated April
6, 2000 among the Company, the Trust, Morgan Stanley & Co. Incorporated, Salomon
Smith Barney Inc. and Banc of America Securities LLC.
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8
"Predecessor Convertible Debenture" of a Convertible Debenture
means every previous Convertible Debenture evidencing all or a portion of the
same debt as that evidenced by such Convertible Debenture; and, for the purposes
of this definition, a Convertible Debenture authenticated and delivered under
Section 2.11 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Convertible Debenture shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Convertible Debenture.
"Preferred Securities Guarantee" means the Preferred Securities
Guarantee Agreement dated as of April 12, 2000 between the Guarantor and The
Bank of New York, as Preferred Guarantee Trustee.
"Preferred Securities Registration Rights Agreement" means the
Registration Rights Agreement dated as of April 6, 2000 among the Company, the
Trust and Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc. and Banc
of America Securities LLC as the Initial Purchasers, relating to the Convertible
Preferred Securities.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"principal" whenever used with reference to the Convertible
Debentures or any Convertible Debenture or any portion thereof, shall be deemed
to include "and premium, if any."
"Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the daily Closing Price for one share of the
common stock received by holders of Common Stock (determined as provided herein)
in such Common Stock Fundamental Change during the 10 Trading Days immediately
prior to the date fixed for the determination of the holders of Common Stock
entitled to receive such common stock or, if there is no such date, prior to the
date upon which the holders of Common Stock shall have the right to receive such
common stock.
"QIB" or "Qualified Institutional Buyer" shall mean "Qualified
Institutional Buyer" as such term is defined in Rule 144A under the Securities
Act.
"record date" has the meaning specified in Section 2.9.
"Registrar" has the meaning specified in Section 2.10.
"Representative" means the (a) indenture trustee or other
trustee, agent or representative for any Senior Indebtedness or (b) with respect
to any Senior Indebtedness that does not have any such trustee, agent or other
representative (i) in the case of such Senior Indebtedness issued pursuant to an
agreement providing for voting arrangements as among the holders or owners of
such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting
with the consent of the required persons necessary to bind such holders or
owners of such Senior Indebtedness and (ii) in the case of all other such Senior
Indebtedness, the holder or owner of such Senior Indebtedness.
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9
"Responsible Officer" when used with respect to the Trustee means
any officer within the corporate trust department (or any successor department)
of the Trustee including any vice president, assistant vice president, assistant
treasurer, senior trust officer, trust officer or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Corporate Trust Office
because of his or her knowledge of and familiarity with the particular subject
and who has direct responsibility for the administration of this Indenture.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning specified in Section 2.10.
"Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (a) indebtedness of the
Company for money borrowed (but excluding trade accounts payable arising in the
ordinary course of business) under any credit agreements, notes, guarantees or
similar documents and (b) indebtedness evidenced by securities, debentures,
bonds or other similar instruments issued by the Company; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Company and all obligations of the Company under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of the Company for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the Company
(contingent or otherwise) with respect to an interest rate or other swap, cap or
collar agreements or other similar instruments or agreements or foreign currency
hedge, exchange, purchase or similar instruments or agreements; (vi) all
obligations of the types referred to in clauses (i) through (v) of other Persons
for the payment of which the Company is responsible or liable as obligor,
guarantor or otherwise; and (vii) all obligations of the types referred to in
clauses (i) through (vi) above of other Persons secured by any lien on any
property or asset of the Company (whether or not such obligation is assumed by
the Company), whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company,
except for any such indebtedness that is by its terms subordinated to or PARI
PASSU with the Convertible Debentures. Such Senior Indebtedness shall continue
to be Senior Indebtedness irrespective of any deferrals, renewals, extensions or
refundings of, or amendments, modifications, supplements or waivers of any term
of such Senior Indebtedness.
"Stated Maturity" when used with respect to any Convertible
Debenture or any installment of principal thereof or interest thereon, means the
date on which the principal of such Convertible Debenture or such installment of
principal or interest is due and payable in accordance with the terms thereof.
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10
"Subsidiary" means any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of the
outstanding Capital Stock (or other interests entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, general
partners, managers, managing members, managing partners or trustees thereof or,
if such persons are not elected, to vote on any matter that is submitted to the
vote of all persons holding ownership interests in such entity) is at the time
owned or controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"Trading Day" shall mean a day on which any securities are traded
on the national securities exchange or quotation system used to determine the
Closing Price or any day on which the New York Stock Exchange is open for
trading.
"Transfer Restriction Termination Date" means the earlier of the
first date on which (i) the Convertible Preferred Securities, the Convertible
Debentures and any Common Stock issued or issuable upon the conversion or
exchange thereof (other than (A) such securities acquired by the Company or any
Affiliate thereof since the Issue Date of the Convertible Preferred Securities
and (B) Common Stock issued upon the conversion or exchange of any such security
described in clause (A) above) may be sold pursuant to Rule 144(k) (or any
successor provision) and (ii) all the Offered Securities have been sold pursuant
to an effective registration statement.
"Trust" or "Viatel Trust" means Viatel Financing Trust I, a
Delaware statutory business trust.
"Trust Indenture Act" or "TIA" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended, as in
force at the date as of which this Indenture was originally executed.
"Trust Securities" means the Common Securities and the
Convertible Preferred Securities of Viatel Trust.
"Trust Securities Guarantees" means the Common Securities
Guarantee and the Preferred Securities Guarantee.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof until a successor Trustee shall have become such pursuant to
the provisions hereof, and thereafter, "Trustee" shall mean or include each
Person who is then a Trustee hereunder.
"United States of America" or "United States" means the United
States of America (including the states and the District of Columbia), its
territories, possessions, the Commonwealth of Puerto Rico and other areas
subject to its jurisdiction.
"U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States or any state or political subdivision
thereof, (iii) an estate the income of which is subject to United States federal
income taxation regardless of its sources or (iv) a trust whose administration
is subject to the primary supervision of a United States court and which has one
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11
or more United States fiduciaries who have the authority to control all
substantial decisions of the Trust.
"vice president" when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title of "vice president."
ARTICLE II
THE CONVERTIBLE DEBENTURES
Section 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
There are hereby authorized Debentures designated the "7 3/4%
Junior Convertible Subordinated Debentures," limited in aggregate principal
amount to $185,567,010 which amount shall be as set forth in any written order
of the Company for the authentication and delivery of Convertible Debentures
pursuant to Section 2.6 of this Indenture.
Section 2.2 MATURITY. The Maturity Date is April 15, 2015.
Section 2.3 FORM AND PAYMENT.(a) Except as provided in Section
2.6, the Convertible Debentures shall be issued in fully registered certificated
form without coupons in denominations of $10 in principal amount and integral
multiples thereof. Principal and interest on the Convertible Debentures issued
in certificated form will be payable, the transfer of such Convertible
Debentures will be registrable and such Convertible Debentures will be
exchangeable for Convertible Debentures bearing identical terms and provisions
at the office or agency of the Trustee; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the Holder
at such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of any Convertible Debentures is the
Institutional Trustee, the payment of the principal of and interest (including
Compound Interest and Additional Sums, if any) on such Convertible Debentures
held by the Institutional Trustee will be made at such place and to such account
as may be designated by the Institutional Trustee.
(b) The Convertible Debentures are subject to the terms set forth
in this Indenture including, without limitation, Exhibit A hereto, the terms of
which are hereby incorporated in their entirety by reference.
(c) The Convertible Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the form of
Exhibit A to this Indenture.
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12
Section 2.4 EXCHANGE AND REGISTRATION OF TRANSFER OF CONVERTIBLE
DEBENTURES; RESTRICTIONS ON TRANSFERS; DEPOSITARY.If distributed to holders of
Trust Securities, the Convertible Debentures will be issued to such holders in
the same form as the Trust Securities that such Convertible Debentures replace
in accordance with the following procedures:
(a) So long as Convertible Debentures are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all
Convertible Debentures that are so eligible may be represented by one or more
Convertible Debentures in global form registered in the name of the Depositary
or the nominee of the Depositary, except as otherwise specified below. The
transfer and exchange of beneficial interests in any such Convertible Debenture
in global form shall be effected through the Depositary in accordance with this
Indenture and the procedures of the Depositary therefor.
Convertible Debentures that are distributed to QIBs in
replacement of Convertible Preferred Securities represented by a global
Convertible Preferred Security will be represented by a global Convertible
Debenture (the "144A Global Debenture"). The 144A Global Debenture shall be
referred to herein as a Global Debenture. Convertible Debentures that are
distributed to QIBs in replacement of Certificated Convertible Preferred
Securities will be represented by definitive Convertible Debentures as set forth
in Section 2.4(b).
Except as provided below, beneficial owners of a Convertible
Debenture in global form shall not be entitled to have certificates registered
in their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Convertible Debentures in global form.
(b) Convertible Preferred Securities held in certificated form,
except for certificates representing Convertible Preferred Securities held by
the Depositary or its nominee (or any successor Clearing Agency or its nominee),
shall upon presentation to the Trustee by the Institutional Trustee or by the
holder thereof or by the Institutional Trustee on behalf of such holder shall be
exchanged for Convertible Debentures in fully registered certificated form of
like aggregate principal amount and tenor.
(c) So long as the Convertible Debentures are eligible for
book-entry settlement, and to the extent that Convertible Debentures are held by
QIBs in a Global Debenture, or unless otherwise required by law, upon any
transfer of a definitive Convertible Debenture to a QIB in accordance with Rule
144A, unless otherwise requested by the transferor, and upon receipt of the
definitive Convertible Debenture or Convertible Debentures being so transferred,
together with a certification from the transferor that the transfer is being
made in compliance with Rule 144A (or other evidence satisfactory to the
Trustee), the Trustee shall make an endorsement on any 144A Global Debenture to
reflect an increase in the aggregate principal amount of the Convertible
Debentures represented by such Global Debenture, and the Trustee shall cancel
such definitive Convertible Debenture or Convertible Debentures in accordance
with the standing instructions and procedures of the Depositary, the aggregate
principal amount of Convertible Debentures represented by such Global Debenture
to be increased accordingly; provided that no definitive Convertible Debenture,
or portion thereof, in respect of which the Company or an Affiliate of the
Company held any beneficial interest shall be included in such Global Debenture
until such definitive Convertible Debenture is freely tradable in accordance
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13
with Rule 144(k); provided further that the Trustee shall, at the written
request of the Company, issue Convertible Debentures in definitive form upon any
transfer of a beneficial interest in the Global Debenture to the Company or any
Affiliate of the Company.
Any Global Debenture may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Depositary, by the New
York Stock Exchange or by the National Association of Securities Dealers, Inc.
in order for the Convertible Debentures to be tradeable on the PORTAL Market or
as may be required for the Convertible Debentures to be tradeable on any other
market developed for trading of securities pursuant to Rule 144A or required to
comply with any applicable law or any regulation thereunder or with the rules
and regulations of any securities exchange upon which the Convertible Debentures
may be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Convertible Debentures are subject.
(d) Each Convertible Debenture that bears or is required to bear
the legend set forth in this Section 2.4(d) (a "Restricted Convertible
Debenture") shall be subject to the restrictions on transfer provided in the
legend set forth in this Section 2.4(d), unless such restrictions on transfer
shall be waived by the written consent of the Company, and the Holder of each
Restricted Convertible Debenture, by such Holder's acceptance thereof, agrees to
be bound by such restrictions on transfer. As used in this Section 2.4(d) and in
Section 2.4(e), the term "transfer" encompasses any sale, pledge, transfer or
other disposition of any Restricted Convertible Debenture.
Prior to the Transfer Restriction Termination Date, any
certificate evidencing a Convertible Debenture shall bear a legend in
substantially the following form, unless otherwise agreed by the Company (with
written notice thereof to the Trustee):
THE SECURITY EVIDENCED HEREBY 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 IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THE
SECURITY EVIDENCED HEREBY OR, IF THIS SECURITY IS CONVERTIBLE INTO COMMON STOCK,
THE COMMON STOCK ISSUABLE UPON CONVERSION OR EXCHANGE OF THIS SECURITY EXCEPT
(A) TO VIATEL, INC. (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
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14
THE TRUSTEE FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE
DEBENTURES, AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK,
THE TRANSFER AGENT FOR THE COMMON STOCK), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR TRANSFER AGENT), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
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 FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES,
AS THE CASE MAY BE (OR, IF THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER
MUST FURNISH TO THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THE COMPANY OR VIATEL FINANCING TRUST I (THE "TRUST") 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). IF THIS CERTIFICATE DOES NOT EVIDENCE
COMMON STOCK AND IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE FOR THE CONVERTIBLE PREFERRED SECURITIES OR THE
CONVERTIBLE DEBENTURES, AS THE CASE MAY BE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY OR THE TRUST 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.
THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER 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.
Following the Transfer Restriction Termination Date, any
Convertible Debenture or security issued in exchange or substitution therefor
(other than (i) Convertible Debentures acquired by the Company or any Affiliate
thereof since the issue date of the Convertible Preferred Securities and (ii)
Common Stock issued upon the conversion or exchange of any Convertible Debenture
described in clause (i) above) may upon surrender of such Convertible Debenture
for exchange to the Registrar in accordance with the provisions of this Section
2.4, be exchanged for a new Convertible Debenture or Convertible Debentures, of
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15
like tenor and aggregate principal amount, which shall not bear the restrictive
legend required by this Section 2.4(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in this Section 2.4(d)), a Global Debenture may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to all or a portion of the Convertible Debentures in
global form. Initially, the Global Debentures shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the Depositary, and
deposited with the Trustee as custodian for Cede & Co.
Definitive Convertible Debentures issued in exchange for all or a
part of a Global Debenture pursuant to this Section 2.4(d) shall be registered
in such names and in such authorized denominations as the Depositary, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Convertible Debentures to the person in whose names such
definitive Convertible Debentures are so registered.
At such time as all interests in a Global Debenture have been
redeemed, converted, exchanged, repurchased or canceled, such Global Debenture
shall be, upon receipt thereof, canceled by the Trustee in accordance with
standing procedures and instructions of the Depositary. At any time prior to
such cancellation, if any interest in a Global Debenture is exchanged for
definitive Convertible Debentures, redeemed, converted, exchanged or repurchased
by the Company pursuant to Article X or canceled, or transferred for part of a
Global Debenture, the principal amount of such Global Debenture shall, in
accordance with the standing procedures and instructions of the Depositary be
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Debenture by, or at the direction of, the Trustee to reflect such
reduction or increase.
(e) Any Convertible Debenture or Common Stock issued upon the
conversion or exchange of a Convertible Debenture that, prior to the Transfer
Restriction Termination Date, is purchased or owned by the Company or any
Affiliate thereof may not be resold by the Company or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Convertible Debentures or Common Stock, as the case may be, no longer
being "restricted securities" (as defined under Rule 144).
Section 2.5 INTEREST.
(a) Each Convertible Debenture will bear interest at the rate of
7:% per annum (the "Coupon Rate") from April 12, 2000 until the principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the Coupon Rate, compounded quarterly,
<PAGE>
16
payable (subject to the provisions of Article XI) quarterly in arrears on
January 15, April 15, July 15 and October 15 of each year (each, an "Interest
Payment Date"), commencing on July 15, 2000, to the Person in whose name such
Convertible Debenture or any Predecessor Convertible Debenture is registered, at
the close of business on the record date for such interest installment, which
shall be the close of business on the fifteenth day prior to that Interest
Payment Date.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed, will be computed on the basis of the actual number of days
elapsed per 30-day month. In the event that any date on which interest is
payable on the Convertible Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(c) If at any time the Trust is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, the Company will pay as additional sums ("Additional
Sums") such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying any such taxes, duties,
assessments or other governmental charges will not be less than the amounts the
Trust would have received had no such taxes, duties, assessments or other
government charges been imposed so long as the Trust is the holder of the
Convertible Debentures.
The definitive Convertible Debentures shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Convertible
Debentures, as evidenced by their execution of such Convertible Debentures.
Section 2.6 AUTHENTICATION AND DELIVERY OF CONVERTIBLE
Debentures.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Convertible Debentures in
the aggregate principal amount of up to $185,567,010 executed by the Company to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
make available for delivery such Convertible Debentures to or upon the written
order of the Company, signed by both (i) the chairman of its Board of Directors,
or any vice chairman of its Board of Directors, or its president or any vice
president and (ii) its treasurer or any assistant treasurer or its secretary or
any assistant secretary, without any further action by the Company. In
authenticating such Convertible Debentures and accepting the additional
responsibilities under this Indenture in relation to such Convertible
Debentures, the Trustee shall be provided with and (subject to Section 6.1)
shall be fully protected in relying upon:
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17
(a) a copy of any resolution or resolutions of the Board of
Directors relating to the issuance of such Convertible Debentures, in
each case certified by the secretary or an assistant secretary of the
Company;
(b) a supplemental indenture, if any;
(c) an Opinion of Counsel, prepared in accordance with Section
15.5, which shall state that the Convertible Debentures have been duly
authorized, and, 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
legally binding obligations of the Company enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally and by
general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
Notwithstanding the provisions of the preceding paragraph, if the
Convertible Debentures are not to be originally issued at one time, it shall not
be necessary to deliver the resolution of the Board of Directors and Opinion of
Counsel otherwise required pursuant to such preceding paragraph at or prior to
the time of authentication of each Convertible Debenture if such documents are
delivered at or prior to the time of authentication upon original issuance of
the first Convertible Debentures to be issued. After the original issuance of
the first Convertible Debenture to be issued, any separate written request by
the Company that the Trustee authenticate Convertible Debentures for original
issuance will be deemed to be a certification by the Company that it is in
compliance with all conditions precedent provided for in this Indenture relating
to the authentication and delivery of such Convertible Debentures.
The Trustee shall have the right to decline to authenticate and
deliver any Convertible Debentures under this Section if the Trustee is advised
by counsel in good faith that the issuance of such Convertible Debentures would
expose the Trustee to personal liability or is unlawful.
If the Convertible Debentures are to be issued in the form of one
or more Global Debentures, then the Company shall execute and the Trustee shall,
in accordance with this Section, authenticate and deliver one or more Global
Debentures that (i) shall represent and shall be denominated in an amount equal
to the aggregate principal amount of all of the Convertible Debentures issued
and not yet cancelled, (ii) shall be registered in the name of the Depositary
for such Global Debenture or Convertible Debentures or the nominee of such
Depositary, (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Convertible Debentures in definitive registered form, this
Convertible Debenture may not be transferred except as a whole by the Depositary
to the nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary."
<PAGE>
18
Each Depositary must, at the time of its designation and at all
times while it serves as Depositary, be a clearing agency registered under the
Exchange Act and any other applicable statute or regulation to be so registered
to act as such depositary.
Section 2.7 EXECUTION OF CONVERTIBLE DEBENTURES. The Convertible
Debentures shall be signed on behalf of the Company by the chairman of its Board
of Directors, or any vice chairman of its Board of Directors, or its president
or any vice president and attested by its treasurer or any assistant treasurer
or its secretary or any assistant secretary, under its corporate seal. Such
signatures may be the manual or facsimile signatures of such officers. The seal
of the Company may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Convertible Debentures.
Typographical and other minor errors or defects in any such reproduction of the
seal or any such signature shall not affect the validity or enforceability of
any Convertible Debenture that has been duly authenticated and delivered by the
Trustee.
In case any officer of the Company who shall have signed any of
the Convertible Debentures shall cease to be such officer before the Convertible
Debenture so signed shall be authenticated and delivered by the Trustee or
disposed of by the Company, such Convertible Debenture nevertheless may be
authenticated and delivered or disposed of as though the person who signed such
Convertible Debenture had not ceased to be such officer of the Company; and any
Convertible Debenture may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Convertible Debenture, shall be the
proper officers of the Company, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
Section 2.8 CERTIFICATE OF AUTHENTICATION. Only such Convertible
Debentures as shall bear thereon a certificate of authentication substantially
in the form attached hereto as a part of Exhibit A and executed by the Trustee
by the manual signature of one of its authorized signatories shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose. The
execution of such certificate by the Trustee upon any Convertible Debenture
executed by the Company shall be conclusive evidence that the Convertible
Debenture so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Convertible Debenture shall
have been duly authenticated and delivered hereunder but never issued and sold
by the Company, the Company shall deliver such Convertible Debenture to the
Trustee for cancellation as provided in Section 2.12 together with a written
statement (which need not comply with Section 15.5 and need not be accompanied
by an Opinion of Counsel) stating that such Convertible Debenture has never been
issued and sold by the Company, for all purposes of this Indenture such
Convertible Debenture shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
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19
Section 2.9 DENOMINATION AND DATE OF CONVERTIBLE DEBENTURES;
PAYMENTS OF INTEREST.
Convertible Debentures shall be issuable in denominations of $10
and any integral multiple thereof. The Convertible Debentures shall be numbered,
lettered, or otherwise distinguished in such manner or in accordance with such
plans as the officers of the Company executing the same may determine with the
approval of the Trustee as evidenced by the execution and authentication
thereof.
Each Convertible Debenture shall be dated the date of its
authentication.
The term "record date" as used with respect to any interest
payment date (except for payment of defaulted interest) shall mean the close of
business on the fifteenth day preceding such interest payment date, whether or
not such record date is a Business Day.
Any interest on any Convertible Debenture which is payable, but
is not punctually paid or duly provided for, on any interest payment date,
subject to the provisions of Article XI (called "defaulted interest" for
purposes of this Section) shall forthwith cease to be payable to the Holder on
the relevant record date by virtue of his having been such Holder; and such
defaulted interest may be paid by the Company, at its election in each case, as
provided in clause (1) or clause (2) below:
(1) The Company may elect to make payment of any defaulted
interest to the persons in whose names any such Convertible Debentures
(or their respective predecessor Convertible Debentures) are
registered at the close of business on a special record date for the
payment of such defaulted interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each
Convertible Debentures and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of
such defaulted interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
persons entitled to such defaulted interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for
the payment of such defaulted interest in respect of Convertible
Debentures which shall not be more than 15 nor less than 10 days prior
to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date
and, in the name and at the expense of the Company shall cause notice
of the proposed payment of such defaulted interest and the special
record date thereof to be mailed, first class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less
than 10 days prior to such special record date. Notice of the proposed
payment of such defaulted interest and the special record date
therefor having been mailed as aforesaid, such defaulted interest in
respect of Convertible Debentures shall be paid to the person in whose
names such Convertible Debentures (or their respective predecessor
Convertible Debentures) are registered on such special record date and
such defaulted interest shall no longer be payable pursuant to the
following clause (2). (2) The Company may make payment of any
<PAGE>
20
defaulted interest on the Convertible Debentures in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Convertible Debentures may be listed, and upon
such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each
Convertible Debenture delivered under this Indenture upon transfer of or in
exchange for or in lieu of any other Convertible Debenture shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Convertible Debenture.
In the case of any Convertible Debenture which is converted into
Common Stock of the Company after any record date and on or prior to the next
succeeding Interest Payment Date (other than any Convertible Debenture whose
Maturity is prior to such Interest Payment Date), interest whose Stated Maturity
is on such Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Convertible Debenture (or one or more Predecessor Convertible Debentures) is
registered at the close of business on such record date. However, if a
redemption date falls between a record date and the subsequent Interest Payment
Date, the amount of such payment shall include accumulated and unpaid interest
accrued to, but excluding, such redemption date. Except as otherwise expressly
provided in the first two sentences of this paragraph, in the case of any
Convertible Debenture which is converted, interest whose Stated Maturity is
after the date of conversion of such Convertible Debenture shall not be payable.
Section 2.10 REGISTRATION, TRANSFER AND EXCHANGE.The provisions
of this Section 2.10 shall be subject in their entirety to the provisions of
Section 2.4. The Company will cause to be kept at each office or agency to be
maintained for the purpose as provided in Section 3.2 a register or registers
(herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Company will provide for
the registration and the registration of the transfer or exchange of the
Convertible Debentures. The Trustee is hereby appointed and accepts the
appointment as Registrar (the "Registrar") for purposes of registering, and
registering transfers of, the Convertible Debentures. Upon surrender for
registration of transfer of any Convertible Debenture at any such office or
agency to be maintained for the purpose as provided in Section 3.2, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in the name of the transferee or transferees a new Convertible Debenture or
Convertible Debentures and of a like tenor and containing the same terms (other
than the principal amount thereof, if more than one Convertible Debenture is
executed, authenticated and delivered in respect to any Convertible Debenture so
presented, in which case the aggregate principal amount of the executed,
authenticated and delivered Convertible Debentures shall equal the principal
amount of the Convertible Debenture presented in respect thereof) and
conditions.
At the option of the Holder thereof, Convertible Debentures
(other than a Global Debenture, except as set forth below) may be exchanged for
a Convertible Debenture or Convertible Debentures having authorized
denominations and an equal aggregate principal amount, upon surrender of such
Convertible Debentures to be exchanged at the agency of the Company that shall
<PAGE>
21
be maintained for such purpose in accordance with Section 3.2 and upon payment,
if the Company shall so require, of the charge hereinafter provided. Whenever
any Convertible Debentures are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Convertible
Debentures which the Holder making the exchange is entitled to receive. All
Convertible Debentures surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly cancelled by the Trustee and the Trustee shall
dispose of such cancelled Convertible Debentures in its customary manner and
will deliver a certificate of cancellation thereof to the Company.
All Convertible Debentures issued upon any transfer or exchange
of Convertible Debentures shall be the valid and legally binding obligations of
the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Convertible Debentures surrendered upon such transfer or
exchange.
Every Convertible Debenture presented or surrendered for
registration of transfer or exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any
registration of transfer or exchange of Convertible Debentures, but the company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Convertible Debentures, other than exchanges pursuant to Sections 2.13, 8.5 or
12.5 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Convertible Debenture during a 15-day period prior
to the day of mailing of the relevant notice of redemption or (ii) to register
the transfer of or exchange any Convertible Debenture so selected for redemption
in whole or in part, except, in the case of any Convertible Debenture to be
redeemed in part, the portion thereof not redeemed.
Notwithstanding any other provisions of this Section 2.10, unless
and until it is exchanged in whole or in part for Convertible Debentures in
definitive registered form, a Global Debenture representing all or a portion of
the Convertible Debentures may not be transferred except as a whole by the
Depositary to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.
If at any time the Depositary for any Convertible Debentures
represented by one or more Global Debentures notifies the Company that it is
unwilling or unable to continue as Depositary for such Convertible Debentures or
if at any time the Depositary for such Convertible Debentures shall no longer be
eligible under Section 2.6, the Company shall appoint a successor Depositary
with respect to such Convertible Debentures. If a successor Depositary for such
Convertible Debentures is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, as the case
may be, the Company's election that such Convertible Debentures be represented
by one or more Global Debentures shall no longer be effective and the Company
will execute, and the Trustee, upon receipt of an Officers' Certificate for the
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22
authentication and delivery of definitive Convertible Debentures, will
authenticate and deliver, Convertible Debentures in definitive registered form,
in any authorized denominations, in an aggregate principal amount equal to the
principal amount of the Global Debenture or Convertible Debentures representing
such Convertible Debentures in exchange for such Global Debenture or Convertible
Debentures.
The Company may at any time and in its sole discretion determine
that the Convertible Debentures issued in the form of one or more Global
Debentures shall no longer be represented by a Global Debenture. In such event
the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate for the authentication and delivery of definitive Convertible
Debentures, will authenticate and deliver, Convertible Debentures in definitive
registered form, in any authorized denominations, in an aggregate principal
amount equal to the principal amount of the Global Debenture, in exchange for
such Global Debenture.
If an Event of Default occurs and is continuing with respect to
Convertible Debentures issued in the form of one or more Global Debentures, upon
written notice from the Depositary, the Company will execute, and the Trustee,
upon receipt of an Officers' Certificate for the authentication and delivery of
definitive Convertible Debentures, will authenticate and deliver, Convertible
Debentures in definitive registered form, in any authorized denominations, in an
aggregate principal amount equal to the principal amount of the Global Debenture
or Convertible Debentures, representing such Convertible Debentures, in exchange
for such Global Debenture or Convertible Debentures.
If specified by the Company, the Depositary for such Global
Debenture may surrender such Global Debenture in exchange in whole or in part
for Convertible Debentures in definitive registered form on such terms as are
acceptable to the Company and such Depositary. Thereupon, the Company shall
execute, and the Trustee shall authenticate and deliver, without service charge
to the Holder:
(i) to the Person specified by such Depositary a new Convertible
Debenture or Convertible Debentures, of any authorized denominations
as requested by such Person, in an aggregate principal amount equal to
and in exchange for such Person's beneficial interest in the Global
Debenture; and
(ii) to such Depositary a new Global Debenture in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Debenture and the aggregate principal amount of
Convertible Debentures authenticated and delivered pursuant to clause
(i) above.
Upon the exchange of a Global Debenture for Convertible
Debentures in definitive registered form, in authorized denominations, such
Global Debenture shall be cancelled by the Trustee or an agent of the Company or
the Trustee. Convertible Debentures in definitive registered form issued in
exchange for a Global Debenture pursuant to this Section 2.10 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Debenture, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee or agent of the Company or
the Trustee. The Trustee or such agent shall deliver such Convertible Debentures
<PAGE>
23
to or as directed by the Persons in whose names such Convertible Debentures are
so registered.
Section 2.11 MUTILATED, DEFACED, DESTROYED, LOST AND STOLEN
CONVERTIBLE DEBENTURES. In case any temporary or definitive Convertible
Debenture shall become mutilated or defaced or be destroyed, lost or stolen,
then, in the absence of notice to the Company or the Trustee that the
Convertible Debenture has been acquired by a bona fide purchaser, the Company
shall execute, and upon the written request of any officer of the Company, the
Trustee shall authenticate and make available for delivery a new Convertible
Debenture and of like tenor and principal amount and with the same terms and
conditions, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated or defaced Convertible Debenture or in lieu of
and substitution for the Convertible Debenture so destroyed, lost or stolen. In
every case the applicant for a substitute Convertible Debenture shall furnish to
the Company and to the Trustee and to any agent of the Company or the Trustee
such security or indemnity as may be required by them to indemnify and defend
and to save each of them harmless and, in every case of destruction, loss or
theft, evidence to their satisfaction of the destruction, loss or theft of such
Convertible Debenture and of the ownership thereof and in the case of mutilation
or defacement shall surrender the Convertible Debenture to the Trustee or such
agent.
Upon the issuance of any substitute Convertible Debenture, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent) connected
therewith. In case any Convertible Debenture which has matured or is about to
mature or has been called for redemption in full shall become mutilated or
defaced or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Convertible Debenture, pay or authorize, the payment of the same
(without surrender thereof except in the case of a mutilated or defaced
Convertible Debenture); provided, however, that the applicant for such payment
shall furnish to the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as any of them may require to save each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company and the Trustee and any agent of the
Company or the Trustee evidence to their satisfaction of the destruction, loss
or theft of such Convertible Debenture and of the ownership thereof.
Every substitute Convertible Debenture issued pursuant to the
provisions of this Section by virtue of the fact that any Convertible Debenture
is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen
Convertible Debenture shall be at any time enforceable by anyone and shall be
entitled to all the benefits of (but shall be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately with any and all
other Convertible Debentures duly authenticated and delivered hereunder. All
Convertible Debentures shall be held upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Convertible Debentures and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
<PAGE>
24
Section 2.12 CANCELLATION OF CONVERTIBLE DEBENTURES. All
Convertible Debentures surrendered for payment, redemption, conversion,
registration of transfer or exchange, or for credit against any payment in
respect of a sinking or analogous fund, shall, if surrendered to the Company or
any agent of the Company or the Trustee, be delivered to the Trustee for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Convertible Debentures shall be issued in lieu thereof, except as expressly
permitted by any of the provisions of this Indenture. The Company may at any
time deliver to the Trustee for cancellation any Convertible Debentures
previously authenticated hereunder which the Company has not issued and sold and
all Convertible Debentures so delivered shall be promptly cancelled by the
Trustee. If the Company shall acquire any of the Convertible Debentures, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Convertible Debentures unless and until the
same are delivered to the Trustee for cancellation. All cancelled Convertible
Debentures shall be disposed of in accordance with the Trustee's customary
practices.
Section 2.13 TEMPORARY CONVERTIBLE DEBENTURES. Pending the
preparation of definitive Convertible Debentures, the Company may execute and
the Trustee shall authenticate and make available for delivery temporary
Convertible Debentures (printed, lithographed, typewritten or otherwise
reproduced, in each case in form reasonably acceptable to the Trustee).
Temporary Convertible Debentures shall be issuable in any authorized
denomination, and substantially in the form of the definitive Convertible
Debentures but with such omissions, insertions and variations as may be
appropriate for temporary Convertible Debentures, all as may be determined by
the Company with the reasonable concurrence of the Trustee. Temporary
Convertible Debentures may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Convertible Debenture shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like effect, as the
definitive Convertible Debentures. Without unreasonable delay the Company shall
execute and shall furnish definitive Convertible Debentures and thereupon
temporary Convertible Debentures may be surrendered in exchange therefor without
charge to the Holder at each office or agency to be maintained by the Company
for that purpose pursuant to Section 3.2, and the Trustee shall authenticate and
make available for delivery in exchange for such temporary Convertible
Debentures an equal aggregate principal amount of definitive Convertible
Debentures of authorized denominations. Until so exchanged, the temporary
Convertible Debentures shall be entitled to the same benefits under this
Indenture as definitive Convertible Debentures.
Section 2.14 CUSIP NUMBERS.
The Company in issuing the Convertible Debentures may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; PROVIDED that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Convertible Debentures or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Convertible Debentures, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the "CUSIP"
numbers.
<PAGE>
25
ARTICLE III
COVENANTS OF THE COMPANY
Section 3.1 PAYMENT OF PRINCIPAL AND INTEREST.
The Company covenants and agrees for the benefit of the
Convertible Debentures that it will duly and punctually pay or cause to be paid
the principal of, and interest on, each of the Convertible Debentures in
accordance with the terms of such Convertible Debentures and of this Indenture.
The interest on Convertible Debentures (together with any additional amounts
payable pursuant to the terms of such Convertible Debentures) shall be payable
only to or upon the written order of the Holders thereof and at the option of
the Company may be paid by wire transfer or by mailing checks for such interest
payable to or upon the written order of such Holders at their last addresses as
they appear on the Security Register.
Payment of principal of and any interest on any Convertible
Debenture in definitive global form shall be made to the Person or Persons
specified therein. Except as provided in the preceding paragraph, the Company,
the Trustee and any agent of the Company and the Trustee shall treat a Person as
the Holder of such principal amount of Outstanding Convertible Debentures
represented by a Global Debenture as shall be specified in a written statement
of the Holder of such Global Debenture.
Section 3.2 OFFICES FOR PAYMENT, ETC. So long as any of the
Convertible Debentures remain outstanding, the Company will maintain the
following: an office or agency in the Borough of Manhattan, City of New York (a)
where the Convertible Debentures may be presented for payment, (b) where the
Convertible Debentures may be presented for registration of transfer and for
exchange as provided in this Indenture, and (c) where notices and demands may be
served upon the Company in respect of the Convertible Debentures, or this
Indenture.
The Company will give to the Trustee written notice of the
location of any such office or agency and of any change of location thereof. In
case the Company shall fail to so designate or maintain any such office or
agency or shall fail to give such notice of the location or of any change in the
location thereof, presentations and demands may be made and notices may be
served at the Corporate Trust Office. The Trustee is hereby appointed, and
accepts its appointment as, Paying Agent.
Section 3.3 PAYING AGENTS. Whenever the Company shall appoint a
Paying Agent other than the Trustee with respect to the Convertible Debentures,
it will cause such Paying Agent to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section:
(a) that it will hold all sums received by it as such Paying
Agent for the payment of the principal of or interest on the
Convertible Debentures (whether such sums have been paid to it by the
Company or by any other obligor on the Convertible Debentures) in
trust for the benefit of the Holders of the Convertible Debentures or
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26
of the Trustee, and upon the occurrence of an Event of Default and
upon the written request of the Trustee, pay over all such sums
received by it to the Trustee; and
(b) that it will give the Trustee written notice of any failure
by the Company (or by any other obligor on the Convertible Debentures)
to make any payment of the principal of or interest on the Convertible
Debentures when the same shall be due and payable. The Company will,
on or prior to each due date of the principal of or interest on the
Convertible Debentures, deposit in a timely manner with the Paying
Agent a sum sufficient to pay such principal or interest so becoming
due, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure to take such action.
If the Company shall act as its own Paying Agent with respect to
the Convertible Debentures, it will, on or before each due date of the principal
of or interest on the Convertible Debentures, set aside, segregate and hold in
trust for the benefit of the holders of the Convertible Debentures a sum
sufficient to pay such principal or interest so becoming due. The Company will
promptly notify the Trustee of any failure to take such action.
Section 3.4 WRITTEN STATEMENT TO TRUSTEE. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, a brief certificate (which need not comply
with Section 15.5) from the principal executive, financial or accounting officer
of the Company as to his or her knowledge, after due inquiry, of the Company's
compliance with all conditions and covenants under this Indenture (such
compliance to be determined without regard to any period of grace or requirement
of notice provided under this Indenture), and if the Company shall not be in
compliance, specifying all such defaults or non-compliance and the nature and
status thereof. The Company shall deliver to the Trustee promptly after the
Company becomes aware of the occurrence of any Event of Default or an event
which, with notice or the lapse of time or both, would constitute an Event of
Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Company proposes to take with
respect thereto.
Section 3.5 LIMITATION ON DIVIDENDS; TRANSACTIONS WITH
AFFILIATES. If any Convertible Debentures are outstanding and (i) there shall
have occurred any Event of Default or any event that, with the giving of notice
or lapse of time or both, would constitute an Event of Default, (ii) the
Guarantor shall be in default with respect to its payment or other obligations
under the Preferred Securities Guarantee or the Common Securities Guarantee, or
(iii) the Company shall have given notice of its election to defer payments of
interest on Convertible Debentures by extending the interest payment period as
provided in Article XI and such period, or any extension thereof, shall be
continuing, then the Company shall not (a) declare or pay any dividend on, make
any distribution with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its Capital Stock or (b) make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank pari passu with or junior in
interest to the Convertible Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
the Convertible Debentures (other than (i) as a result of a reclassification of
the Capital Stock of the Company or the exchange or conversion of one class or
series of the Capital Stock of the Company for another class or series of the
<PAGE>
27
Capital Stock of the Company, (ii) the purchase of fractional interests in
shares of the Capital Stock of the Company pursuant to the conversion or
exchange provisions of such Capital Stock or the security being converted into
or exchanged for such Capital Stock, (iii) dividends or distributions in Common
Stock of the Company, (iv) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (v) payments under the Trust Securities Guarantees, (vi)
purchases of Common Stock of the Company related to the issuance of Common Stock
of the Company or rights under any of the Company's benefit plans for its
directors, officers or employees and (vii) obligations under any dividend
reinvestment and stock purchase plans).
Section 3.6 COVENANTS AS TO VIATEL TRUST. For so long as the
Trust Securities remain outstanding, the Company will (a) maintain 100% direct
or indirect ownership of the Common Securities of Viatel Trust; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company's ownership of the Common Securities, (b) use its
reasonable efforts to cause Viatel Trust (i) to remain a statutory business
trust, except in connection with the distribution of Convertible Debentures to
the holders of Trust Securities in liquidation of Viatel Trust, the redemption
of all of the Trust Securities of Viatel Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (ii)
to continue to be classified as a grantor trust for United States federal income
tax purposes and (c) to use its reasonable efforts to cause each holder of Trust
Securities to be treated as owning an undivided beneficial interest in the
Convertible Debentures.
Section 3.7 EXISTENCE.Subject to Article IX, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
ARTICLE IV
HOLDERS OF CONVERTIBLE DEBENTURES LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 4.1 COMPANY TO FURNISH TRUSTEE INFORMATION AS TO NAMES
AND ADDRESSES OF HOLDERS OF CONVERTIBLE DEBENTURES. The Company covenants and
agrees that it will furnish or cause to be furnished to the Trustee a list in
such form as the Trustee may reasonably require of the names and addresses of
the Holders of the Convertible Debentures:
(a) semiannually and not more than 15 days after each record date
for the payment of interest on such Convertible Debentures, as
hereinabove specified, as of such record date, and
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28
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such
request, such list to be as of a date not more than 15 days prior to
the time such information is furnished, provided that if and so long
as the Trustee shall be the Registrar, such list shall not be required
to be furnished.
Section 4.2 PRESERVATION AND DISCLOSURE OF HOLDERS OF CONVERTIBLE
DEBENTURES' LISTS. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
Holders of Convertible Debentures contained in the most recent list furnished to
it as provided in Section 4.1 or maintained by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list furnished to it as
provided in Section 4.1 upon receipt of a new list so furnished.
(b) In case three or more Holders of Convertible Debentures
(hereinafter referred to as "applicants") apply in writing to the Trustee and
furnish to the Trustee reasonable proof that each such applicant has owned a
Convertible Debenture for a period of at least six months preceding the date of
such application, and such application states that the applicants desire to
communicate with other Holders of Convertible Debentures (in which case the
applicants must all hold Convertible Debentures) or with Holders of all
Convertible Debentures with respect to their rights under this Indenture or
under such Convertible Debentures and such application is accompanied by a copy
of the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five business days after the receipt of
such application, at is election, either
(i) afford to such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section, or
(ii) inform such applicants as to the approximate number of
Holders of Convertible Debentures or of all Convertible Debentures, as
the case may be, whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section, as to the approximate
cost of mailing to such Holders of Convertible Debentures the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of Convertible Debentures or all
Holders of Convertible Debentures, as the case may be, whose name and
address appears in the information preserved at the time by the
Trustee in accordance with the provisions of subsection (a) of this
Section, a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender
to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission together with a copy of
the material to be mailed, a written statement to the effect that, in
the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Convertible Debentures or could be in
violation of applicable law. Such written statement shall specify the
basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so
filed, shall enter an order refusing to sustain any of such objections
<PAGE>
29
or if, after the entry of such order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity
for hearing, that all the objections so sustained have been met, and
shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders of Convertible Debentures with
reasonable promptness after the entry of such order and the renewal of
such tender; otherwise the Trustee shall be relieved of any obligation
or duty to such applicants respecting their application.
(c) Each and every Holder of Convertible Debentures, by receiving
and holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Convertible Debentures in accordance with
the provisions of subsection (b) of this Section, regardless of the source from
which such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
such subsection (b).
Section 4.3 REPORTS BY THE COMPANY. The Company covenants: (a) to
file with the Trustee, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions and any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act, or if the Company
is not required to file information, documents, or reports pursuant to either of
such Sections, then to file with the Trustee and the Commission to the extent
permitted, in accordance with rules and regulations prescribed from time to time
by the Commission, such of the supplementary and periodic information,
documents, and reports which may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
additional information, documents, and reports with respect to compliance by the
Company with the conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations; and
(c) to transmit by mail to the Holders of Convertible Debentures
in the manner and to the extent required by Sections 6.6 and 15.4, within 30
days after the filing thereof with the Trustee, such summaries of any
information, documents, and reports required to be filed by the Company pursuant
to subsections (a) and (b) of this Section as may be required to be transmitted
to such Holders by rules and regulations prescribed from time to time by the
Commission.
<PAGE>
30
ARTICLE V
REMEDIES OF THE TRUSTEE AND HOLDERS OF CONVERTIBLE DEBENTURES ON EVENT OF
DEFAULT
Section 5.1 EVENT OF DEFAULT DEFINED; ACCELERATION OF MATURITY;
WAIVER OF DEFAULT. "Event of Default" with respect to the Convertible Debentures
wherever used herein, means any one or more of the following events which shall
have occurred and be continuing (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) default in the payment of any interest (including any
Additional Sums and Compound Interest) upon or any additional amounts,
including any Liquidated Damages Amount (as defined in the Preferred
Securities Registration Rights Agreement), payable in respect of any
Convertible Debentures when it becomes due and payable, and
continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the
Company in accordance with the terms of this Indenture shall not
constitute a default in the payment of interest for this purpose; or
(b) default in the payment of the principal of, or premium, if
any, on, any Convertible Debentures as and when the same shall become
due and payable whether at maturity, upon redemption, by declaration
or otherwise; or
(c) default in the performance, or breach of any covenant or
warranty of the Company contained in the Convertible Debentures or in
this Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Outstanding Convertible Debentures a written notice specifying such
default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(d) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of all or any substantial part of its
property, or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 90
consecutive days; or
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31
(e) the commencement by the Company of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, or the consent by it to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or of all or any substantial part
of its property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(f) failure by the Company to convert Convertible Debentures into
shares of Common Stock of the Company upon an appropriate election by
a holder of Trust Securities or Convertible Debentures to convert such
Trust Securities or Convertible Debentures, as the case may be, into
such Common Stock (whether or not conversion or exchange is prohibited
by the subordination provisions set forth herein); or
(g) the Viatel Trust shall have voluntarily or involuntarily
dissolved, wound up its business or otherwise terminated its existence
except in connection with (i) the distribution of Convertible
Debentures to holders of Trust Securities in liquidation of their
interest in the Viatel Trust upon the occurrence of a Special Event or
upon the occurrence of events as described in Section 3 of Annex I to
the Declaration, (ii) the redemption of all of the outstanding Trust
Securities of the Viatel Trust, (iii) the conversion of all
outstanding Convertible Preferred Securities into Common Stock of the
Company or (iv) certain mergers, consolidations or amalgamations, each
as permitted by the Declaration.
If an Event of Default occurs and is continuing, then and in each
and every such case, unless the principal of all Convertible Debentures shall
have already become due and payable, either the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Convertible Debentures then
Outstanding hereunder, by notice in writing to the Company (and to the Trustee
if given by such Holders), may declare the entire principal of, plus accrued and
unpaid interest on, all the Convertible Debentures (including Additional Sums,
if any, and, to the extent permitted by applicable law, Compound Interest, if
any) and any other amounts payable under this Indenture to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable. These provisions, however, are subject to the
condition that if at any time after the principal and other amounts due on the
Convertible Debentures shall have been so declared due and payable, and before
any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest, if any, upon all the Convertible Debentures and the principal of any
and all Convertible Debentures which shall have become due otherwise than by
such acceleration (with interest upon such principal and, to the extent that
<PAGE>
32
payment of such interest is enforceable under applicable law, Compound Interest
to the date of such payment) or deposit in Dollars such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agents,
attorneys and counsel and all other expenses and liabilities incurred, and all
advances with interest made, by the Trustee, its agents, attorneys and counsel,
and if any and all defaults under this Indenture, other than the nonpayment of
the principal and interest of Convertible Debentures which shall have become due
by such acceleration, shall have been cured or waived as provided herein, then
and in every such case the Holders of a majority in aggregate principal amount
of the Convertible Debentures then Outstanding, by written notice to the Company
and to the Trustee for the Convertible Debentures, may waive all defaults and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
Section 5.2 COLLECTION OF INDEBTEDNESS BY TRUSTEE; TRUSTEE MAY
PROVE DEBT.The Company covenants that (a) in case default shall be made in the
payment of any installment of interest on any of the Convertible Debentures when
such interest shall have become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Convertible Debentures
when the same shall have become due and payable, whether upon Maturity or upon
any redemption or by declaration or otherwise, then upon demand of the Trustee
for the Convertible Debentures, the Company will pay to the Trustee for the
benefit of the Holders of the Convertible Debentures the whole amount that then
shall have become due and payable on all Convertible Debentures for principal of
or interest, as the case may be (with interest to the date of such payment upon
the overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest specified in the Convertible Debentures); and
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to, and all
expenses and liabilities incurred and all advances with interest made by, the
Trustee and each predecessor Trustee except as a result of its negligence or bad
faith.
Until such demand is made by the Trustee, the Company may pay the
principal of and interest on the Convertible Debentures to the persons entitled
thereto, whether or not the principal of and interest on the Convertible
Debentures are overdue.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee for the Convertible Debentures, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or other obligor upon such Convertible Debentures and collect in the
manner provided by law out of the property of the Company or other obligor upon
such Convertible Debentures, wherever situated, the moneys adjudged or decreed
to be payable.
In case there shall be pending proceedings relative to the
Company or any other obligor upon the securities under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Company or its property or such other
<PAGE>
33
obligor, or in case of any other comparable judicial proceedings relative to the
Company or other obligor under the Convertible Debentures, or to the property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of any Convertible Debentures shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Convertible
Debentures, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to, and all expenses
and liabilities incurred and all advances with interest made by, the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, except as a result of negligence or bad faith)
and of the Holders of Convertible Debentures allowed in any judicial
proceedings relative to the Company or other obligor upon all
Convertible Debentures, or to the property of the Company or such
obligor, and
(b) to collect and receive any moneys or other property payable
or deliver able on any such claims, and to distribute all amounts
received with respect to the claims of the Holders of Convertible
Debentures and of the Trustee on their behalf; and any trustee,
receiver, liquidator, custodian or other similar official is hereby
authorized by each of the Holders of Convertible Debentures to make
payments to the Trustee for the Convertible Debentures, and, in the
event that such Trustee shall consent to the making of payments
directly to the Holders of Convertible Debentures, to pay to such
Trustee such amounts as shall be sufficient to cover reasonable
compensation to, and all expenses and liabilities incurred and all
advances with interest made by, such Trustee, each predecessor Trustee
and their respective agents, attorneys and counsel and all other
amounts due to such Trustee or any predecessor Trustee pursuant to
Section 6.7, except as a result of Trustee's negligence or bad faith.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder of
Convertible Debentures any plan of reorganization, arrangement, adjustment or
composition affecting the Convertible Debentures or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of Convertible Debentures in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Convertible Debentures, may be enforced by the
<PAGE>
34
Trustee for the Convertible Debentures without the possession of any of the
Convertible Debentures or the production thereof at any trial or other
proceedings relative thereto, any such action or proceedings instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Convertible Debentures in respect of which such action was taken.
In any proceedings brought by the Trustee for the Convertible
Debentures (and also any proceedings involving the interpretation of any
provision of this Indenture to which the Trustee shall be a party), the Trustee
shall be held to represent all the Holders of the Convertible Debentures in
respect to which such action was taken, and it shall not be necessary to make
any Holders of such Convertible Debentures parties to any such proceedings.
Section 5.3 APPLICATION OF PROCEEDS. Any moneys collected by the
Trustee for the Convertible Debentures pursuant to this Article in respect of
the Convertible Debentures shall be applied in the following order at the date
or dates fixed by such Trustee and, in case of the distribution of such moneys
on account of principal or interest, upon presentation of the several
Convertible Debentures in respect of which moneys have been collected and
stamping (or otherwise noting) thereon the payment, or issuing Convertible
Debentures in reduced principal amounts in exchange for the presented
Convertible Debentures if only partially paid, or upon surrender thereof if
fully paid:
FIRST: To the payment of costs and expenses applicable in respect
of which moneys have been collected, including reasonable compensation
to, and all expenses and liabilities incurred and all advances with
interest made by, the Trustee and each predecessor Trustee and their
respective agents and attorneys and all other amounts due to the
Trustee or any predecessor Trustee pursuant to Section 6.7, except as
a result of Trustee's negligence or bad faith;
SECOND: To the payment of the amounts then due and unpaid for
interest on the Convertible Debentures for which principal is not yet
due and payable in respect of which moneys have been collected, such
payments to be made ratably to the persons entitled thereto, without
discrimination or preference, according to the amounts then due and
payable on such Convertible Debentures for interest;
THIRD: To the payment of the amounts then due and unpaid for
principal of and interest on the Convertible Debentures for which
principal is due and payable in respect of which moneys have been
collected, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference, according to the
amounts then due and payable on such Convertible Debentures of
principal and interest, respectively; and
FOURTH: To the payment of the remainder, if any, to the Company.
Section 5.4 RESTORATION OF RIGHTS ON ABANDONMENT OF
PROCEEDINGS. In case the Trustee for the Convertible Debentures or any Holder
shall have proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to the determination in any such proceeding, the
Company, the Trustee and the Holders shall be restored respectively to their
former positions and rights hereunder, and all rights, remedies and powers of
the Company, the Trustee and the Holders of Convertible Debentures shall
continue as though no such proceedings had been taken.
Section 5.5 LIMITATIONS ON SUITS BY HOLDERS OF CONVERTIBLE
DEBENTURES.
No Holder of any Convertible Debenture shall have any right by
virtue or by availing of any provision of this Indenture to institute any action
or proceeding at law or in equity or in bankruptcy or otherwise upon or under
<PAGE>
35
with respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee written
notice of any Event of Default and of the continuance thereof, as hereinbefore
provided, and, if the Viatel Trust is not the sole Holder of the Convertible
Debentures, unless also the Holders of not less than 25% in aggregate principal
amount of the Convertible Debentures then Outstanding shall have made written
request upon the Trustee to institute such action or proceedings in its own name
as trustee hereunder and shall have offered to the Trustee such reasonable
indemnity, as it may require, against the costs, expenses and liabilities to be
incurred therein or thereby and the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity shall have failed to institute any
such action or proceeding and no direction inconsistent with such written
request shall have been given to the Trustee during such 60 day period by
Holders of a majority in principal amount of the Convertible Debentures then
Outstanding; it being understood and intended, and being expressly covenanted by
the taker and Holder of every Convertible Debenture with every other taker and
Holder of a Convertible Debenture and the Trustee, that no one or more Holders
of Convertible Debentures shall have any right in any manner whatever, by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other such Holder of Convertible Debentures, or to
obtain or seek to obtain priority over or preference to any other such Holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders of Convertible
Debentures.
Section 5.6 UNCONDITIONAL RIGHT OF HOLDERS OF CONVERTIBLE
DEBENTURES TO INSTITUTE CERTAIN SUITS. Notwithstanding any provision in this
Indenture and any provision of any Convertible Debenture, the right of any
Holder of any Convertible Debenture to receive payment of the principal of and
(subject to Section 2.9 and Article XI) interest on such Convertible Debenture
at the respective rates, in the respective amount on or after the respective due
dates expressed in such Convertible Debenture, and to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
Section 5.7 POWERS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER OF DEFAULT. Except as provided in Section 2.11 and Section 5.5, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders of
Convertible Debentures 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.
No delay or omission of the Trustee or of any Holder of
Convertible Debentures to exercise any right or power accruing upon any Event of
Default occurring and continuing as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.5, every power and remedy given
by this Indenture or by law to the Trustee or to the Holders of Convertible
Debentures may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or the Holders of Convertible Debentures.
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Section 5.8 CONTROL BY HOLDERS OF CONVERTIBLE DEBENTURES. The
Holders of a majority in aggregate principal amount of the Convertible
Debentures at the time Outstanding shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee with respect
to the Convertible Debentures by this Indenture; provided that such direction
shall not be in conflict with any rule of law or the provisions of this
Indenture; and provided further that the Trustee, being advised by counsel,
shall have the right to decline to follow any such direction if the Trustee
shall determine that the action or proceedings so directed would involve the
Trustee in personal liability or if the Trustee in good faith shall so determine
that the actions or forbearance specified in or pursuant to such direction would
be unduly prejudicial to the interest of Holders of the Convertible Debentures
not joining in the giving of said direction.
Section 5.9 WAIVER OF PAST DEFAULTS. The Holders of not less than
a majority in aggregate principal amount of the Convertible Debentures at the
time Outstanding may on behalf of the Holders of all the Convertible Debentures
waive any past default hereunder or its consequences, except a default:
(a) in the payment of the principal of (or premium, if any) or
any interest on any Convertible Debenture as and when the same shall
become due by the terms of Convertible Debentures otherwise than by
acceleration (unless such default has been cured and sums sufficient
to pay all matured installments of interest and principal and any
premium has been deposited with the Trustee (in accordance with
Section 5.1)), or
(b) in respect of a covenant or provision hereof which under
Article VIII cannot be modified or amended without the consent of the
Holder of each Outstanding Convertible Debenture affected;
provided, however, that if the Convertible Debentures are held by the Viatel
Trust or the Institutional Trustee of such Trust, such waiver or modification to
such waiver shall not be effective until the holders of a majority in aggregate
liquidation amount of Trust Securities of the Viatel Trust shall have consented
to such waiver or modification to such waiver; provided further, that if the
consent of the Holder of each Outstanding Convertible Debenture is required,
such waiver shall not be effective until each holder of the Trust Securities of
the Viatel Trust shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred
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
thereon.
Section 5.10 RIGHT OF COURT TO REQUIRE FILING OF UNDERTAKING TO
PAY COSTS. All parties to this Indenture agree, and each Holder of any
Convertible Debenture, by his acceptance thereof, shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
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37
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder of Convertible Debentures or group of Holders of Convertible Debentures
holding in the aggregate more than 10% in principal amount of the Outstanding
Convertible Debentures, or to any suit instituted by a Holder of Convertible
Debentures for the enforcement of the payment of the principal of or interest on
any Convertible Debenture on or after the due date expressed in such Convertible
Debenture or any date fixed for redemption.
Section 5.11 SUITS FOR ENFORCEMENT.
In case an Event of Default has occurred, has not been waived and
is continuing, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either at law or in equity or in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture
or to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
ARTICLE VI
CONCERNING THE TRUSTEE
Section 6.1 DUTIES OF THE TRUSTEE. (a) If an Event of Default has
occurred and is continuing with respect to the Convertible Debentures, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default with
respect to the Convertible Debentures:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no other duties shall be
inferred or implied against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming on their face to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform on their face to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent failure to act or its own willful misconduct, except that:
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(i) this paragraph (c) does not limit the effect of paragraph (b)
of this Section 6.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.8.
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 6.1.
(e) 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 hereunder, if it shall have reasonable grounds for believing
that the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(f) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 6.2 RIGHTS OF TRUSTEE. Subject to Section 6.1 and the
provisions of the Trust Indenture Act:
(a) The Trustee may conclusively rely on any document (whether in
its original or facsimile form) 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, 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, personally or by agent or attorney at the sole cost of the
Company.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) Subject to the provisions of Section 6.1(c), the Trustee
shall not be liable for any action it takes or omits to take in good faith which
it believes to be authorized or within its rights or powers.
(d) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel.
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39
(e) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(f) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(g) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed by the Trustee with due care to act hereunder.
Section 6.3 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Convertible
Debentures and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar or
co- Registrar may do the same with like rights. However, the Trustee must comply
with Sections 6.10 and 6.11.
Section 6.4 TRUSTEE'S DISCLAIMER. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the
Convertible Debentures, it shall not be accountable for the Company's use of the
proceeds from the Convertible Debentures, it shall not be responsible for any
statement in the registration statement for the Convertible Debentures under the
Securities Act or in the Indenture or the Convertible Debentures (other than its
certificate of authentication).
Section 6.5 NOTICE OF DEFAULTS. If a default occurs and is
continuing with respect to any Convertible Debentures and if it is known to the
Trustee through oral or written notice to a Responsible Officer, the Trustee
shall give to each Holder of Convertible Debentures notice of the default within
90 days after such default occurs. Except in the case of a default described in
Section 5.1(a) or (b), the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interest of Holders of Convertible Debentures.
Section 6.6 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after
each May 15, beginning with the May 15 following the date of this Indenture, the
Trustee shall mail to each Holder of Convertible Debentures and each other
person specified in TIA Section 313(c) a brief report dated as of such May 15
that complies with TIA Section 313(a) to the extent required thereby. The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Holders of
Convertible Debentures shall be filed with the Commission and each securities
exchange on which the Convertible Debentures are listed. The Company agrees
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promptly to notify the Trustee whenever the Convertible Debentures become listed
on any securities exchange and of any delisting thereof.
Section 6.7 COMPENSATION AND INDEMNITY. The Company agrees:
(a) to pay to the Trustee from time to time in Dollars such
compensation as shall be agreed to in writing between the Company and the
Trustee for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances with interest thereon incurred or made by
the Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses, advances with interest thereon and
disbursements of its agents and counsel), except to the extent any such expense,
disbursement or advance may be attributable to its negligence or bad faith; and
(c) to fully indemnify the Trustee and any predecessor Trustee in
Dollars for, and to hold it harmless against, any loss, liability, claim, damage
or expense arising out of or in connection with the acceptance or administration
of this trust or the performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder
(including the reasonable compensation and the expenses, advances with interest
thereon and disbursements of its agents and counsel), except to the extent that
any such loss, liability, claim, damage or expense may be attributable to its
negligence or bad faith.
As security for the performance of the obligations of the Company
in this Section 6.7, the Trustee shall have a lien prior to the Convertible
Debentures on all money or property held or collected by the Trustee, except
that held in trust to pay the principal of or interest, if any, on particular
Convertible Debentures.
"Trustee" for purposes of this Section 6.7 includes any
predecessor Trustee, provided that the negligence or bad faith of any Trustee
shall not be attributable to any other Trustee.
The Company's payment obligations pursuant to this Section 6.7
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a default specified in Sections 5.1(d) and 5.1(e), such
expenses are intended to constitute expenses of administration under bankruptcy
law.
Section 6.8 REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time with respect to Convertible Debentures by so notifying the Company;
provided, however, no such resignation shall be effective until a successor
Trustee has accepted its appointment pursuant to this Section 6.8. The Holders
of a majority in aggregate principal amount of the Outstanding Convertible
Debentures may remove the Trustee at the time outstanding by so notifying the
Trustee and the Company. The Company shall remove the Trustee if:
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(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, with respect to the Convertible
Debentures, the Company shall promptly appoint, by resolution of its Board of
Directors, a successor Trustee with respect to the Convertible Debentures.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture with respect to the Convertible Debentures. The successor
Trustee shall mail a notice of its succession to Holders of Convertible
Debentures so affected. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 6.7.
If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in aggregate principal amount of the Convertible
Debentures at the time Outstanding may petition at the expense of the Company
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.10, any Holder of
Convertible Debentures may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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Section 6.9 SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
Section 6.10 ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a)(1) and Section
310(a)(5). The Trustee shall have combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b).
Section 6.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
Section 6.12 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
COMPANY.
Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
five Business Days after the date any officer of the Company actually receives
such application, unless an such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VII
CONCERNING THE HOLDERS OF CONVERTIBLE DEBENTURES
Section 7.1 EVIDENCE OF ACTION TAKEN BY HOLDERS OF CONVERTIBLE
DEBENTURES.(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided in this Indenture to be given or taken by a
specified percentage in principal amount of the Holders of Convertible
Debentures may be embodied in and evidenced by one or more instruments or
substantially similar tenor signed by such specified percentage of Holders of
Convertible Debentures in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee.
Proof of execution of any instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Sections
6.1 and 6.2) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Article.
(b) The ownership of such Convertible Debentures shall be
provided by the Security Register.
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43
Section 7.2 PROOF OF EXECUTION OF INSTRUMENTS. Subject to
Sections 6.1 and 6.2, the execution of any instrument by a Holder of Convertible
Debentures or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee.
Section 7.3 HOLDERS TO BE TREATED AS OWNERS. The Company, the
Trustee and any agent of the Company or the Trustee may deem and treat the
person in whose name any Convertible Debenture shall be registered upon the
Security Register as the absolute owner of such Convertible Debenture (whether
or not such Convertible Debenture shall be overdue and notwithstanding any
notification of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and (subject to Section 2.9)
interest on such Convertible Debenture and for all other purposes; and neither
the Company nor the Trustee nor any agent of the Company or the Trustee shall be
affected by any notice to the contrary.
Section 7.4 CONVERTIBLE DEBENTURES OWNED BY COMPANY DEEMED NOT
OUTSTANDING. In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Convertible Debentures have concurred in any
direction, consent or waiver under this Indenture, Convertible Debentures which
are owned by the Company or any other obligor on the Convertible Debentures with
respect to which such determination is being made or by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Convertible Debentures with
respect to which such determination is being made shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver only Convertible Debentures
which a Responsible Officer of the Trustee actually knows are so owned shall be
so disregarded. Convertible Debentures 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
Convertible Debentures and that the pledgee is not the Company or any other
obligor upon the Convertible Debentures or any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Convertible Debentures.
Section 7.5 RIGHT OF REVOCATION OF ACTION TAKEN.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.1, of the taking of any action by the Holders
of the percentage in aggregate principal amount of the Convertible Debentures,
as the case may be, specified in this Indenture in connection with such action,
any Holder of a Convertible Debenture the serial number of which is shown by the
evidence to be included among the serial numbers of the Convertible Debentures
the Holders of which have consented to such action may, by filing written notice
at the Corporate Trust Office and upon proof of holding as provided in this
Article, revoke such action so far as concerns such Convertible Debenture.
Except as aforesaid any such action taken by the Holder of any Convertible
Debentures shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Convertible Debenture and of any Convertible
Debentures issued in exchange or substitution therefor, irrespective of whether
or not any notation in regard thereto is made upon any such Convertible
Debenture. Any action taken by the Holders of the percentage in aggregate
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44
principal amount of the Convertible Debentures, as the case may be, specified in
this Indenture in connection with such action shall be conclusively binding upon
the Company, the Trustee and the Holders of all the Convertible Debentures
affected by such action.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
Section 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS OF
CONVERTIBLE DEBENTURES. The Company, when authorized by a resolution of its
Board of Directors, and the Trustee for the Convertible Debentures may from time
to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to such
Trustee, for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Convertible Debentures any property or
assets;
(b) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of
the Company pursuant to Article IX;
(c) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the protection
of the Holders of Convertible Debentures;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture; or to make such other provisions in
regard to matters or questions arising under this Indenture or under
any supplemental indenture as the Board of Directors may deem
necessary or desirable and which shall not materially and adversely
affect the interests of the Holders of the Convertible Debentures; or
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Convertible
Debentures.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property thereunder,
but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Convertible Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 8.2.
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Section 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF
CONVERTIBLE DEBENTURES. With the consent (evidenced as provided in Article VII)
of the Holders of not less than a majority in aggregate principal amount of the
Convertible Debentures at the time Outstanding (voting as one class), the
Company, when authorized by a resolution of its Board of Directors, and the
Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Convertible Debentures;
provided, however, that no such supplemental indenture shall (a) except to the
extent permitted by Article XI, extend the Stated Maturity of any Convertible
Debenture, or reduce the principal amount thereof or any premium thereon, or
reduce the rate or extend the time of payment of interest thereon, or reduce any
amount payable on redemption thereof, or make the principal thereof or interest
thereon payable in any coin or currency other than that provided in the
Convertible Debentures or in accordance with the terms thereof, or impair or
affect the right of any Holder of Convertible Debentures to institute suit for
payment thereof, or adversely affect the right to convert Convertible
Debentures, or modify the subordination provisions of this Indenture in any
manner adverse to the Holders of Convertible Debentures without the consent of
the Holders of each Convertible Debenture so affected, or (b) reduce the
aforesaid percentage of Convertible Debentures, the consent of the Holders of
which is required for any such supplemental indenture, without the consent of
the Holders of each Convertible Debenture so affected.
Upon the request of the Company, accompanied by a copy of a
resolution of the Board of Directors certified by the secretary or assistant
secretary of the Company authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Holders of Convertible Debentures as aforesaid and other documents, if any,
required by Section 7.1, the Trustee shall join with the Company in the
execution of such supplemental indenture or otherwise, in which case such
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
It shall not be necessary for the consent of the Holders of
Convertible Debentures under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Company shall give notice thereof to the Holders of then Outstanding Convertible
Debentures, by mailing a notice thereof by first-class mail to such Holders at
their addresses as they shall appear on the Security Register, and in each case
such notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Company to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
Section 8.3 EFFECT OF SUPPLEMENTAL INDENTURE. Every supplemental
indenture executed pursuant to this Article VIII shall conform to the
requirements of the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and be
<PAGE>
46
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the Holders of Convertible Debentures
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be a part of the
terms and conditions of this Indenture for any and all purposes.
Section 8.4 DOCUMENTS TO BE GIVEN TO TRUSTEE. The Trustee,
subject to the provisions of Section 6.1 and 6.2, shall receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article VIII complies with the
applicable provisions of this Indenture.
Section 8.5 NOTATION ON CONVERTIBLE DEBENTURES IN RESPECT OF
SUPPLEMENTAL INDENTURES. Convertible Debentures authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article VIII may bear, upon the direction of the Company, a notation in
form satisfactory to the Trustee for the Convertible Debentures as to any matter
provided for by such supplemental indenture. If the Company or the Trustee shall
so determine, new Convertible Debentures so modified as to conform, in the
opinion of the Trustee and the Company, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Convertible
Debentures then Outstanding.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 COMPANY MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. The
Company may sell, transfer, lease or otherwise convey all or substantially all
of its assets on a consolidated basis to any Person, or consolidate or merge
with or into, any other Person, provided that in any such case, (a) either (i)
the Company shall be the continuing corporation, or (ii) if the Company is not
the continuing corporation, the successor corporation or Person which acquires
by sale, transfer, lease or other conveyance all or substantially all of the
assets of the Company, shall be a corporation organized and validly existing
under the laws of the United States of America or any state thereof or the
District of Columbia and shall expressly assume the due and punctual payment of
the principal of, premium, if any, and interest (including Additional Sums and
Compound Interest) on all of the Convertible Debentures according to their
tenor, and the due and punctual performance and observance of all of the
covenants, agreements and conditions (A) of this Indenture to be performed or
observed by the Company by supplemental indenture satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation or entity, and (B) of
the Preferred Securities Registration Rights Agreement, by amendment thereto,
(b) immediately after such merger or consolidation, or such sale, transfer,
lease or other conveyance, no Event of Default, and no event which, after notice
or lapse of time or both, would become an Event of Default, shall have occurred
and be continuing, and (c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the requirements of
this Section have been complied with.
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47
Section 9.2 SUCCESSOR CORPORATION SUBSTITUTED. In case of any
such consolidation, merger, sale, transfer, lease or conveyance, and following
such an assumption by the successor corporation, such successor corporation
shall succeed to and be substituted for the Company, with the same effect as if
it had been named herein, and (except in the case of a lease) the Company shall
be discharged from all obligations and covenants under this Indenture, the
Convertible Debentures and the Preferred Securities Registration Rights
Agreement and may be liquidated and dissolved. Such successor corporation may
cause to be signed, and may issue either in its own name or in the name of the
Company any or all of the Convertible Debentures issuable hereunder which
theretofore shall not have been signed by the Company and be delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall make available
for delivery any Convertible Debentures which previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication,
and any Convertible Debentures, which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All of
the Convertible Debentures so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Convertible Debentures theretofore
or thereafter issued in accordance with the terms of this Indenture as though
all of such Convertible Debentures had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, transfer, lease
or conveyance such changes in phraseology and form (but not in substance) may be
made in the Convertible Debentures thereafter to be issued as may be
appropriate.
Section 9.3 OPINION OF COUNSEL TO TRUSTEE. The Trustee, subject
to the provisions of Section 6.1 and 6.2, may receive an Opinion of Counsel,
prepared in accordance with Section 15.5, as conclusive evidence that any such
consolidation, merger, sale, lease or conveyance, and any such assumption, and
any such liquidation or dissolution, complies with the applicable provisions of
this Indenture.
ARTICLE X
REDEMPTION OF THE CONVERTIBLE DEBENTURES
Section 10.1 TAX EVENT REDEMPTION.
If a Tax Event (as defined in the Declaration) has occurred and
is continuing and:
(a) the Company has received a Redemption Tax Opinion (as defined
in the Declaration); or
(b) after receiving a Dissolution Tax Opinion (as defined in the
Declaration), the Regular Trustees shall have been informed by tax
counsel rendering the Dissolution Tax Opinion that a No-Recognition
Opinion (as defined in the Declaration) cannot be delivered to the
Trust, then, notwithstanding Section 10.2(a) but subject to Section
10.2(b), the Company shall have the right upon not less than 30 days
nor more than 60 days notice to the Holders of the Convertible
Debentures to redeem the Convertible Debentures, in whole or in part,
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48
for cash within 90 days following the occurrence of such Tax Event
(the "90-Day Period") at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest
thereon (including Additional Sums, if any, and, to the extent
permitted by applicable law, Compound Interest, if any) to the date of
such redemption (the "Redemption Price"), provided that if at the time
there is available to the Company or the Trust the opportunity to
eliminate, within the 90-Day Period, the Tax Event by taking some
ministerial action ("Ministerial Action"), such as filing a form or
making an election, or pursuing some other similar reasonable measure
which has no adverse effect on the Company, the Trust or the Holders
of the Trust Securities issued by the Trust, the Company shall pursue
such Ministerial Action in lieu of redemption. The Redemption Price
shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines, provided
that the Company shall deposit with the Trustee an amount sufficient
to pay the Redemption Price prior to the redemption date.
Section 10.2 OPTIONAL REDEMPTION BY COMPANY.(a) Subject to the
provisions of Section 10.2(b) and to the provisions of this Article X generally,
except as otherwise may be specified in Section 10.1 or elsewhere in this
Indenture, the Company shall have the right to redeem the Convertible
Debentures, in whole or in part, from time to time, on or after April 18, 2003.
Any redemption pursuant to this paragraph will be made upon not less than 30
days nor more than 60 days notice to the Holders of the Convertible Debentures,
at the following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with accrued
and unpaid interest (including Additional Sums, if any, and, to the extent
permitted by applicable law, Compound Interest, if any) to, but excluding, the
redemption date, if redeemed during the 12-month period beginning April 18, of
the applicable year set forth below:
--------------------------------------
YEAR REDEMPTION PRICE
--------------------------------------
2003 105.43%
--------------------------------------
2004 104.65%
--------------------------------------
2005 103.88%
--------------------------------------
2006 103.10%
--------------------------------------
2007 102.33%
--------------------------------------
2008 101.55%
--------------------------------------
2009 100.78%
--------------------------------------
and 100% if redeemed on or after April `8, 2010.
If Convertible Debentures are redeemed on any January 15, April
15, July 15 and October 15, accrued and unpaid interest shall be payable to
holders of record on the relevant record date.
The Company may not redeem fewer than all of the outstanding
Convertible Debentures unless all accrued and unpaid interest has been paid on
all Convertible Debentures for all quarterly interest payment periods
terminating on or prior to the date of redemption.
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49
So long as the corresponding Trust Securities are outstanding,
the proceeds from the redemption of the Convertible Debentures will be used to
redeem the Trust Securities. If the Convertible Debentures are only partially
redeemed pursuant to this Section 10.2, the Convertible Debentures will be
redeemed pro rata. The Optional Redemption Price, together with any required
interest payment, shall be paid prior to 12:00 noon, New York time, on the
redemption date or at such earlier time as the Company determines provided that
the Company shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price, together with any required interest payment, by 10:00
a.m., New York time, on the date such amounts are to be paid. Partial
redemptions must be in an amount not less than $1,000 principal amount of
Convertible Debentures.
If Convertible Debentures selected for partial redemption are
converted in part before termination of the conversion right with respect to the
portion of the Convertible Debentures so selected, the converted portion of the
Convertible Debentures shall be deemed (so far as may be) to be the portion
selected for redemption. Convertible Debentures (or portions thereof) which have
been converted during a selection of Convertible Debentures to be redeemed shall
be treated by the Trustee as Outstanding for the purpose of such selection. In
any case where more than one Convertible Debenture is registered in the same
name, the Trustee in its discretion may treat the aggregate principal amount so
registered as if it were represented by one Convertible Debenture.
If any Convertible Debenture called for redemption is converted
into Common Stock of the Company, any money deposited with the Trustee or with
any Paying Agent or so segregated and held in trust for the redemption of such
Convertible Debenture shall (subject to any right of the Holder of such
Convertible Debenture or any Predecessor Convertible Debenture to receive
interest as provided in the last paragraph of Section 2.9) be paid to the
Company upon the Company's request or, if then held by the Company, shall be
discharged from such trust.
(b) If a partial redemption of the Convertible Debentures would
result in the delisting of the Convertible Preferred Securities issued by the
Trust from any national securities exchange or other organization on which the
Convertible Preferred Securities are then listed, the Company shall not be
permitted to effect such partial redemption and may only redeem the Convertible
Debentures in whole.
Section 10.3 NO SINKING FUND. The Convertible Debentures are not
entitled to the benefit of any sinking fund or subject to any sinking fund.
Section 10.4 ELECTION TO REDEEM; NOTICE OF REDEMPTION; PARTIAL
REDEMPTIONS.
The election of the Company to redeem any Convertible Debentures
shall be evidenced by, or pursuant to, a resolution of the Board of Directors.
Notice of redemption to the Holders of Convertible Debentures required to be
redeemed or to be redeemed as a whole or in part at the option of the Company
shall be given by giving notice of such redemption as provided in Section 15.4,
at least 30 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Convertible Debentures. Any notice which is mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the Holder receives the notice. Neither the failure to
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50
give notice by mail, nor any defect in the notice so mailed to the Holder of any
Convertible Debenture designated for redemption as a whole or in part shall
affect the validity of the proceedings for such redemption.
The notice of redemption to each such Holder shall specify the
date fixed for redemption, the "CUSIP" number or numbers, if any, for such
Convertible Debentures, the redemption price, the Place or Places of Payment,
that payment will be made upon presentation and surrender of such Convertible
Debentures, that interest accrued to the date fixed for redemption will be paid
as specified in such notice and that on and after said date interest thereon or
on the portions thereof to be redeemed will cease to accrue, the conversion rate
or price, the date on which the right to convert the Convertible Debentures to
be redeemed will terminate and the place or places where such Convertible
Debentures may be surrendered for conversion. If less than all of the
Convertible Debentures are to be redeemed, the notice of redemption shall
specify the number of the Convertible Debentures to be redeemed. In case any
Convertible Debenture is to be redeemed in part, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and after the date fixed for redemption, upon surrender of such
Convertible Debenture, a new Convertible Debenture or Convertible Debentures in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Convertible Debentures to be redeemed
at the option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. If such
notice is to be given by the Trustee, the Company shall provide notice of such
redemption to the Trustee at least 60 days prior to the date fixed for
redemption (unless a shorter notice shall be satisfactory to the Trustee). If
such notice is given by the Company, the Company shall provide a copy of such
notice given to the Holders of such redemption to the Trustee at least 2 days
prior to the date such notice is given to such Holders, but in any event at
least 30 days and not more than 60 days prior to the date fixed for redemption.
The Company or the Trust shall give public notice of any such
redemption by the issuance of a press release through the services of the Dow
Jones Broad Tape, Reuters News Service and Bloomberg News Service.
Not later than the redemption date specified in the notice of
redemption given as provided in this Section, the Company will have on deposit
with the Trustee or with one or more Paying Agents (or, if the Company is acting
as its own Paying Agent, set aside, segregate and hold in trust as provided in
Section 3.3) in funds available on such date an amount of money sufficient to
redeem on the redemption date all the Convertible Debentures so called for
redemption at the appropriate redemption price, together with accrued interest
to the date fixed for redemption. If less than all of the Outstanding
Convertible Debentures are to be redeemed at the election of the Company, the
Company will deliver to the Trustee at least 60 days prior to the date fixed for
redemption (unless a shorter notice shall be satisfactory to the Trustee) an
Officers' Certificate stating the aggregate principal amount of Convertible
Debentures to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Convertible Debentures
<PAGE>
51
shall relate, in the case of any Convertible Debenture redeemed or to be
redeemed only in part, to the portion of the principal amount of such
Convertible Debenture which has been or is to be redeemed.
Section 10.5 PAYMENT OF CONVERTIBLE DEBENTURES CALLED FOR
REDEMPTION. If notice of redemption has been given as above provided, the
Convertible Debentures or portions of Convertible Debentures specified in such
notice shall become due and payable on the date and at the place stated in such
notice at the applicable redemption price, together with interest accrued to the
date fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Convertible Debentures at the redemption price,
together with interest accrued to said date) interest on the Convertible
Debentures or portions of Convertible Debentures so called for redemption shall
cease to accrue, and, except as provided in Section 6.1, such Convertible
Debentures shall cease from and after the date fixed for redemption to be
entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Convertible Debentures except the
right to receive the redemption price thereof and unpaid interest to the date
fixed for redemption. On presentation and surrender of such Convertible
Debentures at a Place of Payment specified in said notice, said Convertible
Debentures or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that, payment of interest
becoming due on or prior to the date fixed for redemption shall be payable to
the Holders of such Convertible Debentures registered as such on the relevant
record date subject to the terms and provisions of Section 2.9 hereof.
If any Convertible Debenture called for redemption shall not be
so paid upon surrender thereof for redemption, the principal shall, until paid
or duly provided for, bear interest from the date fixed for redemption at the
Coupon Rate.
Upon presentation of any Convertible Debenture redeemed in part
only, the Company shall execute and the Trustee shall authenticate and make
available for delivery to or on the order of the Holder thereof, at the expense
of the Company, a new Convertible Debenture or Convertible Debentures, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Convertible Debenture so presented.
Section 10.6 EXCLUSION OF CERTAIN CONVERTIBLE DEBENTURES FROM
ELIGIBILITY FOR SELECTION FOR REDEMPTION. Convertible Debentures shall be
excluded from eligibility for selection for redemption if they are identified by
registration and certificate number in a written statement signed by an
authorized officer of the Company and delivered to the Trustee at least 30 days
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by, either (a)
the Company or (b) an entity specifically identified in such written statement
as directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company.
ARTICLE XI
EXTENSION OF INTEREST PAYMENT PERIOD
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52
Section 11.1 EXTENSION OF INTEREST PAYMENT PERIOD.
As long as an Event of Default under Section 5.1(a) of this
Indenture shall not have occurred and be continuing, the Company shall have the
right, at any time and from time to time during the term of the Convertible
Debentures, to defer payments of interest by extending the interest payment
period of such Convertible Debentures for a period not exceeding 20 consecutive
quarters (the "Extension Period"), during which Extension Period no interest
shall be due and payable; provided that no Extension Period may extend beyond
the Maturity Date or any earlier redemption date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 11.1, will
bear interest thereon at the Coupon Rate compounded quarterly for each quarter
of the Extension Period ("Compound Interest"). Each Extension Period, if any,
will end on an Interest Payment Date. At the end of the Extension Period, the
Company shall pay all interest accrued and unpaid on the Convertible Debentures,
including any Additional Sums and, to the extent permitted by law, Compound
Interest (together, "Deferred Interest") that shall be payable to the Holders of
the Convertible Debentures in whose names the Convertible Debentures are
registered in the Security Register at the close of business on the record date
next preceding such Interest Payment Date. Before the termination of any
Extension Period, the Company may further extend such period, provided that such
period together with all previous and further extensions thereof shall not
exceed 20 consecutive quarters, or extend beyond the Maturity Date or any
earlier redemption date. Upon the termination of any Extension Period and upon
the payment of all Deferred Interest then due, the Company may commence a new
Extension Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extension Period, except at the end thereof, but the
Company may prepay at any time all or any portion of the interest accrued during
an Extension Period.
Section 11.2 NOTICE OF EXTENSION.(a) If the Institutional Trustee
is the only registered Holder of the Convertible Debentures at the time the
Company selects an Extension Period, the Company shall give written notice to
the Regular Trustees, the Institutional Trustee and the Trustee of its selection
of such Extension Period at least one Business Day before the earlier of (i) the
next succeeding date on which Distributions on the Trust Securities issued by
the Trust are payable, or (ii) the date the Regular Trustees are required to
give notice of the record date, or the date such Distributions are payable, to
the New York Stock Exchange or other applicable self-regulatory organization or
to holders of the Convertible Preferred Securities issued by the Trust, but in
any event at least ten Business Days before such record date. The Company shall
cause the Trust to give notice of the Company's selection of such Extension
Period to holders of the Convertible Preferred Securities.
(b) If the Institutional Trustee is not the only Holder of the
Convertible Debentures at the time the Company selects an Extension Period, the
Company shall give the Holders of the Convertible Debentures, the Institutional
Trustee and the Trustee written notice of its selection of such Extension Period
at least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to the New York Stock Exchange
or other applicable self- regulatory organization or to Holders of the
Convertible Debentures, but in any event not less than two Business Days prior
to such record date.
<PAGE>
53
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 11.2 shall be counted as one of the 20
consecutive quarters permitted in the maximum Extension Period permitted under
Section 11.1.
ARTICLE XII
CONVERSION OF CONVERTIBLE DEBENTURES
Section 12.1 CONVERSION RIGHTS. Subject to and upon compliance
with the provisions of this Article XII, the Convertible Debentures are
convertible, at the option of the Holders, at any time beginning July 11, 2000
through the close of business on April 14, 2015 (or, in the case of Convertible
Debentures called for redemption, prior to the close of business on the Business
Day prior to the corresponding redemption date) into fully paid and
nonassessable shares of Common Stock of the Company at an initial conversion
rate of 1.048 shares of Common Stock for each $50 in principal amount of
Convertible Debentures (equivalent to a conversion price of $47.71 per share of
Common Stock (the "Conversion Price")), subject to adjustment and reset as
described in this Article XII. A Holder of Convertible Debentures may convert
any portion of the principal amount of the Convertible Debentures into that
number of fully paid and nonassessable shares of Common Stock obtained by
dividing the principal amount of the Convertible Debentures to be converted by
such Conversion Price. All calculations under this Article XII shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be.
Section 12.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Convertible
Debentures, the Holder thereof shall deliver to the Conversion Agent an
irrevocable notice of conversion (the "Notice of Conversion") setting forth the
principal amount of Convertible Debentures to be converted, together with the
name or names, if other than the Holder, in which the shares of Common Stock
should be issued upon conversion and, if such Convertible Debentures are
definitive Convertible Debentures, surrender to the Conversion Agent the
Convertible Debentures to be converted, duly endorsed or assigned to the Company
or in blank. In addition, a holder of Convertible Preferred Securities may
exercise its right under the Declaration to convert such Convertible Preferred
Securities into Common Stock by delivering to the Conversion Agent an
irrevocable Notice of Conversion setting forth the information called for by the
preceding sentence and directing the Conversion Agent (i) to exchange such
Convertible Preferred Security for a portion of the Convertible Debentures held
by the Trust (at an exchange rate of $50 principal amount of Convertible
Debentures for each Convertible Preferred Security) and (ii) to immediately
convert such Convertible Debentures, on behalf of such holder, into Common Stock
of the Company pursuant to this Article XII and, if such Convertible Preferred
Securities are in definitive form, surrendering such Convertible Preferred
Securities, duly endorsed or assigned to the Company or in blank. So long as any
Convertible Preferred Securities are outstanding, the Trust shall not convert
any Convertible Debentures except pursuant to a Notice of Conversion delivered
to the Conversion Agent by a holder of Convertible Preferred Securities.
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54
If a Notice of Conversion is delivered on or after the record
date and prior to the subsequent Interest Payment Date, the Holder will be
entitled to receive the interest payable on the subsequent Interest Payment Date
on the portion of Convertible Debentures to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. However, if a redemption
date falls between a record date and the subsequent Interest Payment Date, the
Holder will be entitled to receive, on such Interest Payment Date, the interest
accrued to, but excluding, the redemption date. Except as otherwise provided in
the first and second sentences of this paragraph, in the case of any Convertible
Debenture which is converted, interest whose Stated Maturity is after the date
of conversion of such Convertible Debenture shall not be payable, and the
Company shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest on the Convertible
Debentures being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Convertible Preferred Securities effecting a conversion thereof pursuant to
its conversion rights under the Declaration, as the case may be. The Person or
Persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of the Conversion Date. As promptly as practicable on or after the Conversion
Date, the Company shall issue and deliver at the office of the Conversion Agent,
unless otherwise directed by the Holder in the Notice of Conversion, a
certificate or certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment, if any, in lieu
of any fraction of any share to the Person or Persons entitled to receive the
same. The Conversion Agent shall deliver such certificate or certificates to
such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Convertible Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay the principal amount at
Maturity of the portion of Convertible Debentures so converted and any unpaid
interest (including Compound Interest) accrued on such Convertible Debentures at
the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the
Convertible Debentures were duly surrendered to the Conversion Agent for
conversion, or, if such day is not a Trading Day, on the next Trading Day, and
the Conversion Agent in turn will make such payment, if any, to the Holder of
the Convertible Debentures or the holder of the Convertible Preferred Securities
so converted.
(d) In the event of the conversion of any Convertible Debenture
in part only, the Company shall execute and the Trustee shall authenticate and
make available for delivery to or on the order of the Holder thereof, at the
expense of the Company, a new Convertible Debenture or Convertible Debentures in
the aggregate principal amount equal to the unconverted portion thereof.
<PAGE>
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(e) In effecting the conversion transactions described in this
Section 12.2, the Conversion Agent is acting as agent of the holders of
Convertible Preferred Securities (in the exchange of Convertible Preferred
Securities for Convertible Debentures) and as agent of the Holders of
Convertible Debentures (in the conversion of Convertible Debentures into Common
Stock), as the case may be. The Conversion Agent is hereby authorized (i) to
exchange Convertible Debentures held by the Trust from time to time for
Convertible Preferred Securities in connection with the conversion of such
Convertible Preferred Securities in accordance with this Article XII and (ii) to
convert all or a portion of the Convertible Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Article XII and to deliver to the Trust a new Convertible
Debenture or Convertible Debentures for any resulting unconverted principal
amount.
Section 12.3 CONVERSION PRICE ADJUSTMENTS. The Conversion Price
shall be adjusted from time to time as follows:
(a) In case the Company shall, while any of the Convertible
Debentures are outstanding, (i) pay a dividend or make a distribution
with respect to Common Stock in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock, (iii) combine outstanding shares
of Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock any shares of capital
stock of the Company, the conversion privilege and the Conversion
Price for the Convertible Debentures shall be adjusted so that the
Holder of any Convertible Debenture thereafter surrendered for
conversion shall be entitled to receive the number of shares of
capital stock of the Company which such Holder would have owned
immediately following such action had such Convertible Debenture been
converted immediately prior thereto. An adjustment made pursuant to
this subsection (a) shall become effective immediately after the
record date in the case of a dividend or other distribution and shall
become effective immediately after the effective date in case of a
subdivision, combination or reclassification (or immediately after the
record date if a record date shall have been established for such
event). If, as a result of an adjustment made pursuant to this
subsection (a), the Holder of any Convertible Debenture thereafter
surrendered for conversion shall become entitled to receive shares of
two or more classes or series of capital stock of the Company, the
Board of Directors (whose determination shall be conclusive and shall
be evidenced by a Board Resolution filed with the Trustee) shall
determine the allocation of the adjusted Conversion Price for the
Convertible Debentures between or among shares of such classes or
series of capital stock.
(b) In case the Company shall, while any of the Convertible
Debentures are outstanding, issue rights or warrants to all holders of
its Common Stock entitling them (for a period expiring within 45 days
after the record date mentioned below) to subscribe for or purchase
shares of Common Stock at a price per share less than the current
market price per share of Common Stock (as determined pursuant to
subsection (g) below) on the record date mentioned below, the
Conversion Price for the Convertible Debentures shall be adjusted so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance
of such rights or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants plus the number of shares which
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the aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such current market
price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered
for subscription or purchase. Such adjustment shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. To the
extent that no shares of Common Stock are so delivered after the
expiration of such rights or warrants, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. For the purposes
of this subsection, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the
Company. In case any rights or warrants referred to in this subsection
in respect of which an adjustment shall have been made shall expire
unexercised within 45 days after the same shall have been distributed
or issued by the Company, the Conversion Price shall be readjusted at
the time of such expiration to the Conversion Price that would have
been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subsection (c), in case
the Company shall, by dividend or otherwise, distribute to all holders
of its Common Stock evidences of its indebtedness, shares of any class
or series of capital stock, cash or assets or rights or warrants to
subscribe for or purchase any of its securities (excluding any rights
or warrants referred to in subsection (b), any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in subsection (a) of this Section 12.3), the Conversion
Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction
contemplated by this subsection (c) by a fraction of which the
numerator shall be the current market price per share (determined as
provided in subsection (g)) of the Common Stock on the date fixed for
the payment of such distribution (the "Reference Date") less the fair
market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a resolution
of the Board of Directors), on the Reference Date, of the portion of
the evidences of indebtedness, shares of capital stock, cash and
assets so distributed or of such subscription rights or warrants
applicable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of
business on the day following the Reference Date; provided, however,
that in the event the numerator shall be less than one, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Holder of Convertible Debentures shall have the right to receive upon
conversion the amount of such distribution such Holder would have
received had such Holder converted each Convertible Debenture
immediately prior to the Reference Date. In the event that no such
dividend or distribution is so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be
in effect if such dividend or distribution had not occurred. If the
Board of Directors determines the fair market value of any
distribution for purposes of this subsection (c) by reference to the
actual or when issued trading market for any securities comprising
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such distribution, it must in doing so consider the prices in such
market over the same period used in computing the current market price
per share of Common Stock (determined as provided in subsection (g)).
For purposes of this subsection (c), any dividend or distribution that
includes shares of Common Stock, or rights or warrants of the type
described in subsection (b), shall be deemed instead to be a dividend
or distribution of the evidences of indebtedness, shares of capital
stock, cash or assets or rights or warrants other than such shares of
Common Stock, or such rights or warrants of the type described in
subsection (b) (making any Conversion Price reduction required by this
subsection (c)), immediately followed by a dividend or distribution of
such shares of Common Stock or such rights or warrants of the type
described in subsection (b) (making any further Conversion Price
adjustment required by subsection (a) or (b)), except (A) the
Reference Date of such dividend or distribution as defined in this
subsection (c) shall be substituted as (1) "the record date in the
case of a dividend or other distribution," and (2) "the record date
for the determination of stockholders entitled to receive such rights
or warrants" and (3) "the date fixed for such determination" within
the meaning of subsections (a) and (b) and (B) any shares of Common
Stock included in such dividend or distribution shall not be deemed
outstanding for purposes of computing any adjustment of the Conversion
Price in subsection (b).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding any
quarterly cash dividend on Common Stock to the extent that the
aggregate cash dividend per share of Common Stock in any quarter does
not exceed the greater of (i) the amount per share of Common Stock of
the next preceding quarterly dividend on Common Stock to the extent
such preceding quarterly dividend did not require an adjustment of the
Conversion Price pursuant to this subsection (d) (as adjusted to
reflect subdivisions or combinations of Common Stock), and (ii) 3.75%
of the daily Closing Price per share determined as provided in
subsection (g), and excluding any dividend or distribution in
connection with the liquidation, dissolution or winding-up of the
Company), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (d) by a fraction of which
the numerator shall be the current market price per share (determined
as provided in subsection (g)) of the Common Stock on the date fixed
for the payment of such distribution less the amount of cash so
distributed (and not excluded as provided above) applicable to one
share of Common Stock and the denominator shall be such current market
price per share of the Common Stock (determined as provided in
subsection (g)), such reduction to become effective immediately prior
to the opening of business on the day following the date fixed for the
payment of such distribution; provided, however, that in the event the
portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the current market price per share
(as defined in subsection (g)) of the Common Stock on the record date
mentioned above, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder of shares of Convertible
Debentures shall have the right to receive upon conversion the amount
of cash such Holder would have received had such Holder converted each
Convertible Debenture immediately prior to the record date for the
distribution of the cash. If an adjustment is required to be made
pursuant to this subsection (d) as a result of a distribution that is
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a quarterly dividend, such adjustment shall be based upon the amount
by which such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded as provided above. If an adjustment
is required to be made pursuant to this subsection (d) as a result of
a distribution that is not a quarterly dividend, such adjustment shall
be based upon the full amount of the distribution. In the event that
no such dividend or distribution is so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such Record Date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or
any portion of the Company's Common Stock shall expire and such tender
or exchange offer shall involve the payment by the Company or such
subsidiary of consideration per share of Common Stock having a fair
market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a resolution
of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds the Closing Price
of the Common Stock on the Trading Day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subsection (e) by a fraction (which
shall not be greater than one) of which the numerator shall be the
number of shares of Common Stock outstanding (including any tendered
or exchanged shares) at the Expiration Time multiplied by the Closing
Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (i) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (ii) the product of the
number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Closing Price of the Common
Stock on the Trading Day next succeeding the Expiration Time, such
reduction to become retroactively effective immediately prior to the
opening of business on the day following the Expiration Time.
(f) In case a tender or exchange offer made by a Person other
than the Company or any Subsidiary of the Company for all or any
portion of the Common Stock shall expire and such tender or exchange
offer shall involve the payment by a Person other than the Company or
any Subsidiary of the Company of consideration per share of Common
Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
evidenced by a resolution of the Board of Directors) at the applicable
Expiration Time that exceeds the Closing Price of the Common Stock on
the Trading Day next succeeding the applicable Expiration Time in
which as of the closing date of the offer the Board of Directors of
the Company is not recommending rejection of the offer, the Conversion
Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately
prior to the effectiveness of the Conversion Price reduction
contemplated by this subsection (f) by a fraction (which shall not be
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greater than one) of which the numerator shall be the number of shares
of Common Stock outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the Closing Price of the
Common Stock on the Trading Day next succeeding the Expiration Time
and the denominator shall be the sum of (i) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of the Purchased Shares
and, (ii) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) at the Expiration Time and the
Closing Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become retroactively effective
immediately prior to the opening of business on the day following the
Expiration Time; provided, however, that the reduction of the
Conversion Price contemplated by this subsection (f) will only be made
if the tender offer or exchange offer is made for an amount which
increases that Person's ownership of Common Stock to more than 25% of
the total shares of Common Stock outstanding and provided, further,
that the reduction of the Conversion Price contemplated by this
subsection (f) will not be made if as of the close of the offer, the
offering documents with respect to such offer disclose a plan or an
intention to cause the Company to engage in a consolidation or merger
of the Company or a sale of all or substantially all of the assets of
the Company.
(g) For the purpose of any computation under subsection (b), (c)
or (d), the current market price per share of Common Stock on any date
in question shall be deemed to be the average of the daily Closing
Prices for the ten Trading Day period ending on the earlier of the day
in question and, if applicable, the day before the "ex" date with
respect to the issuance or distribution requiring such computation;
provided, however, that if more than one event occurs that would
require an adjustment pursuant to subsections (a) through (f),
inclusive, the Board of Directors may make such adjustments to the
Closing Prices during such ten Trading Day period as it deems
appropriate to effectuate the intent of the adjustments in this
Section 12.3, in which case any such determination by the Board of
Directors shall be set forth in a Board Resolution and shall be
conclusive. For purposes of this paragraph, the term "ex" date, (1)
when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the New
York Stock Exchange or on such successor securities exchange as the
Common Stock may be listed or in the relevant market from which the
Closing Prices were obtained without the right to receive such
issuance or distribution, and (2) when used with respect to any tender
or exchange offer means the first date on which the Common Stock
trades regular way on such securities exchange or in such market after
the Expiration Time of such offer.
(h) The Company may make such reductions in the Conversion Price,
in addition to those required by subsections (a) through (f), as the
Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights
to acquire stock) or from any event treated as such for income tax
purposes. The Company from time to time may reduce the Conversion
Price by any amount for any period of time if the period is at least
twenty (20) days. Whenever the Conversion Price is reduced pursuant to
the preceding sentence, the Company shall mail to Holders of record of
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the Convertible Debentures a notice of the reduction at least 15 days
prior to the date the reduced Conversion Price takes effect, and such
notice shall state the reduced Conversion Price and the period it will
be in effect.
(i) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the Conversion Price; provided, however, that any
adjustments which by reason of this subsection (i) are not required to
be made shall be carried forward and taken into account in determining
whether any subsequent adjustment shall be required.
(j) If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above,
only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value to the Holder
of Convertible Debentures.
(k) Except as stated above, the Conversion Rate will not be
adjusted for the issuance of Common Stock or any securities
convertible into, or exchangeable for, Common Stock, or carrying the
right to purchase any of the foregoing.
Section 12.4 MERGER, CONSOLIDATION OR SALE OF ASSETS. (a) In the
event that the Company shall be a party to any transaction (including without
limitation (i) any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of the
Common Stock), (ii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company
(other than a merger which does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company),
(iii) any sale or transfer of all or substantially all of the assets of the
Company or (iv) any compulsory share exchange) pursuant to which either shares
of Common Stock shall be converted into the right to receive other securities,
cash or other property, or, in the case of a sale or transfer of all or
substantially all of the assets of the Company, the holders of Common Stock
shall be entitled to receive other securities, cash or other property, then
lawful provision shall be made as part of the terms of such transaction whereby
the Holder of each Convertible Debenture then outstanding shall have the right
thereafter to convert such Convertible Debenture only into:
(i) in the case of any such transaction that does not constitute
a Common Stock Fundamental Change and subject to funds being legally
available for such purpose under applicable law at the time of such
conversion, the kind and amount of the securities, cash or other
property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common Stock issuable
upon conversion of such Convertible Debenture immediately prior to
such recapitalization, reclassification, consolidation, merger, sale,
transfer or share exchange, after giving effect, in the case of any
Non-Stock Fundamental Change, to any adjustment in the Conversion
Price in accordance with clause (i) of subsection (c) of this Section
12.4; and
(ii) in the case of any such transaction that constitutes a
Common Stock Fundamental Change, common stock of the kind received by
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holders of Common Stock as a result of such Common Stock Fundamental
Change in an amount determined in accordance with clause (ii) of
subsection (c) of this Section 12.4.
(b) The Company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article XII. The above provisions shall similarly apply to
successive transactions of the foregoing type.
(c) Notwithstanding any other provision of this Section 12.4 to
the contrary, if any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately after such Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price of the Convertible Debentures immediately following such
Non-Stock Fundamental Change shall be the lower of (A) the Conversion
Price in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments
effected pursuant to Section 12.3, and (B) the Applicable Price; and
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price of the Convertible Debentures immediately following
such Common Stock Fundamental Change shall be the Conversion Price in
effect immediately prior to such Common Stock Fundamental Change, but
after giving effect to any other prior adjustments effected pursuant
to Section 12.3, multiplied by a fraction, the numerator of which is
the Purchaser Stock Price and the denominator of which is the
Applicable Price; provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid
with respect to any fractional interests in such common stock
resulting from such Common Stock Fundamental Change) and (B) all of
the Common Stock shall have been exchanged for, converted into or
acquired for, common stock of the successor, acquiror or other third
party (and any cash with respect to fractional interests), the
Conversion Price of the Convertible Debentures immediately following
such Common Stock Fundamental Change shall be the Conversion Price in
effect immediately prior to such Common Stock Fundamental Change
multiplied by a fraction, the numerator of which is one (1) and the
denominator of which is the number of shares of common stock of the
successor, acquiror or other third party received by a holder of one
share of Common Stock as a result of such Common Stock Fundamental
Change.
Section 12.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever
the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and
shall prepare a certificate signed by the Chief Financial Officer or
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the Treasurer of the Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed
with the Trustee and the transfer agent for the Convertible Preferred
Securities and the Convertible Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of
Convertible Preferred Securities and the Convertible Debentures at
their last addresses as they appear upon the transfer books of the
Company and the Trust.
Section 12.6 PRIOR NOTICE OF CERTAIN EVENTS. In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable
in shares of Common Stock or (B) a dividend payable in cash that would
not require an adjustment pursuant to Section 12.3(c) or (d) or (ii)
authorize a tender or exchange offer that would require an adjustment
pursuant to Section 12.3(e);
(b) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or series or of any other rights or
warrants;
(c) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the
Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (i) if any Convertible Preferred Securities are
outstanding, cause to be filed with the transfer agent for the Convertible
Preferred Securities, and shall cause to be mailed to the holders of record of
the Convertible Preferred Securities, at their last addresses as they shall
appear upon the stock transfer books of the Trust or (ii) shall cause to be
mailed to all Holders at their last addresses as they shall appear in the
Security Register, at least 15 days prior to the applicable record or effective
date hereinafter specified, a notice stating (A) the date on which a record (if
any) is to be taken for the purpose of such dividend, distribution, rights or
warrants or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined or (B) the date on which such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effec tive, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer, share
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exchange, dissolution, liquidation or winding up (but no failure to mail such
notice or any defect therein or in the mailing thereof shall affect the validity
of the corporate action required to be specified in such notice). If at any time
the Trustee shall not be the Conversion Agent, a copy of such notice shall also
forthwith be filed by the Company with the Trustee.
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Section 12.7 CERTAIN ADDITIONAL RIGHTS. In case the Company
shall, by dividend or otherwise, declare or make a distribution on the Common
Stock referred to in Section 12.3(c) or 12.3(d), the Holder of the Convertible
Debentures, upon the conversion thereof subsequent to the close of business on
the date fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which the Convertible Debentures are converted, the
portion of the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock; provided, however, that, at the election of the
Company (whose election shall be evidenced by a resolution of the Board of
Directors) with respect to all Holders so converting, the Company may, in lieu
of distributing to such Holder any portion of such distribution not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a resolution
of the Board of Directors). If any conversion of Convertible Debentures
described in the immediately preceding sentence occurs prior to the payment date
for a distribution to holders of Common Stock which the Holder of Convertible
Debentures so converted is entitled to receive in accordance with the
immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which such Holder is so
entitled, provided, that such due bill (a) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (b) requires payment or delivery of such shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
Section 12.8 TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION
PRICE OR ADJUSTMENTS.Neither the Trustee nor any Conversion Agent shall at any
time be under any duty or responsibility to any Holder of any Convertible
Debenture to determine whether any facts exist which may require any adjustment
of the Conversion Price, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed. Neither the
Trustee nor any Conversion Agent shall be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock or of
any securities or property, which may at any time be issued or delivered upon
the conversion of any Convertible Debenture; and neither the Trustee nor any
Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or property upon the
surrender of any Convertible Debenture for the purpose of conversion. All
Convertible Debentures delivered for conversion shall be delivered to the
Trustee to be cancelled by or at the discretion of the Trustee, which shall
dispose of the same as provided in Section 2.12 of this Indenture.
Section 12.9 RESERVATION OF SHARES OF COMMON STOCK.The Company
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock or treasury shares, for the purpose
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of effecting the conversion of Convertible Debentures, the full number of shares
of Common Stock of the Company then issuable upon the conversion of all
outstanding Convertible Debentures.
Section 12.10 PAYMENT OF CERTAIN TAXES UPON CONVERSION. The
Company will pay any and all taxes that may be payable in respect of the issue
or delivery of shares of its Common Stock on conversion of Convertible
Debentures pursuant hereto. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of its Common Stock in a name other than that of the
Holder of the Convertible Debenture or Convertible Debentures to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that such tax has been paid.
Section 12.11 NONASSESSABILITY. The Company covenants that all
shares of Common Stock which may be issued upon conversion of Convertible
Debentures will upon issue in accordance with the terms hereof be duly and
validly issued and fully paid and nonassessable.
ARTICLE XIII
SUBORDINATION OF CONVERTIBLE DEBENTURES
Section 13.1 CONVERTIBLE DEBENTURES SUBORDINATE TO SENIOR
INDEBTEDNESS. The Company covenants and agrees, and each Holder of a Convertible
Debenture, by the Holder's acceptance thereof, likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this Article, the
indebtedness represented by the Convertible Debentures and the payment of the
principal of (and premium, if any) and interest on each and all of the
Convertible Debentures are hereby expressly made subordinate and junior in right
of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of this Indenture or thereafter
incurred. No provision of this Article shall prevent the occurrence of any
default or Event of Default hereunder.
Section 13.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In
the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Company voluntarily or
involuntarily, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of assets of the Company, all amounts due upon all Senior
Indebtedness of the Company (including any interest thereon accruing after the
commencement of such proceedings) shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company on account of the principal (and premium, if any) or
interest on the Convertible Debentures; and any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Convertible Debentures or
the Trustee would be entitled to receive from the Company, except for the
provisions of this Article, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
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payment or distribution, or by the Holders of the Convertible Debentures or by
the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness
(including any interest thereon accruing after the commencement of such
proceedings) in full, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders of the Convertible Debentures or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment, such payment or distribution shall be held
in trust for the benefit of and shall be paid over or delivered to the holders
of such Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, and their respective
interests may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness of the Company, as the case may be, remaining
unpaid to the extent necessary to pay such Senior Indebtedness in full, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment which are subordinated
in right of payment to all Senior Indebtedness which may at the time be
outstanding to substantially the same extent as, or to a greater extent than,
the Convertible Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article IX of this Indenture
shall not be deemed a dissolution, winding up, liquidation, reorganization,
readjustment, composition, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Section if the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article IX of this Indenture.
Section 13.3 PRIOR PAYMENT TO SENIOR INDEBTEDNESS UPON
ACCELERATION OF CONVERTIBLE DEBENTURES. In the event that any Convertible
Debentures are declared due and payable before their Stated Maturity, then and
in such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness or provision shall be made for such payment in cash, before
the Holders of the Convertible Debentures are entitled to receive any payment
<PAGE>
67
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Convertible Debentures) by the Company on account of the principal of (or
premium, if any) or interest on the Convertible Debentures or on account of the
purchase or other acquisition of Convertible Debentures.
In the event that, notwithstanding the foregoing, the Company
shall make any payment to the Trustee or the Holder of any Convertible Debenture
prohibited by the foregoing provisions of this Section, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee or,
as the case may be, such Holder, then and in such event such payment shall be
paid over and delivered forthwith to the Company. The provisions of this Section
shall not apply to any payment with respect to which Section 13.2 would be
applicable.
Section 13.4 NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT. In
the event and during the continuation of any default by the Company in the
payment of principal, premium, if any, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, beyond any applicable
grace period with respect thereto, or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default,
then, in any such case, no payment shall be made by the Company with respect to
the principal (including redemption payments, if any) of, premium, if any, or
interest on the Convertible Debentures until such default is cured or waived or
ceases to exist or any such acceleration or demand for payment has been
rescinded.
Section 13.5 PAYMENT PERMITTED IN CERTAIN SITUATIONS. Nothing
contained in this Article or elsewhere in this Indenture or in the Convertible
Debentures shall prevent (a) the Company, at any time except during the pendency
of any dissolution, winding-up, liquidation or reorganization of the Company,
whether voluntary or involuntary or any bankruptcy, insolvency, receivership or
other proceedings of the Company referred to in Section 13.2 or under the
conditions described in Section 13.3 or 13.4, from making payments at any time
of principal of or premium, if any, or interest on the Convertible Debentures,
or (b) the application by the Trustee of any money deposited with it hereunder
to the payment of or on account of the principal of, or premium, if any, or
interest on the Convertible Debentures or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article.
Section 13.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS. Subject to the payment in full of all Senior Indebtedness or the
provision for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Indebtedness, the rights of the Holders of
Convertible Debentures shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article (equally and ratably with the holders of indebtedness
of the Company which by its express terms is subordinated to indebtedness of the
Company to substantially the same extent as the Convertible Debentures are
subordinated to the Senior Indebtedness and is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Convertible Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of
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68
Convertible Debentures or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to or for the benefit of the holders of Senior Indebtedness by
Holders of Convertible Debentures or the Trustee, shall, as among the Company,
its creditors other than holders of Senior Indebtedness and the Holders of
Convertible Debentures, be deemed to be a payment or distribution by the Company
to or on account of the Senior Indebtedness.
Section 13.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of Convertible Debentures on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing contained
in this Article or elsewhere in this Indenture or in the Convertible Debentures
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of Convertible Debentures,
the obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Indebtedness,
is intended to rank equally with all other general obligations of the Company),
to pay to the Holders of Convertible Debentures the principal of (and premium,
if any) and interest on the Convertible Debentures as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of Convertible Debentures and
creditors of the Company, as the case may be, other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Convertible
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 13.8 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of
a Convertible Debenture by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee such Holder's attorney-in-fact for any and all
such purposes.
Section 13.9 NO WAIVER OF SUBORDINATION PROVISIONS. No right of
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Convertible Debentures, without incurring responsibility to the Holders of
Convertible Debentures and without impairing or releasing the subordination
provided in this Article or the obligations hereunder of the Holders of
Convertible Debentures to the holders of Senior Indebtedness do any one or more
of the following (a) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
<PAGE>
69
same or any agreement under which Senior Indebtedness is outstanding; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 13.10 NOTICE TO TRUSTEE. The Company shall give prompt
written notice to a Responsible Officer of the Trustee of any fact known to the
Company which would prohibit the making of any payment to or by the Trustee in
respect of the Convertible Debentures pursuant to the provisions of this
Article. Notwithstanding the provisions of this Article or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee in respect of the Convertible Debentures pursuant to the provisions
of this Article, unless and until a Responsible Officer of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 6.2
of this Indenture, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall have not received the
notice provided for in this Section at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Convertible Debentures, then, anything herein contained
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.2 of this Indenture, the
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 13.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Section
6.2 of this Indenture, and the Holders of Convertible Debentures shall be
entitled to conclusively rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Convertible Debentures, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
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70
Senior Indebtedness and other indebtedness of the Company, as the case may be,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article.
Section 13.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR
INDEBTEDNESS. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. Except with respect to Section
13.4, the Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness and shall not be liable to any such holders or creditors
if it shall in good faith pay over or distribute to Holders of Convertible
Debentures or to the Company or to any other Person cash, property or securities
to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
Section 13.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XIII shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.7 of this Indenture.
Section 13.14 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this Article
shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee; provided, however, that Section 13.13
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
Section 13.15 CERTAIN CONVERSIONS DEEMED PAYMENT. For purposes of
this Article only, (a) the issuance and delivery of junior securities (or cash
paid in lieu of fractional shares) upon conversion of Convertible Debentures in
accordance with Article XII shall not be deemed to constitute a payment or
distribution on account of the principal of or premium or interest on
Convertible Debentures or on account of the purchase or other acquisition of
Convertible Debentures, and (b) the payment, issuance or delivery of cash,
property or securities (other than junior securities and cash paid in lieu of
fractional shares) upon conversion of a Convertible Debenture shall be deemed to
constitute payment on account of the principal of such Convertible Debenture.
For the purposes of this Section, the term "junior securities" means (i) shares
of any stock of any class of the Company and (ii) securities of the Company
which are subordinated in right of payment to all Senior Indebtedness which may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Convertible
Debentures are so subordinated as provided in this Article. Nothing contained in
this Article or elsewhere in this Indenture or in the Convertible Debentures is
intended to or shall impair, as among the Company, its creditors other than
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71
holders of Senior Indebtedness and the Holders of Convertible Debentures, the
right, which is absolute and unconditional, of the Holder of any Convertible
Debenture to convert such Convertible Debenture in accordance with Article XII.
ARTICLE XIV
EXPENSES
Section 14.1 PAYMENT OF EXPENSES. In connection with the
offering, sale and issuance of the Convertible Debentures to the Institutional
Trustee and in connection with the sale of the Trust Securities by the Trust,
the Company, in its capacity as borrower with respect to the Convertible
Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale,
issuance and registration under the Securities Act of the Convertible
Debentures and the Trust Securities, including commissions to the
purchasers payable pursuant to the Placement Agreement and
compensation of the Trustee under this Indenture in accordance with
the provisions of Section 6.7 of this Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the
Trust, the fees and expenses of the Institutional Trustee and the
Delaware Trustee, the costs and expenses relating to the operation of
the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment,
paying agent(s), registrar(s), transfer agent(s), duplicating, travel
and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets);
(c) pay all costs and expenses related to the enforcement by the
Institutional Trustee of the rights of the holders of the Trust
Securities;
(d) be primarily liable for any indemnification obligations
arising with respect to the Declaration; and
(e) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
Section 14.2 PAYMENT UPON RESIGNATION OR REMOVAL. Upon
termination of this Indenture or the removal or resignation of the Trustee
pursuant to Section 6.8 of this Indenture, the Company shall pay to the Trustee
all amounts accrued to the date of such termination, removal or resignation.
Upon termination of the Declaration or the removal or resignation of the
Delaware Trustee or the Institutional Trustee, as the case may be, pursuant to
Section 5.6 of the Declaration, the Company shall pay to the Delaware Trustee or
<PAGE>
72
the Institutional Trustee, and their respective counsel, as the case may be, all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
OF COMPANY EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any
obligations, covenant or agreement contained in this Indenture, in any
Convertible Debenture, or because of any indebtedness evidenced thereby, shall
be had against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor,
either directly or through the Company or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Convertible Debentures by
the Holders thereof and as part of the consideration of the issue of the
Convertible Debentures.
Section 15.2 PROVISIONS OF INDENTURE FOR THE SOLE BENEFIT OF
PARTIES AND HOLDERS OF CONVERTIBLE DEBENTURES. Nothing in this Indenture or in
the Convertible Debentures, expressed or implied, shall give or be construed to
give to any Person, firm or corporation, other than the parties hereto, any
Paying Agent and their successors hereunder, the holders of Senior Indebtedness,
the holders of Convertible Preferred Securities (to the extent provided herein)
and the Holders of the Convertible Debentures any legal or equitable right,
remedy or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the Holders of the Convertible
Debentures.
Section 15.3 RIGHT TO ASSIGN; SUCCESSORS AND ASSIGNS BOUND BY
INDENTURE. The Company shall have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly-owned Subsidiary of the Company; provided that, in the event of any such
assignment, the Company shall remain liable for all of its obligations under
this Indenture. Subject to the foregoing, this Indenture will be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. The rights and obligations of the parties under this Indenture may
not otherwise be assigned by such parties.
All the covenants, stipulations, promises and agreements in this
Indenture by the parties hereto shall bind their respective successors and
assigns, whether so expressed or not.
Section 15.4 NOTICES AND DEMANDS ON COMPANY, TRUSTEE AND HOLDERS
OF CONVERTIBLE DEBENTURES. Any notice or demand which by any provision of this
Indenture is required or permitted to be given or served by the Trustee or by
the Holders of Convertible Debentures to or on the Company may be given or
served by being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein); via overnight courier; or through personal
delivery, with such notice or demand addressed (until another address of the
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73
Company is filed by the Company with the Trustee) to Viatel, Inc., 685 Third
Avenue, 24th Floor, New York, New York, 10017, Attention: General Counsel. Any
notice, direction, request or demand by the Company or any Holder of Convertible
Debentures to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made at the Corporate Trust Office.
Where this Indenture provides for notice to Holders of
Convertible Debentures of any event such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed by
first-class mail, postage prepaid to such Holders as their names and addresses
appear in the Convertible Debenture register within the time prescribed. 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 any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, shall
affect the sufficiency of such notice, and any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Company
and Holders of Convertible Debentures when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be reasonably acceptable to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 15.5 OFFICERS' CERTIFICATES AND OPINIONS OF COUNSEL;
STATEMENTS TO BE CONTAINED THEREIN. Upon any application or demand by the
Company to the Trustee to take action under any of the provisions of this
Indenture, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the person
making such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto, (b) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based, (c) a statement that, in the
opinion of 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 (d) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with. Any certificate, statement or opinion of any officer of the
Company may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
<PAGE>
74
certificate or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of counsel may be based, insofar as it
relates to factual matters or information with respect to which is in the
possession of the Company, upon the certificate, statement or opinion of or
representations by an officer or officers of the Company, unless such counsel
knows that the certificate, statement or opinion or representations with respect
to the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
Any certificate, statement or opinion of an officer of the
Company or of counsel may be based, insofar as it relates to accounting matters,
upon a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous. Any certificate or
opinion of any independent firm of public accountants filed with and directed to
the Trustee shall contain a statement that such firm is independent.
Section 15.6 PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS.
Except as otherwise provided in Section 2.5, if the date of Maturity of interest
on or principal of the Convertible Debentures or the date fixed for redemption
or repayment of any such Convertible Debenture shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day; provided that if such next succeeding
Business Day falls in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on the date of Maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
Section 15.7 CONFLICT OF ANY PROVISION OF INDENTURE WITH TRUST
INDENTURE ACT. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required by the Trust Indenture Act, such required provision shall control.
Section 15.8 NEW YORK LAW TO GOVERN. THIS INDENTURE AND THE
CONVERTIBLE DEBENTURES SHALL BE DEEMED TO BE CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY IN THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES OF SAID STATE.
Section 15.9 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
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75
Section 15.10 EFFECT OF HEADINGS; GENDER. The Article and Section
headings herein and the Table of Contents are for convenience only and shall not
affect the construction hereof. The use of the masculine, feminine or neuter
gender herein shall not limit in any way the applicability of any term or
provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed all as of the day and year first above written.
VIATEL, INC.
By: /s/ James P. Prenetta
_____________________________
Name: James P. Prenetta
Title: Senior Vice President
General Counsel
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
_____________________________
Name: Ming J. Shiang
Title: Vice President
<PAGE>
EXHIBIT A
[(FORM OF FACE OF CONVERTIBLE DEBENTURE)]
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE
FOLLOWING - - THIS DEBENTURE IS A BOOK-ENTRY DEBENTURE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY. THIS DEBENTURE IS EXCHANGEABLE FOR CONVERTIBLE
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS DEBENTURE (OTHER THAN A TRANSFER OF THIS DEBENTURE AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE
REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
UNLESS THIS DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. __________ [CUSIP NO. __________]
VIATEL, INC.
[ % CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE]
[PRIOR TO THE TRANSFER RESTRICTION TERMINATION DATE, ANY
CERTIFICATE EVIDENCING A CONVERTIBLE DEBENTURE SHALL BEAR A LEGEND IN
SUBSTANTIALLY THE FOLLOWING FORM, UNLESS OTHERWISE AGREED BY THE COMPANY (WITH
WRITTEN NOTICE THEREOF TO THE TRUSTEE): THE SECURITY EVIDENCED HEREBY 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
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144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR, IF THIS SECURITY
IS CONVERTIBLE INTO COMMON STOCK, THE COMMON STOCK ISSUABLE UPON CONVERSION OR
EXCHANGE OF THIS SECURITY EXCEPT (A) TO VIATEL, INC. (THE "COMPANY") OR ANY
SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (D) TO AN "INSTITUTIONAL ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF
THIS CERTIFICATE EVIDENCES COMMON STOCK, THE TRANSFER AGENT FOR THE COMMON
STOCK), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE OR TRANSFER AGENT), (E)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT
OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), 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 FOR THE CONVERTIBLE
PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE MAY BE (OR, IF
THIS CERTIFICATE EVIDENCES COMMON STOCK, SUCH HOLDER MUST FURNISH TO THE
TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR VIATEL FINANCING TRUST I (THE "TRUST") 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). IF THIS CERTIFICATE DOES NOT EVIDENCE COMMON STOCK AND IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR
THE CONVERTIBLE PREFERRED SECURITIES OR THE CONVERTIBLE DEBENTURES, AS THE CASE
MAY BE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY
OR THE TRUST MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
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<PAGE>
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER 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.]
Viatel, Inc., a Delaware corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to, The Bank of New York, as
Institutional Trustee (the "Institutional Trustee") for Viatel Financing Trust I
or registered assigns, the principal sum of One Hundred Eighty-Five Million Five
Hundred Sixty-Seven Thousand Ten Dollars ($185,567,010)]1 on April 15, 2015 and
to pay interest on said principal sum from April 12, 2000, or from the most
recent interest payment date to which interest has been paid or duly provided
for, quarterly (subject to deferral as set forth herein) in arrears on January
15, April 15, July 15 and October 15 (each such date, an "Interest Payment
Date") of each year commencing July 15, 2000, at the rate of 7 3/4% per annum
until the principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum compounded quarterly. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest payable
for any period shorter than a full quarterly period for which interest is
computed, will be computed on the basis of the actual number of days elapsed per
30-day month. In the event that any date on which interest is payable on this
Convertible Debenture is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture (referred to on the reverse hereof) be paid
to the person in whose name this Convertible Debenture (or one or more
Predecessor Convertible Debentures, as defined in said Indenture) is registered
on the record date for such interest installment, which shall be the close of
business on the fifteenth day prior to such Interest Payment Date. Any such
interest installment not punctually paid or duly provided for shall forthwith
cease to be payable to the registered Holders on such record date and may be
paid to the Person in whose name this Convertible Debenture (or one or more
Predecessor Convertible Debentures) is registered at the close of business on a
special record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of the
Convertible Debentures not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Convertible Debentures may
be listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. The principal of (and premium, if any) and the
interest on this Convertible Debenture shall be payable at the office or agency
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<PAGE>
of the Trustee maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the Security Register. Notwithstanding the
foregoing, so long as the Holder of this Convertible Debenture is the
Institutional Trustee, the payment of the principal of (and premium, if any) and
interest on this Convertible Debenture will be made at such place and to such
account as may be designated by the Institutional Trustee.
The indebtedness evidenced by this Convertible Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness, and this Convertible
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Convertible Debenture, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee on his or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Convertible Debenture shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become obligatory for
any purpose until the Certificate of Authentication hereon shall have been
signed by or on behalf of the Trustee.
The provisions of this Convertible Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
Capitalized terms used but not defined herein shall have the
meaning given them in the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
VIATEL, INC.
By:_____________________________
Name:
Title:
Attest:
By:________________________________
Name:
Title:
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<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Debentures described in the
within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK
as Trustee
By:________________________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE OF DEBENTURE]
This Convertible Debenture is one of the 7 3/4% Convertible
Junior Subordinated Debentures (herein referred to as the "Convertible
Debentures"), all issued or to be issued under and pursuant to an Indenture
dated as of April 12, 2000, duly executed and delivered between the Company and
The Bank of New York, as Trustee (the "Trustee") (the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Convertible Debentures. The Convertible Debentures are limited in aggregate
principal amount as specified in the Indenture.
Because of the occurrence and continuation of a Tax Event, in
certain circumstances, this Convertible Debenture may become due and payable at
the principal amount specified on the face hereof together with any interest
accrued thereon (the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, New York City time, on the date of such redemption or at
such earlier time as the Company determines. The Company shall have the right to
redeem this Convertible Debenture at the option of the Company, upon not less
than 30 nor more than 60 days notice, without premium or penalty, in whole or in
part at any time on or after April 18, 2003 (an "Optional Redemption") at the
following prices (expressed as percentages of the principal amount of the
Convertible Debentures) (the "Optional Redemption Price") together with accrued
and unpaid interest (including Additional Sums, if any, and, to the extent
permitted by applicable law, Compound Interest, if any) to, but excluding, the
redemption date, if redeemed during the 12-month period beginning April 18 of
the applicable year set forth below:
YEAR REDEMPTION PRICE
------- ----------------
2003 105.43%
2004 104.65%
2005 103.88%
2006 103.10%
2007 102.33%
2008 101.55%
2009 100.78%
and 100% if redeemed on or after April 18, 2010.
If Convertible Debentures are redeemed on any January 15, April
15, July 15 or October 15, accrued and unpaid interest shall be payable to
holders of record on the relevant record date.
So long as the corresponding Trust Securities are outstanding,
the proceeds from the redemption of any of the Convertible Debentures will be
used to redeem Trust Securities.
If the Convertible Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Convertible Debentures will be
redeemed pro rata.
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<PAGE>
In the event of redemption of this Convertible Debenture in part
only, a new Convertible Debenture or Convertible Debentures for the unredeemed
portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Convertible
Debentures and the interest accrued thereon may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of a majority of the aggregate
principal amount of the Convertible Debentures at the time Outstanding,
evidenced as provided in the Indenture, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in any
manner the rights of the Holders of the Convertible Debentures; provided,
however, that no such supplemental indenture shall (i) extend the Stated
Maturity of any Convertible Debenture, or reduce the principal amount thereof or
any premium thereon, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable upon redemption thereof, or
impair or affect the right of any Holder to institute suit for the payment
thereof, without the consent of the Holder of each Convertible Debenture so
affected, or (ii) reduce the aforesaid percentage of Convertible Debentures, the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holder of each Convertible Debenture. It is also
provided in the Indenture that, with respect to certain defaults or Events of
Default regarding the Convertible Debentures, prior to any declaration
accelerating the maturity of such Convertible Debentures, or after such
declaration and before any judgment or decree for the payment of the moneys due
is obtained or entered, and provided the Company has paid or made provision for
payment of any unaccelerated amounts then due, the Holders of a majority in
aggregate principal amount Outstanding of the Convertible Debentures (or, in the
case of certain defaults or Events of Default, all of the Convertible
Debentures), may on behalf of the Holders of all the Convertible Debentures
waive any such past default or Event of Default and its consequences. The
preceding sentence shall not, however, apply to a default in the payment of the
principal of or premium, if any, or interest on any of the Convertible
Debentures. Any such consent or waiver by the Holder of this Convertible
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners of this
Convertible Debenture and any Convertible Debenture which may be issued in
exchange or substitution therefor, irrespective of whether or not any notation
thereof is made upon this Convertible Debenture or such other Convertible
Debenture.
No reference herein to the Indenture and no provision of this
Convertible Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Convertible Debenture at the time and
place and at the rate and in the money herein prescribed.
As long as an Event of Default under Section 5.1(a) of the
Indenture shall not have occurred and be continuing, the Company shall have the
right at any time during the term of the Convertible Debentures and from time to
time to extend the interest payment period of such Convertible Debentures for up
to 20 consecutive quarters (an "Extension Period"), at the end of which period
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<PAGE>
the Company shall pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Convertible Debentures to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extension Period, the Company may further
extend such Extension Period, provided that such Extension Period together with
all such further extensions thereof shall not exceed 20 consecutive quarters. At
the termination of any such Extension Period and upon the payment of all accrued
and unpaid interest and any additional amounts then due, the Company may
commence a new Extension Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Convertible Debenture is transferable by the registered
Holder hereof on the Security Register of the Company, upon surrender of this
Convertible Debenture for registration of transfer at the office or agency of
the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Convertible Debentures of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Convertible Debenture, the Company, the Trustee, any paying agent and the
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Convertible Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other
than the Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Convertible Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Holder of any Convertible Debenture has the right,
exercisable at any time beginning July 11, 2000 through the close of business
(New York time) on April 14, 2015 (or, in the case of a Convertible Debenture
called for redemption, prior to the close of business on the Business Day prior
to the corresponding redemption date), to convert the principal amount thereof
(or any portion thereof that is an integral multiple of $50) into shares of
Common Stock at the initial conversion rate of 1.048 shares of Common Stock for
each Convertible Debenture (equivalent to a Conversion Price of $47.71 per share
of Common Stock), subject to adjustment under certain circumstances.
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<PAGE>
To convert a Convertible Debenture, a Holder must (a) complete
and sign a conversion notice substantially in the form attached hereto, (b)
surrender the Convertible Debenture to a Conversion Agent, (c) furnish
appropriate endorsements or transfer documents if required by the Conversion
Agent and (d) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any Holder
surrenders a Convertible Debenture for conversion on or after the record date
for the payment of an installment of interest and prior to the opening of
business on the next Interest Payment Date, then, notwithstanding such
conversion, the interest payable on such Interest Payment Date will be paid to
the registered Holder of such Convertible Debenture on such record date. In such
event, such Convertible Debenture, when surrendered for conversion, need not be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the portion so converted. However, if a redemption date
falls between a record date and the subsequent Interest Payment Date, the Holder
will be entitled to receive, on such redemption date, the interest accrued to,
but excluding, the redemption date. The number of shares issuable upon
conversion of a Convertible Debenture is determined by dividing the principal
amount of the Convertible Debenture converted by the Conversion Price in effect
on the Conversion Date. No fractional shares will be issued upon conversion but
a cash adjustment will be made for any fractional interest. The outstanding
principal amount of any Convertible Debenture shall be reduced by the portion of
the principal amount thereof converted into shares of Common Stock.
The Convertible Debentures are issuable only in registered form
without coupons in denominations of $10 and any integral multiple thereof.2 This
Global Debenture is exchangeable for Convertible Debentures in definitive form
only under certain limited circumstances set forth in the Indenture. Convertible
Debentures so issued are issuable only in registered form without coupons in
denominations of $10 and any integral multiple thereof.3 As provided in the
Indenture and subject to certain limitations therein set forth, Convertible
Debentures are exchangeable for a like aggregate principal amount of Convertible
Debentures of a different authorized denomination, as requested by the Holder
surrendering the same.
THE INDENTURE AND THE CONVERTIBLE DEBENTURES SHALL BE DEEMED TO
BE CONTRACTS MADE AND TO BE PERFORMED ENTIRELY IN THE STATE OF NEW YORK, AND FOR
ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SAID STATE WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SAID STATE.
A-9
<PAGE>
FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: Viatel, Inc.
The undersigned owner of this Convertible Debenture hereby irrevocably exercises
the option to convert this Convertible Debenture, or the portion below
designated, into Common Stock of VIATEL, INC. in accordance with the terms of
the Indenture referred to in this Convertible Debenture, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date: _______________, ____
in whole _____ Portions of Convertible Debenture to be converted ($50 or
integral multiples-thereof): $________________
_____________________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address, Including
Zip Code, and Social Security or Other Identifying
Number
_____________________________________________________
_____________________________________________________
_____________________________________________________
Signature Guarantee:4 _______________________________
____________________
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<PAGE>
ASSIGNMENT
[FORM OF ASSIGNMENT FOR CONVERTIBLE DEBENTURES
THAT ARE NOT GLOBAL DEBENTURES]
For value received __________________________ hereby sell(s),
assign(s) and transfer(s) unto
________________________________________________________________________________
(Please insert social security or other taxpayer identification number of
assignee.) the within Convertible Debenture and hereby irrevocably constitutes
and appoints _______ attorney to transfer the said Convertible Debenture on the
books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Convertible
Debenture occurring prior to the Transfer Restriction Termination Date, the
undersigned confirms that such Convertible Debenture is being transferred:
[_] To Viatel, Inc. or a subsidiary thereof; or
[_] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[_] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[_] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended; or
[_] Pursuant to an effective registration statement.
and unless the box below is checked, the undersigned confirms that such
Convertible Debenture is not being transferred to an "affiliate" of the Company
as defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate"):
[_] The transferee is an Affiliate of the Company.
Dated: _____________________________
________________________________
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<PAGE>
________________________________
Signature(s)
________________________________
Signature Guarantee5
NOTICE: The above signatures of the holder(s) hereof must
correspond with the name as written upon the face of this Convertible Debenture
in every particular without alteration or enlargement or any change whatever.
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<PAGE>
[FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL DEBENTURES TO REFLECT CHANGES IN
PRINCIPAL AMOUNT]
Schedule A
Changes to Principal Amount of Global Debentures
Principal Amount of
Convertible Debentures
by which this Global
Debenture is to be
Reduced or Increased, Remaining Principal
and Reason for Amount of this
DATE REDUCTION OR INCREASE Global DEBENTURE NOTATION MADE BY
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<PAGE>
- - ---------------------
1 In the case of a Global Debenture the bracketed text will be replaced with the
following: "principal amount set forth on Schedule A hereto".
2 This text will appear in the case of registered definitive certificates issued
to Institutional Accredited Investors.
3 This text will appear in the case of a Global Debenture.
4 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Conversion Agent, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Conversion
Agent in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
5 (Signature must be guaranteed by an "eligible guarantor institution," that is,
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
Execution Copy
REGISTRATION RIGHTS AGREEMENT
Dated April 14, 2000
between
VIATEL, INC.
and
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into on April 14, 2000 between VIATEL, INC., a Delaware corporation (the
"COMPANY"), and MORGAN STANLEY & CO. INCORPORATED, CHASE SECURITIES INC. and
CREDIT SUISSE FIRST BOSTON CORPORATION (the "PLACEMENT AGENTS").
This Agreement is made pursuant to the Placement Agreement, dated the
date hereof, between the Company and the Placement Agents (the "PLACEMENT
AGREEMENT"), which provides for the sale by the Company to the Placement Agents
of an aggregate of Euro 300,000,000 principal amount of 12 3/4% Senior Euro
Notes Due 2008 of the Company (the "NOTES"). In order to induce the Placement
Agents to enter into the Placement Agreement, the Company has agreed to provide
to the Placement Agents, and their direct and indirect transferees the
registration rights 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:
"CLOSING DATE" shall mean the Closing Date as defined in the Placement
Agreement.
"COMPANY" shall have the meaning set forth in the Preamble to this
Agreement and shall also include the Company's successors.
"EXCHANGE DATES" shall have the meaning set forth in Section 2(a)(ii)
hereof.
"EXCHANGE NOTES" shall mean notes issued in the Exchange Offer
pursuant to Section 2(a) hereof.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"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
<PAGE>
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"HOLDER" shall mean any Placement Agent, for so long as it owns any
Registrable Notes, and the successors, assigns and direct and indirect
transferees of any Placement Agent who become a registered owner of
Registrable Notes under the Indenture; PROVIDED THAT for purposes of
Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a) hereof).
"INDENTURE" shall mean the indenture, dated April 20, 2000, between
the Company and The Bank of New York, as trustee, as the same may be
amended from time to time in accordance with the terms thereof.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; PROVIDED that
the principal amount of the Notes shall be calculated in dollars based upon
an exchange rate of Euro 1.0417 per U.S.$1.00; PROVIDED FURTHER whenever
the consent or approval of Holders of a specified percentage of Registrable
Notes is required hereunder, Registrable Notes held by the Company 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.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time.
"NOTES" shall have the meaning set forth in the Preamble to this
Agreement.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint stock company, trust
or unincorporated organization or other entity, or a government or agency
or political subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the Preamble to
this Agreement.
"PLACEMENT AGREEMENT" shall have the meaning set forth in the Preamble
to this Agreement.
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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 any
particular Note shall cease to be a Registrable Note when the earliest of
the following events occurs (i) a Registration Statement with respect to
such Note shall have been declared effective under the 1933 Act and such
Note shall have been disposed of pursuant to such Registration Statement,
(ii) such Note has been sold to the public pursuant to Rule 144 (or any
similar rule then in force, but not Rule 144A) under the 1933 Act or (iii)
such Note shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company 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, (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 the
Company and, in the case of a Shelf Registration Statement, the reasonable
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 the Company, 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 reasonable 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 the
Company 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 the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Notes (but no other
securities unless approved by the Majority Holders) on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted
by the SEC which will accomplish a similar objective, 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.
"TRUSTEE" shall mean the trustee with respect to the Notes under the
Indenture.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Notes are sold to an Underwriter (as
hereinafter defined) for reoffering to the public.
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, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the Company to the Holders to exchange all of the Registrable Notes for
Exchange Notes and to have such Registration Statement remain effective until
the closing of the Exchange Offer. The Company 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. The Company 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
Registration Rights 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) (the
"EXCHANGE DATES");
(iii) that any Registrable Note not tendered will remain outstanding
and continue to accrue interest, but will not retain any rights under this
Registration Rights Agreement;
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(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 or her election to have such Registrable
Notes exchanged.
As soon as practicable after the last Exchange Date, the Company
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 the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Note equal in principal
amount and of like terms to the Registrable Notes surrendered by such
Holder.
The Company shall use its 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. The Company 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) the Company 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
the date that is six months after the Closing Date 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 by
such Placement Agents, of Registrable Notes that were acquired by the Placement
Agents from the Company, the Company
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shall use its best efforts to cause to be filed as soon as practicable after
such determination, date or notice of such opinion of counsel is given to the
Company, 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. The Company agrees to use
its best efforts to keep the Shelf Registration Statement continuously effective
until the expiration of the period referred to in Rule 144(k) under the 1933 Act
with respect to all Registrable Notes covered by the 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 or as would be permitted by the
current rules and regulations. The Company further agrees to supplement or amend
the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other applicable 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 its
best efforts to cause any such amendment to become effective and such Shelf
Registration Statement to become usable as soon as thereafter practicable. The
Company agrees 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) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) or Section 2(b). 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 unless such action by the SEC is no longer required; 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.
In the event that the Exchange Offer is not consummated and, if a Shelf
Registration Statement is required hereby, the Shelf Registration Statement is
not declared or permitted to go effective on or prior to the date that is six
months after the Closing Date, the annual interest rate borne by the Notes will
increase by 0.5% per annum, until the date the Exchange Offer is consummated or
a Shelf Registration Statement is declared effective.
(e) Without limiting the remedies available to the Placement Agents
and the Holders, the Company acknowledges that any failure by the Company to
comply with its 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
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failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company 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 (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the selling Holders
thereof and (z) shall 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 its 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; to
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 disposition of the
Registrable Notes; and the Company consents 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 its reasonable best efforts to register or qualify the
Registrable Notes under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Notes covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC,
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<PAGE>
to cooperate with such Holders 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 the Company shall not be required to (i) 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), (ii) file
any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not 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 the Company 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 the Company 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 in any material respect
and (vi) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(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 prompt 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);
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<PAGE>
(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 two business days 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 its best efforts to
prepare and file with the SEC 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
the light of the circumstances under which they were made, not misleading.
The Company agrees 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 the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) 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 that 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 their counsel (and, in the case of a
Shelf Registration Statement, the Holders and their counsel) and make such
of the representatives of the Company as shall be reasonably requested by
the Placement Agents or their 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
(other than a document which the Company is legally required to file under
the Exchange Act) which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Placement Agents and
their 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 to which the Placement Agents or their counsel (and, in
the case of a Shelf Registration Statement, the Holders or their counsel)
shall reasonably object;
(k) obtain a CUSIP and a Common Code number for all Exchange Notes or
Registrable Notes, as the case may be, not later than the effective date of
a Registration Statement;
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(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 its reasonable 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, upon execution of customary
confidentiality agreements reasonably satisfactory to the Company and its
counsel, 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 the Company, and cause the respective officers, directors and
employees of the Company 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, if reasonably requested by
any Holder of Registrable Notes covered by such Registration Statement, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment
such information with respect to such Holder as is legally required to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company has
received notification of the matters to be incorporated in such filing; and
(o) in the case of a Shelf Registration, use its reasonable best
efforts to enter into such customary agreements and take all such other
actions in connection therewith (including those requested by the Holders
of a majority in principal amount 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 the Company and its subsidiaries, the Shelf
Registration Statement, Prospectus and documents incorporated by reference
therein or deemed incorporated by reference therein, 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) use its reasonable best efforts to obtain opinions of
counsel to the Company (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) use its
reasonable best efforts to obtain "cold comfort" letters from the
independent certified public accountants of the Company
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(and, if necessary, any other certified public accountant of any subsidiary
of the Company, or of any business acquired by the Company for which
financial statements and financial data are or are required to be included
in the Shelf 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 the Company 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, the Company may require
each Holder of Registrable Notes to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Notes as the Company may from time to time reasonably request in
writing. No Holder of Registrable Notes may include its Registrable Notes in
such Shelf Registration Statement unless and until such Holder furnishes such
information to the Company. Each Holder including Registrable Notes in a Shelf
Registration shall agree to furnish promptly to the Company any information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Notes required to make any information previously furnished to the
Company by such Holder not materially misleading.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company 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 Shelf 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
the Company, such Holder will deliver to the Company (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 the Company shall give any such notice to
suspend the disposition of Registrable Notes pursuant to a Shelf Registration
Statement, the Company 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.
There may not be more than two such suspensions during any 365 day period and
any such suspensions may not exceed 30 days for each suspension.
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; PROVIDED THAT the Company shall be required to use its reasonable best
efforts to effect an underwritten offering only upon the request of Holders of
at least 25% in aggregate principal amount of the Registrable Notes outstanding
at the time such request is delivered to the Company. In any such
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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, subject to approval by the Company, which approval will not be
unreasonably withheld.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) 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.
The Company understands that it is the position of the staff of the SEC
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, the Company agrees 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 Agents 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 of the
SEC recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(i), 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 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement 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 the Company by the Placement Agents or with the
reasonable request in writing to the Company by
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one or more broker-dealers who certify to the Placement Agents and the
Company 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 to
an Exchange Offer Registration, the Company shall be obligated (x) 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, (y) 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 (z) 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 the Company or any
Holder with respect to any request that it may make pursuant to Section 4(b)
above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Placement
Agents, each Holder and each person, if any, who controls any Placement Agent 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, any
Placement Agent or any Holder, from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Placement Agent, 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 the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein, in the 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 or any Holder furnished to the Company in writing by any Placement Agent
or any selling Holder expressly for use therein; PROVIDED THAT the foregoing
indemnity agreement shall not inure to the benefit of any Holder or any Person
controlling such Holder, with respect to any sale or disposition of Registrable
Notes by such Holder in violation of the penultimate paragraph of Section 3 of
this Agreement. In connection with any Underwritten Offering permitted by
Section 3, the Company will also indemnify the Underwriters, if any, selling
brokers, dealers and similar securities industry professionals participating in
the distribution, their officers
13
<PAGE>
and directors and each Person who controls such Persons (within the meaning of
either Section 15 of the 1933 Act or Section 20 of 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 the Company, each Placement Agent and the other selling Holders,
and each of their respective directors, officers who sign the Registration
Statement and each Person, if any, who controls the Company, any Placement Agent
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 the Company to the Placement Agents and the Holders, but only with
reference to information relating to such Holder furnished to the Company 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 (but the failure
to so notify an indemnifying party shall not relieve it from any liability which
it may have under this Section, except to the extent that it has been prejudiced
in any material respect by such failure, or from any liability it may otherwise
have) 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 respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (A) the reasonable 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 reasonable fees and expenses of more than one separate firm (in addition to
any local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each Person, if any, who controls the Company within
the meaning of either such Section and (C) the reasonable 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 any Placement Agents and Persons who
control such Placement Agent, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the
14
<PAGE>
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 the Company. 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 (x) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (y) 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 (which consent may
not be unreasonably withheld), 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 (whether or not
any indemnified party is an actual or potential party to such proceeding) 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 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 referred
to therein, 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 the Company 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 the Company 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) The Company 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 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
15
<PAGE>
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.
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
any Placement Agent, any Holder or any Person controlling any Placement Agent or
any Holder, or by or on behalf of the Company, its officers or directors or any
Person controlling the Company, (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. The Company has not entered into, and
on or after the date of this Agreement will not 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 the Company'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 the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes which are affected by such amendment, modification,
supplement, waiver or consent; PROVIDED, HOWEVER, that no amendment,
modification, supplement, waiver or consent 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 or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company 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 the Company,
initially at the Company's address set
16
<PAGE>
forth in the Placement Agreement 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 the Placement Agents) shall have no liability or obligation to the Company
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. The Company shall not, and shall use
its best efforts to cause its affiliates (as defined in Rule 405 under the 1933
Act) not to, purchase and then resell or otherwise transfer any Notes.
(f) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Placement Agents, on the other hand, and 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.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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<PAGE>
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
(j) 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
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
VIATEL, INC.
By: /s/ Allan L. Shaw
___________________________
Name: Allan L. Shaw
Title: Chief Financial Officer
<PAGE>
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: MORGAN STANLEY & CO. INTERNATIONAL LIMITED
In its individual capacity and as representative of the other Placement
Agents
By: /s/ Alan Jones
____________________________
Name: Alan Jones
Title: Managing Director
REGISTRATION RIGHTS AGREEMENT
Dated April 6, 2000
between
VIATEL FINANCING TRUST I
VIATEL, INC.
and
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and
entered into on April 6, 2000 between VIATEL FINANCING TRUST I, a special
statutory trust formed under the laws of the State of Delaware (the "TRUST"),
VIATEL, INC., a Delaware corporation ("VIATEL" or the "COMPANY"), and MORGAN
STANLEY & CO. INCORPORATED, SALOMON SMITH BARNEY INC. and BANC OF AMERICA
SECURITIES LLC (the "PLACEMENT AGENTS").
This Agreement is made pursuant to the Placement Agreement, dated
the date hereof, between the Trust, the Company and the Placement Agents (the
"PLACEMENT AGREEMENT"). In order to induce the Placement Agents to enter into
the Placement Agreement, the Trust and the Company have agreed to provide the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Purchase Agreement.
The Trust and the Company agree with the Placement Agents, (i)
for their benefit as Placement Agents and (ii) for the benefit of the holders
from time to time of the Registrable Securities, including the Placement Agents
(each of the foregoing a "HOLDER" and together the "HOLDERS"), as follows:
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Placement Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"AFFILIATE" shall have the same meaning as given to that term in
Rule 405 of the 1933 Act or any successor rule thereunder.
"APPLICABLE CONVERSION PRICE" as of any date of determination
shall mean the Conversion Price, as it may be adjusted from time to
time, in effect as of such date of determination or, if no Convertible
Debentures are then outstanding, the Conversion Price that would be in
effect were Convertible Debentures then outstanding.
"COMMON STOCK" shall mean the shares of common stock, $.01 par
value per share, of Viatel and any other shares of common stock as may
constitute "Common Stock" for purposes of the Indenture, including the
Underlying Common Stock.
<PAGE>
"COMPANY" shall have the meaning set forth in the Preamble to
this Agreement and shall also include the Company's successors.
"CONVERSION PRICE" shall have the meaning assigned such term in
Section 14.1 of the Indenture.
"CONVERTIBLE DEBENTURES" shall mean the 7 3/4% Convertible Junior
Subordinated Debentures due 2015 of Viatel to be purchased by the
Trust pursuant to the Debenture Purchase Agreement dated as of the
date hereof between Viatel and the Trust.
"CONVERTIBLE PREFERRED SECURITIES" shall mean 7 3/4% Trust
Convertible Preferred Securities of the Trust.
"DAMAGES ACCRUAL PERIOD" See Section 2(e) hereof.
"DAMAGES PAYMENT DATE" shall mean each distribution payment date
under the Declaration, in the case of Convertible Preferred
Securities, each Interest Payment Date (as defined in the Indenture),
in the case of Convertible Debentures, and each January 15, April 15,
July 15, October 15, in the case of Underlying Common Stock; and, in
the event that any Convertible Preferred Security or Convertible
Debenture (or portion thereof) is called for redemption or surrendered
for conversion, the date of redemption or conversion, as the case may
be, shall be deemed to be a Damages Payment Date with respect to such
Convertible Preferred Security or Convertible Debenture (or portion
thereof), as the case may be, unless accrued and unpaid distributions
or interest, as the case may be, are to paid to the holder on a record
date prior to such date of conversion (in which case the Damages
Payment Date shall be deemed to be the date on which distributions or
interest, as the case may be, are payable to such record holder).
"DECLARATION" shall mean the Amended and Restated Declaration of
Trust dated as of the date hereof of the Trust as amended from time to
time.
"DEFERRAL PERIODS" See Section 2(d)(ii) hereof.
"EFFECTIVENESS PERIOD" shall mean the period commencing with the
date hereof and ending on the date that all Registrable Securities
have ceased to be Registrable Securities.
"EVENT" See Section 2(e) hereof.
"EVENT DATE" See Section 2(e) hereof.
"EVENT TERMINATION DATE" See Section 2(e) hereof.
2
<PAGE>
"FILING DATE" See Section 2(a) hereof.
"GUARANTEE" shall mean the guarantee by Viatel of the Convertible
Preferred Securities pursuant to the Preferred Securities Guarantee
Agreement dated as of the date hereof between Viatel and The Bank of
New York, as preferred guarantee trustee.
"HOLDER" shall have the meaning set forth in the Preamble to this
Agreement.
"INDENTURE" shall mean the indenture, dated April 12, 2000
between the Company and The Bank of New York, as trustee, pursuant to
which the Convertible Debentures are being issued.
"INITIAL SHELF REGISTRATION" See Section 2(a) hereof.
"LIQUIDATED DAMAGES AMOUNT" See Section 2(e) hereof.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
outstanding Registrable Securities; PROVIDED THAT whenever the consent
or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the
Company, the Trust or any of their respective affiliates (as such term
is defined in Rule 405 under the 1933 Act) (other than the Placement
Agents or subsequent holders of Registrable Securities if such
subsequent holders are deemed to be such affiliates solely by reason
of their holding of such Registrable Securities) shall not be counted
in determining whether such consent or approval was given by the
Holders of such required percentage or amount.
"MANAGING UNDERWRITERS" shall mean the investment banking firm or
firms that shall manage or co-manage an Underwritten Offering.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"1933 ACT" shall mean the Securities Act of 1933, as amended from
time to time.
"NOTICE HOLDER" See Section 2(d)(i) hereof.
"PERSON" shall mean an individual, partnership, corporation,
limited liability company, joint venture, association, joint stock
company, trust or unincorporated organization or other entity, or a
government or agency or political subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the
Preamble to this Agreement.
3
<PAGE>
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
Preamble to this Agreement.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A
promulgated under the 1933 Act), as amended or supplemented by any
amendment or prospectus supplement, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
"REGISTRABLE SECURITIES" shall mean the Convertible Preferred
Securities, the Guarantee, the Convertible Debentures and the
Underlying Common Stock, whether or not such securities have been
converted or exchanged, and at all times subsequent to any such
conversion or exchange, and any security issued with respect thereto
upon any stock dividend, split or similar event until, in the case of
any such security, (i) it is effectively registered under the 1933 Act
and disposed of in accordance with the Registration Statement covering
its offering and sale, (ii) it is saleable by the Holder thereof
pursuant to Rule 144(k) or any successor provision or (iii) it is sold
to the public pursuant to Rule 144 and, as result of the event or
circumstance described in any of the foregoing clauses (i) through
(iii), the legends with respect to transfer restrictions required
under the Declaration and the Indenture are removed or removable in
accordance with the terms of the Declaration or the Indenture, as the
case may be.
"REGISTRATION EXPENSES" shall mean any and all expenses incident
to performance of or compliance by the Company and the Trust 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
Registrable Securities), (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, (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 the Company and the Trust and
the reasonable fees and disbursements of one counsel for the Holders
4
<PAGE>
(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 the
Company, 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 reasonable 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 Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement of
the Company or the Trust that covers any of the Registrable Securities
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.
"RULE 144" shall mean Rule 144 under the 1933 Act, as such Rule
may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"SELLING PERIOD" See Section 2(d)(i) hereof.
"SHELF REGISTRATION" shall mean a registration effected pursuant
to Section 2(a) hereof.
"SUBSEQUENT SHELF REGISTRATION" See Section 2(b) hereof.
"TRUST" shall have the meaning set forth in the preamble to the
agreement.
"TRUSTEE" shall mean The Bank of New York (or any successor
entity), the Institutional Trustee under the Declaration or, in the
event the Convertible Debentures are distributed to holders of the
Convertible Preferred Securities upon dissolution of the Trust, the
Trustee under the Indenture.
"UNDERLYING COMMON STOCK" shall mean the Common Stock into which
the Convertible Debentures are convertible.
"UNDERWRITERS" See Section 3.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean
a registration in which Registrable Securities are sold to an
Underwriter (as hereinafter defined) for reoffering to the public.
2. SHELF REGISTRATION.
5
<PAGE>
(a) SHELF REGISTRATION. The Company and the Trust shall prepare
and file with the SEC, as soon as practicable but in any event on or prior to
the date ninety (90) days following the latest date of original issuance of the
Convertible Preferred Securities (the "FILING DATE"), a registration statement
for an offering to be made on a delayed or continuous basis pursuant to Rule 415
of the 1933 Act (the "SHELF REGISTRATION") registering the resale from time to
time by Holders thereof of all of the Registrable Securities (the "INITIAL SHELF
REGISTRATION"). The Initial Shelf Registration shall be on Form S-3 or another
appropriate form permitting registration of the Registrable Securities for
resale by the Holders in one or more Underwritten Offerings, privately
negotiated transactions, sales on the Nasdaq National Market, sales to brokers
or dealers or otherwise. The Company and the Trust shall use their reasonable
best efforts to cause the Initial Shelf Registration to be declared effective
under the 1933 Act as soon as practicable, but in no event later than 180 days
after the date hereof, and to keep the Initial Shelf Registration continuously
effective under the 1933 Act until the earlier of the end of the Effectiveness
Period.
(b) If the Initial Shelf Registration or any Subsequent Shelf
Registration (as defined below) ceases to be effective for any reason at any
time during the Effectiveness Period (other than because all Registrable
Securities registered thereunder shall have been sold or shall have ceased to be
Registrable Securities), the Company and the Trust shall use their reasonable
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall, subject to Section 2(d), within
thirty (30) days of such cessation of effectiveness amend such Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities (a "SUBSEQUENT SHELF
REGISTRATION"). If a Subsequent Shelf Registration is filed, the Company and the
Trust shall use their reasonable best efforts to cause such Subsequent Shelf
Registration to be declared effective as soon as practicable after such filing
and to keep such Registration Statement continuously effective until the end of
the Effectiveness Period.
(c) The Company and the Trust shall supplement and amend the
Shelf Registration if required by the rules, regulations or instructions
applicable to the registration form under the 1933 Act used by the Company and
the Trust for such Shelf Registration, if required by the 1933 Act or if
reasonably requested by the Placement Agents on behalf of the Holders of the
Registrable Securities covered by such Registration Statement or by the Managing
Underwriters of such Registrable Securities; provided that the party or parties
6
<PAGE>
making such request shall have furnished to the Company and the Trust with such
request a written description of such request and reasonable legal grounds
therefor.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to distribute its Registrable Securities pursuant to a Shelf
Registration and related Prospectus, it will do so only in accordance with this
Section 2(d). Each Holder of Registrable Securities agrees to give written
notice to the Company and the Trust prior to any intended distribution of
Registrable Securities under the Shelf Registration, which notice shall specify
the date on which such Holder intends to begin such distribution and any
information with respect to such Holder and the intended distribution of
Registrable Securities by such Holder required to amend the Registration
Statement with respect to such intended distribution of Registrable Securities
by such Holder. Within five business days after such date, the Company and the
Trust shall either:
(i) (A) If necessary, prepare and file with the SEC a
post-effective amendment to the Shelf Registration or a supplement to
the related Prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required document
so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and so that, as thereafter delivered to purchasers of the
Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; (B) provide the Holders of the Registrable
Securities who gave such notice copies of any documents filed pursuant
to Section 2(d)(i)(A); and (C) inform each such Holder that the
Company and the Trust have complied with their obligations in Section
2(d)(i)(A) and that the Registration Statement and the Prospectus may
be used for sales of Registrable Securities (or that, if the Company
or the Trust has filed a post-effective amendment to the Shelf
Registration which has not yet been declared effective, the Company
and the Trust will notify each such Holder to that effect, will use
reasonable efforts to secure the effectiveness of such post-effective
amendment and will immediately notify each such Holder pursuant to
Section 2(d)(i)(A) hereof when the amendment has become effective and
that the Registration Statement and the Prospectus may be used for
sales of Registrable Securities).
Each Holder who has given notice of intention to distribute such
Holder's Registrable Securities in accordance with this Section 2(d)
(a "NOTICE HOLDER") shall distribute all or any such Registrable
Securities pursuant to the Shelf Registration and related Prospectus
only during the 45-day period commencing with the date on which the
Company and the Trust give such notice (such 45-day period is referred
to as a "SELLING PERIOD"). The Notice Holders will not distribute any
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Registrable Securities pursuant to such Registration Statement or
Prospectus after such Selling Period without giving a new notice of
intention to distribute pursuant to Section 2(d) hereof and receiving
a further notice from the Company and the Trust pursuant to Section
2(d)(i)(C) hereof.
(ii) In the event of the happening of any event (A) of the kind
described in Section 2(e) hereof or (B) that the Company believes in
good faith makes it advisable to suspend use of the Prospectus for a
discrete period of time due to pending material corporate developments
or similar material events that have not yet been publicly disclosed
and as to which the Company believes in good faith that public
disclosure will be disadvantageous to the Company or the Trust, the
Company shall deliver a certificate in writing, signed by its Chief
Executive Officer or Chief Financial Officer, to the Notice Holders,
and the Managing Underwriters, if any, to the effect of the foregoing
and, upon receipt of such certificate, each such Notice Holder's
Selling Period will not recommence or shall be suspended until such
Notice Holder's receipt of copies of the supplemented or amended
Prospectus provided for in Section 2(d)(i)(A) hereof, or until it is
advised in writing by the Company that the Prospectus may be used, and
it has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such
Prospectus. The Company and the Trust will use their reasonable best
efforts to ensure that the use of the Prospectus may be resumed, and
the Selling Period will commence or recommence, as soon as practicable
and, in the case of a pending development or event referred to in
Section 2(d)(ii)(B) hereof, as soon as the earlier of (x) public
disclosure of such pending material corporate development or similar
material event or (y) the date upon which in the judgment of the
Company, public disclosure of such material corporate development or
similar material event would not be disadvantageous to the Company or
the Trust. Notwithstanding the foregoing, the period during which a
Selling Period is suspended, whether or not consecutive, in any
12-month period, shall not exceed 60 days (a "DEFERRAL PERIOD").
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if (i) the Initial Shelf Registration
has not been filed on or prior to the Filing Date, (ii) prior to the end of the
Effectiveness Period, the SEC shall have issued a stop order suspending the
effectiveness of the Shelf Registration, (iii) the aggregate number of days in
any one Deferral Period exceeds the periods permitted pursuant to Section
2(d)(ii) hereof or (each of the events of a type described in any of the
foregoing clauses (i) through (iii) are individually referred to herein as an
"Event," and the Filing Date in the case of clause (i), the date on which the
effectiveness of the Shelf Registration has been suspended or proceedings with
respect to the Shelf Registration under Section 8(d) or 8(e) of the 1933 Act
have been commenced in the case of clause (ii), the date on which the duration
of a Deferral Period exceeds the aggregate number of days permitted by Section
2(d)(ii) hereof being referred to herein as an "EVENT DATE"). Events shall be
deemed to continue until the "EVENT TERMINATION DATE," which shall be the
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<PAGE>
following dates with respect to the respective types of Events: the date the
Initial Registration Statement is filed in the case of an Event of the type
described in clause (i), the date that all stop orders suspending effectiveness
of the Shelf Registration have been removed and the proceedings initiated with
respect to the Shelf Registration under Section 8(d) or (e) of the 1933 Act have
terminated, as the case may be, in the case of Events of the types described in
clause (ii), and termination of the Deferral Period which caused the limit on
the duration of a Deferral Period set forth in Section 2(d)(ii) to be exceeded
in the case of the commencement of an Event of the type described in clause
(iii).
Accordingly, upon the occurrence of any Event Date and until such
time as there are no Events which have occurred and are continuing (a "DAMAGES
ACCRUAL PERIOD"), commencing on and including the Event Date on which such
Damages Accrual Period began, the Company agrees to pay, as liquidated damages,
and not as a penalty, an additional amount (the "LIQUIDATED DAMAGES AMOUNT"):
(i) to each Holder of (x) a Convertible Preferred Security or (y) in the event
that the Convertible Debentures are distributed to holders of Convertible
Preferred Securities upon dissolution of the Trust in accordance with the
Declaration, a Convertible Debenture, accruing at a rate equal to one-half of
one percent per annum (50 basis points) on an amount equal to the liquidation
amount of such Convertible Preferred Security or principal amount of such
Convertible Debenture, as the case may be, held by such Holder and (ii) to each
Holder of Underlying Common Stock, accruing at a rate equal to one-half of one
percent per annum (50 basis points) calculated on an amount equal to the product
of (x) the Applicable Conversion Price as of the business day immediately prior
to the applicable Damages Payment Date times (y) the number of shares of Common
Stock that are Registrable Securities held by such Notice Holder.
Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue with
respect to any Registrable Security from and after the earlier of (x) the date
such security is no longer a Registrable Security, and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Liquidated Damages
Amounts shall be computed on the basis of a 360-day year of twelve 30-day
months, PROVIDED that Liquidated Damages Amounts payable for any period shorter
than a month will be computed on the basis of the actual number of days elapsed
per 30- day month.
The Company shall pay the liquidated damages due on any
Convertible Preferred Security, Convertible Debenture or Underlying Common Stock
by depositing with the Trustee, in trust for the benefit of the Holders of
Convertible Preferred Securities or Convertible Debentures entitled thereto (or,
in the case of Underlying Common Stock, by depositing with the transfer agent
for the benefit of the Holders of Underlying Common Stock entitled thereto), as
the case may be, at least one business day prior to the applicable Damages
Payment Date, sums sufficient to pay all accrued and unpaid liquidated damages
from and including the last Damages Payment Date to which liquidated damages
have been paid in full (or, if no liquidated damages have been paid in respect
of the relevant Damages Accrual Period, from and including the first day of such
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<PAGE>
Damages Accrual Period) to, but excluding, such Damages Payment Date. The
Liquidated Damages Amount due shall be payable on each Damages Payment Date to
the Holders of Registrable Securities entitled thereto holding such Registrable
Securities on the record date for such Damages Payment Date (which record date,
in the case of Underlying Common Stock, shall be established by the Company but
shall in any event be between 10 and 60 days prior to the relevant Damages
Payment Date); PROVIDED that, if any Convertible Preferred Securities or
Convertible Debentures (or portions thereof) are called for redemption, accrued
and unpaid liquidated damages thereon shall be paid to the person entitled to
receive accrued and unpaid interest thereon; and PROVIDED FURTHER that if any
Convertible Preferred Security or Convertible Debenture (or portion thereof) is
surrendered for conversion from and after the close of business on a regular
record date and prior to the corresponding distribution payment or interest
payment date, as the case may be, then accrued and unpaid liquidated damages
thereon shall be paid to the person entitled to receive accrued and unpaid
distributions or interest, as the case may be, in respect of such Convertible
Preferred Security or Convertible Debenture (or portion thereof) as the case may
be; and PROVIDED FURTHER that if any Convertible Preferred Security or
Convertible Debenture (or portion thereof) is surrendered for conversion at any
other time, then the converting Holder thereof shall be entitled to receive all
accrued and unpaid Liquidated Damages thereon to but excluding the date of
conversion. The Trustee shall be entitled, on behalf of the Notice Holders and
the Holders of Convertible Preferred Securities, Convertible Debentures or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of such liquidated damages.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages.
All of the Company's obligations set forth in this Section 2(e)
which are outstanding with respect to any Registrable Securities at the time
such security ceases to be a Registrable Security shall survive until such time
as all such obligations with respect to such security have been satisfied in
full.
The parties hereto agree that the liquidated damages provided for
in this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by holders of Registrable Securities, other than the Placement Agents,
by reason of the failure of the Shelf Registration to be filed or declared
effective or unavailable (absolutely or as a practical matter) for effecting
resales of Registrable Securities, as the case may be, in accordance with the
provisions hereof.
(f) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2. 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 Securities pursuant to the
Shelf Registration.
3. REGISTRATION PROCEDURES.
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In connection with the obligations of the Company and the Trust
with respect to the Registration Statements pursuant to Section 2 hereof, the
Company and the Trust 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 be available for
the sale of the Registrable Securities by the selling Holders thereof
and use their best efforts to cause such Registration Statement to
become effective and remain effective in accordance with Section 2
hereof; PROVIDED that before the effective date of any such
Registration Statement or Prospectus or any amendments or supplements
thereto (other than documents that would be incorporated or deemed to
be incorporated therein by reference and that Viatel or the Trust is
required by applicable securities laws or stock exchange requirements
to file) Viatel and the Trust shall furnish to Morgan Stanley & Co.
Incorporated copies of all such documents proposed to be filed, which
documents will be subject to the review of Morgan Stanley & Co.
Incorporated;
(b) subject to Section 2(d), 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 specified in Section 2 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, subject to Section 2(d), comply in all
material respects with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or such Prospectus as so
supplemented;
(c) furnish to each Holder of Registrable Securities, to counsel
for the Placement Agents, to counsel for the Holders and to each
Underwriter of an Underwritten Offering of Registrable Securities, 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 disposition
of the Registrable Securities; and the Company and the Trust 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 Securities and any such Underwriters in connection with
the offering and sale of the Registrable Securities covered by and in
the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
(d) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
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<PAGE>
sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement shall reasonably
request in writing by the time the applicable Registration Statement
is declared effective by the SEC, to cooperate with such Holders 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 Securities owned by such Holder; PROVIDED, HOWEVER,
that neither the Company nor the Trust shall be required to (i)
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), (ii) file any general consent to service of
process or (iii) subject themselves to taxation in any such
jurisdiction if it is not so subject;
(e) notify each Holder of Registrable Securities, 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 Prospectus, any Prospectus supplement, a
Registration Statement or a post-effective amendment to a Registration
Statement or post-effective amendment has been filed with the SEC and
when a Registration Statement or post-effective amendment has become
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
Securities covered thereby, the representations and warranties of the
Company or the Trust 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 the Company or the Trust receives any notification with
respect to the suspension of the qualification of the Registrable
Securities 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 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 in any material respect
and (vi) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(f) subject to Section 2(d) 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
prompt notice to each Holder of the withdrawal of any such order;
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<PAGE>
(g) furnish to each Holder of Registrable Securities and the
Placement Agents, 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) cooperate with the selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be in
such denominations and registered in such names as the selling Holders
may reasonably request at least two business days prior to the closing
of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by Section
3(e)(v) hereof, use their best efforts to prepare and file with the
SEC 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 Securities,
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 the light of the circumstances under which they were made,
not misleading. Each of the Company and the Trust agrees 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 the either the Company or the
Trust has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) 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 that 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 Holders and their counsel and make such
of the representatives of the Company as shall be reasonably requested
by 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
(other than a document which the Company is legally required to file
under the 1934 Act) which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Holders and their
counsel shall not have previously been advised and furnished a copy or
to which the Holders or their counsel shall reasonably object;
(k) obtain a CUSIP number for all Registrable Securities not
later than the effective date of the Registration Statement and
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<PAGE>
provide the Trustee and the transfer agent for the Common Stock with
printed certificates for the Registrable Securities which are in a
form eligible for deposit with The Depositary Trust Company, as
applicable;
(l) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States (except
as may be required solely as a consequence of the nature of such
selling Holder, in which case Viatel and the Trust will cooperate in
all reasonable respects with the filing of such Registration Statement
and the granting of such approvals) as may be necessary to enable the
selling Holder or Holders thereof to consummate the disposition of
such Registrable Securities;
(m) upon execution of customary confidentiality agreements
reasonably satisfactory to the Company and the Trust and their
counsel, make available for inspection by a representative of the
Holders of the Registrable Securities, any Underwriter participating
in any disposition pursuant to such Shelf Registration, 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 the Company, and cause the respective
officers, directors and employees of the Company to supply all
information reasonably requested by any such representative,
Underwriter, attorney or accountant in connection with a Shelf
Registration;
(n) if reasonably requested by the Placement Agents or any Holder
of Registrable Securities covered by such Registration Statement, (i)
promptly incorporate in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as is legally
required to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company and the Trust have received notification of the matters to
be incorporated in such filing;
(o) use their reasonable best efforts to 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 Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities 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 Securities
with respect to the business of the Company and its subsidiaries, the
Shelf Registration, Prospectus and documents incorporated by reference
therein or deemed incorporated by reference therein, 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) use their reasonable best efforts to obtain
opinions of counsel to the Company (which counsel and opinions, in
form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed
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<PAGE>
to each selling Holder and Underwriter of Registrable Securities,
covering the matters customarily covered in opinions requested in
underwritten offerings, (iii) use their reasonable best efforts to
obtain "cold comfort" letters from the independent certified public
accountants of the Company (and, if necessary, any other certified
public accountant of any subsidiary of the Company, or of any business
acquired by the Company 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
Securities, 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 of the Registrable Securities being sold or the
Underwriters, and which are customarily delivered in underwritten
offerings, to evidence the continued validity of the representations
and warranties of the Company made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in an
underwriting agreement;
(q) cooperate with the selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the Holders may
request;
(r) cause all Underlying Common Stock covered by the Registration
Statement to be listed on each securities exchange or quotation system on which
the Common Stock is then listed no later than the date the Registration
Statement is declared effective and, in connection therewith, to the extent
applicable, to make such filings under the 1934 Act (E.G., the filing of a
Registration Statement on Form 8-A) and to have such filings declared effective
thereunder.
The Company and the Trust may require each Holder of Registrable
Securities to furnish to the Company such information regarding the Holder and
the proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing. No Holder of
Registrable Securities may include its Registrable Securities in such
Registration Statement unless and until such Holder furnishes such information
to the Company. Each Holder including Registrable Securities in a Shelf
Registration shall agree to furnish promptly to the Company any information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Securities required to make any information previously furnished to
the Company by such Holder not materially misleading.
Each Holder agrees that, upon receipt of any notice from the
Company or the Trust of the happening of any event of the kind described in
Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Shelf Registration until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
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<PAGE>
Section 3(i) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (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 Securities current at the time of receipt of such
notice. If the Company shall give any such notice to suspend the disposition of
Registrable Securities pursuant to a Shelf Registration, the Company and the
Trust 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. There may not be more
than two such suspensions during any 365 day period and any such suspensions may
not exceed 30 days for each suspension.
The Holders of Registrable Securities covered by a Shelf
Registration who desire to do so may sell such Registrable Securities in an
Underwritten Offering; PROVIDED that the Company and the Trust shall be required
to use their reasonable best efforts to effect an underwritten offering only
upon the request of Holders of at least 25% of the Registrable Securities
outstanding at the time such request is delivered to the Company. 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 Securities included in such
offering, subject to approval by the Company, which approval will not be
unreasonably withheld.
4. HOLDER'S OBLIGATIONS.
Each Holder, severally and not jointly, agrees, by acquisition of
the Registrable Securities, that such Holder of Registrable Securities shall not
be entitled to sell any of such Registrable Securities pursuant to a
Registration Statement or to receive a Prospectus relating thereto, unless such
Holder has furnished Viatel and the Trust with the notice required pursuant to
Section 2(d) hereof (including the information required to accompany such
notice) and, promptly after the request by Viatel and the Trust, such other
information regarding such Holder and the distribution of such Registrable
Securities as Viatel and the Trust may from time to time reasonably request.
Viatel and the Trust may exclude from such registration the Registrable
Securities of any Holder who does not furnish such information provided above
for so long as such information is not so furnished. Each Holder of Registrable
Securities as to which any Registration Statement is being effected, severally
and not jointly, agrees promptly to furnish to Viatel and the Trust all
information required to be disclosed in order to make the information previously
furnished to Viatel and the Trust by such Holder not misleading. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder, severally and not jointly, that the information
relating to such Holder and its plan of distribution is as set forth in the
Prospectus delivered by such Holder in connection with such disposition, that
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<PAGE>
such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to such Holder or its plan of distribution
and that such Prospectus does not as of the time of such sale omit to state any
material fact relating to such Holder or its plan of distribution necessary to
make the statements in such Prospectus, in the light of the circumstances under
which they were made, not misleading.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees 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 Registrable Securities
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 the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the 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 the Company in
writing by the Placement Agents or any selling Holder expressly for use therein;
PROVIDED that the foregoing indemnity agreement shall not inure to the benefit
of any Holder or any Person controlling such Holder, with respect to any sale or
disposition of Registrable Securities by such Holder in violation of the
penultimate paragraph of Section 3 of this Agreement. In connection with any
Underwritten Offering permitted by Section 3, the Company 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
either Section 15 of the 1933 Act or Section 20 of 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.
The foregoing notwithstanding, the Company shall not be liable to
the extent that such losses, claims, damages or liabilities arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Prospectus that is a preliminary prospectus if (i)
such indemnified person failed to send or deliver a copy of the Prospectus with
or prior to the delivery of written confirmation of the dale of Registrable
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<PAGE>
Securities giving rise to such losses, claims, damages or liabilities and (ii)
the Prospectus would have corrected such untrue statement or omission.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, 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 the Company, 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 the Company to the Placement Agents and the
Holders, but only with reference to information relating to such Holder
furnished to the Company 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 (but the
failure to so notify an indemnifying party shall not relieve it from any
liability which it may have under this Section, except to the extent that it has
been prejudiced in any material respect by such failure, or from any liability
it may otherwise have) 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 respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (A) the reasonable 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 reasonable
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Trust and the Company, its directors, its officers who sign the
Registration Statement and each Person, if any, who controls the Company or the
Trust within the meaning of either such Section and (C) the reasonable 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 cases involving the Placement Agents and Persons
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<PAGE>
controlling the Placement Agents, the firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm for the
Company and the Trust and any such control persons of the Company or the Trust,
such firm shall be designated in writing by the Company. 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 the Company. 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 (x) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (y) 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 (which consent may
not be unreasonably withheld), 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 (whether or not
any indemnified party is an actual or potential party to such proceeding) 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 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 referred
to therein, 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 the Company, the Trust 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 the Company, the Trust 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 Securities of such
Holder that were registered pursuant to a Registration Statement.
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<PAGE>
(e) The Company, the Trust 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 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 Securities 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.
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 the Trust, the Company, their
officers or directors or any Person controlling the Trust or the Company and
(iii) any sale of Registrable Securities by any Holder.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Neither the Company nor the Trust
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 Securities 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
the Company's or the Trust'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 the Company and the Trust have obtained the written
consent of Holders of at least a majority of the then outstanding Underlying
Common Stock constituting Registrable Securities (with Holders of Convertible
Preferred Securities deemed to be the Holders, for purposes of this Section, of
the number of outstanding shares of Underlying Common Stock into which such
Convertible Preferred Securities are convertible or exchangeable or, in the
event that the Convertible Debentures have been distributed to Holders upon
liquidation of the Trust, with the Holders of Convertible Debentures deemed to
20
<PAGE>
be the Holders, for purposes of this Section, the number of outstanding shares
of Underlying Common Stock into which such Convertible Debentures are
convertible); PROVIDED, HOWEVER, that no amendment, modification, supplement,
waiver or consent to any departure from the provisions of Section 5 hereof shall
be effective as against any Holder of Registrable Securities 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 or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company 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 Purchase Agreement; and (ii) if to the Company or
the Trust, initially at the Company's or the Trust's address, respectively set
forth in the Placement Agreement 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
Securities in violation of the terms of the Purchase Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities 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 the Placement Agents) shall have no
liability or obligation to the Company or the Trust 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.
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<PAGE>
(e) PURCHASES AND SALES OF REGISTRABLE SECURITIES. Neither the
Company nor the Trust shall, and shall use its best efforts to cause its
affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then
resell or otherwise transfer any Registrable Securities.
(f) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Trust, on the one hand, and the Placement Agents, on the other hand, and 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.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
(j) 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
(k) JOINT AND SEVERAL OBLIGATIONS. Anything herein to the
contrary notwithstanding, the representations, warranties, covenants and
agreements of Viatel and the Trust contained in this Agreement are joint and
several, other than the obligations under Section 5 hereof.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
VIATEL, INC.
By: /s/ Allan L. Shaw
_________________________________
Name: Allan L. Shaw
Title: Chief Financial Officer
VIATEL FINANCING TRUST I
By: VIATEL, INC., as Sponsor
By: /s/ Allan L. Shaw
____________________________
Name: Allan L. Shaw
Title: Chief Financial Officer
<PAGE>
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC
Acting severally on behalf of themselves and the several
Placement Agents
By: Morgan Stanley & Co. Incorporated
By: /s/ James D. Allen
______________________________
Name: James D. Allen
Title: Principal
EXECUTION COPY
VIATEL, INC.
EURO 300,000,000 OF 12 3/4% SENIOR EURO NOTES DUE 2008
PLACEMENT AGREEMENT
April 14, 2000
<PAGE>
PLACEMENT AGREEMENT
April 14, 2000
Morgan Stanley & Co. International Limited
Chase Securities Inc.
Credit Suisse First Boston Corporation
c/o Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs and Mesdames:
Viatel, Inc., a Delaware corporation (the "COMPANY"), proposes to issue and
sell to the several placement agents named in Schedule I hereto (the "PLACEMENT
AGENTS") an aggregate of Euro 300,000,000 principal amount of 12 3/4% Senior
Euro Notes Due 2008 of the Company (the "NOTES") to be issued pursuant to the
provisions of an indenture, to be dated April 20, 2000 (the "INDENTURE"),
between the Company and The Bank of New York, as trustee (in such capacity, the
"TRUSTEE").
Capitalized terms used herein without definition have the respective
meanings specified in the Final Memorandum (as defined below).
The Notes will be offered without being registered under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), to "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act) in compliance with the
exemption from registration provided by Rule 144A under the Securities Act and
outside the United States in compliance with Regulation S under the Securities
Act ("REGULATION S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement relating to the
Notes, to be dated the date hereof, and to be substantially in the form attached
hereto as EXHIBIT A (the "REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Notes to the Placement Agents, the
Company has prepared a preliminary offering memorandum issued on April 7, 2000
(the "PRELIMINARY MEMORANDUM") and a final offering memorandum, dated April 14,
2000 (the "FINAL MEMORANDUM" and, together with the Preliminary Memorandum, the
"MEMORANDUM"), setting forth or including a description of the terms of the
<PAGE>
Notes, the terms of the offering and a description of the Company and its
business.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to,
and agrees with, you that as of the date hereof:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and corporate authority to own
its properties and to conduct its business as described in the Final
Memorandum and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect (as defined below) on the Company and its Subsidiaries
(as defined below), taken as a whole.
(b) Each subsidiary of the Company is listed on EXHIBIT B hereto
(each a "SUBSIDIARY" and, collectively, the "SUBSIDIARIES") and, if
applicable to such country, each of the Subsidiaries operating in such
country has been duly incorporated or otherwise organized, is validly
existing in good standing under the laws of the jurisdiction of its
incorporation or organization, with full corporate power and corporate
authority to own its properties and to conduct its business as
described in the Final Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect (as defined below) on the Company and the Subsidiaries,
taken as a whole.
(c) All of the issued shares of capital stock or other equity
interests, as the case may be, of each Subsidiary of the Company have
been duly authorized and are validly issued, fully paid and
non-assessable and are owned, either directly or indirectly, by the
Company, free and clear of all liens, encumbrances, equities or
claims, other than those indicated in the Final Memorandum.
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Notes have been duly authorized by the Company and, when
issued and authenticated in accordance with the Indenture and
delivered to and paid for by the Placement Agents in accordance with
the terms of this Agreement and the Indenture, will (x) be valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, except as the enforceability thereof may
be limited by applicable bankruptcy,insolvency, fraudulent conveyance,
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<PAGE>
reorganization, moratorium and other similar laws affecting creditors'
rights generally and subject to general equitable principles (whether
considered in a proceeding in equity or at law) (the "ENFORCEABILITY
EXCEPTIONS"), and (y) be entitled to the benefits of the Indenture
pursuant to which such Notes are to be issued, and the Registration
Rights Agreement.
(f) The Preliminary Memorandum as of the date hereof does not
contain and the Final Memorandum, on the Closing Date and in the form
used by the Placement Agents to confirm sales, 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 paragraph do not
apply to statements in or omissions from either Memorandum (or any
supplement or amendment thereto) based upon information relating to
any Placement Agent furnished to the Company in writing by such
Placement Agent expressly for use therein.
(g) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Registration Rights Agreement and the Notes
(collectively, the "TRANSACTION DOCUMENTS") and the issuance, sale and
delivery of the Notes in accordance with their terms will not
contravene (i) any provision of applicable law, (ii) the certificate
of incorporation or by-laws of the Company, (iii) any material
agreement or other instrument binding upon the Company or any of its
Subsidiaries, or (iv) any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any Subsidiary, except with respect to clauses (i) and
(iii) to the extent that any contravention would not have a Material
Adverse Effect (as defined below) on the Company and its Subsidiaries,
taken as a whole, and, no consent, approval, authorization, exemption
or order of, or qualification or filing with, any governmental body or
agency is required for the performance by the Company of its
obligations under the Transaction Documents (other than such consent,
approval, authorization, exemption, order or other action which has
been obtained), except (x) such as may be required by the securities
or Blue Sky laws of the various states in connection with the offer
and sale of the Notes, (y) such as may be required by federal and
state securities laws with respect to the Company's obligations under
the Registration Rights Agreement and (z) for any consents, approvals,
authorizations, orders or qualifications, the failure to obtain which
would not have a Material Adverse Effect on the ability of the Company
to perform its obligations under the Transaction Documents.
(h) The Indenture and the Registration Rights Agreement have been
duly authorized by the Company and, when duly executed and delivered
by the Company, will constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with
their terms, subject to the Enforceability Exceptions and except that
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<PAGE>
(x) rights to indemnification and contribution may be limited by
public policy and (y) provisions of the Indenture, if any, requiring
any waiver of stay or extension laws, diligent performance or other
acts on the part of the Trustee may be unenforceable under principles
of public policy.
(i) The Notes and the Indenture conform in all material respects
to the descriptions thereof contained in the Final Memorandum under
the heading "Description of the Notes."
(j) Assuming the accuracy of the Placement Agents'
representations contained herein and the Placement Agents' compliance
with their agreements hereunder, it is not necessary to register the
Notes under the Securities Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended.
(k) 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 (a "MATERIAL ADVERSE EFFECT") of the Company and its
Subsidiaries, taken as a whole, from that set forth in the Final
Memorandum, attached as EXHIBIT C; furthermore, (i) other than the
transactions contemplated hereby, the Company and its Subsidiaries
have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made
any dividend or distribution of any kind on its capital stock other
than ordinary and customary dividends; and (iii) there has not been
any material change in the capital stock, short-term debt or long-term
debt of the Company and its consolidated Subsidiaries, taken as a
whole, except in each case as described in the Final Memorandum.
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any
of its Subsidiaries is or may be a party, or to which any of the
properties of the Company or any of its Subsidiaries is or may be
subject other than proceedings accurately described in all material
respects in the Final Memorandum and proceedings that are not
reasonably likely to have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, or on the power or ability of the
Company to perform its obligations under any of the Transaction
Documents or to consummate the transactions contemplated by the Final
Memorandum.
(m) The Company is not, and after giving effect to the offering
and sale of the Notes, and the application of the proceeds thereof as
described in the Final Memorandum under the caption "Use of Proceeds,"
will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
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<PAGE>
(n) Neither the Company nor any affiliate of the Company (as
defined in Rule 501(b) of Regulation D under the Securities Act, an
"AFFILIATE") 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 (as those
terms are used in Regulation D under the Securities Act) in connection
with the offering of the Notes in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(o) The Company and its 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, singly or in the
aggregate, have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
(p) There are no costs and liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole.
(q) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(r) Except as described in the Final Memorandum, the Company and
its Subsidiaries (i) have all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and have made
all declarations and filings with, all federal, state, local and other
governmental, administrative or regulatory authorities, all
self-regulatory organizations and all courts and other tribunals, to
own, lease, license and use their properties and assets and to conduct
their business in the manner described in the Final Memorandum, except
to the extent that the failure to obtain such consents,
authorizations, approvals, orders, certificates or permits or make
such declarations or filings would not have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole; and (ii) have
not received any notice of proceedings relating to the violation,
<PAGE>
revocation or modification of any such license, consent,
authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
(s) The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, taken as a whole, in
each case free and clear of all liens, encumbrances and defects except
(i) such as are reflected in the Company's financial statements or are
described in the Final Memorandum; (ii) such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
Subsidiaries; or (iii) such as do not have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole; and any real
property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, binding and enforceable
leases with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries, in each case except
as described in or contemplated by the Final Memorandum and subject to
the Enforceability Exceptions.
(t) The Company and its Subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business
now operated by them, and, except as set forth in the Final
Memorandum, neither the Company nor any of its Subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would be reasonably likely to have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of the Company
or any of its Subsidiaries exists, except as described in or
contemplated by the Final Memorandum, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that might
reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole.
(v) (i) The Company and its Subsidiaries are insured against such
losses and risks and in such amounts as the Company reasonably
believes are prudent and customary in the businesses in which they are
engaged; (ii) neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for; and (iii)
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<PAGE>
neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a
cost that would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, except as described in or
contemplated by the Final Memorandum.
(w) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to
the several Placement Agents, and each Placement Agent upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company, the respective principal amount of Notes set forth in Schedule I hereto
opposite its name at a purchase price equal to 97% of the principal amount
thereof (which reflects a 3% commission) (the "PURCHASE PRICE"), plus accrued
interest, if any, from April 20, 2000 to the Closing Date.
The Company hereby agrees that, without the prior written consent of Morgan
Stanley & Co. International Limited on behalf of the Placement Agents, it will
not, during the period beginning on the date hereof, and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes (other than the sale of the Notes under this
Agreement).
3. TERMS OF OFFERING. The Placement Agents have advised the Company that
the Placement Agents will make an offering of the Notes purchased by the
Placement Agents hereunder on the terms set forth in the Final Memorandum, as
soon as practicable after this Agreement is entered into as in the judgment of
the Placement Agents is advisable.
4. PAYMENT AND DELIVERY. Payment for the Notes shall be made to the Company
in federal or other funds immediately available in New York City against
delivery of such Notes at the closing to be held at the office of Shearman &
Sterling, 599 Lexington Avenue, New York, NY 10022, at 9:00 A.M., local time, on
April 20, 2000, or at such other time on the same or such other date, not later
than May 4, 2000, as shall be agreed to by the Company and
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Morgan Stanley & Co. International Limited. The time and date of such
payment are herein referred to as the "CLOSING DATE."
Certificates for the Notes shall be in definitive form or global form, as
specified by the Placement Agents, and registered in such names and in such
denominations as the Placement Agents shall request in writing not later than
two full business days prior to the Closing Date. The certificates evidencing
the Notes shall be delivered to the Placement Agents on the Closing Date, 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.
5. CONDITIONS TO THE PLACEMENT AGENTS' OBLIGATION. The obligations of the
several Placement Agents to purchase and pay for the Notes on the Closing Date
is subject to the following conditions:
(a) Subsequent to the execution and delivery 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, other than any
notice which shall already have been given as of the date hereof,
in the rating accorded to the Company or any of the Company's
securities or in the rating outlook for the Company 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, business or
operations, of the Company and its Subsidiaries, taken as a
whole, from that set forth in the Final Memorandum (exclusive of
any amendments or supplements thereto subsequent to the date of
this Agreement) that, in the reasonable judgment of the Placement
Agents, is material and adverse and that makes it, in the
reasonable judgment of the Placement Agents, 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
a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect set forth in Section 5(a)(i) of
this Agreement and to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions contained
herein on its part to be performed or satisfied hereunder on or before
the Closing Date. The officer signing and delivering
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such certificate may rely upon the best of his or her knowledge as to
any proceedings threatened.
(c) The Placement Agents shall have received, (A) on each of the
date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Placement Agents, from KPMG 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 and (B) on the date
hereof, letters dated the date hereof, in form and substance
satisfactory to the Placement Agents, from KPMG LLP, independent
public accountants, with respect to agreed-upon procedures to be
applied to information contained in the Final Memorandum with respect
to billable minutes, revenue per billable minute and number of
customers, PROVIDED THAT the letters delivered pursuant to Section
5(c)(A) and Section 5(c)(B) shall use a "cut-off date" not earlier
than 2 business days prior to the date hereof.
(d) The Placement Agents shall have received on the Closing Date
an opinion of Kelley Drye & Warren LLP, outside counsel to the
Company, dated the Closing Date, to the effect set forth in EXHIBIT D.
Such opinion shall be rendered to the Placement Agents at the request
of the Company and shall so state therein.
(e) The Placement Agents shall have received on the Closing Date
opinions of foreign local counsel in Germany, Switzerland, Italy,
France, Belgium, Spain, The Netherlands and the United Kingdom, dated
the Closing Date, each to the effect set forth in EXHIBIT E or as to
such other form as agreed to by the Placement Agents. Such opinions
shall be rendered to the Placement Agents at the request of the
Company and shall so state therein.
(f) The Placement Agents shall have received on the Closing Date
an opinion of Morrison & Forester, LLP, special U.S. communications
counsel to the Company, together with an opinion of Nebraska counsel,
each dated the Closing Date, substantially to the effect set forth in
EXHIBIT F. Such opinions shall be rendered to the Placement Agents at
the request of the Company and shall so state therein.
(g) The Placement Agents shall have received on the Closing Date
an opinion of Shearman & Sterling, counsel to the Placement Agents,
dated the Closing Date, in form and substance satisfactory to you.
(h) The Registration Rights Agreement shall be executed and in
full force and effect.
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(i) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by the Placement
Agents or their counsel.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements of
the Placement Agents contained in this Agreement, the Company covenants with
each Placement Agent as follows:
(a) To use its best efforts to furnish to each Placement Agent in
New York City, without charge, prior to 9:00 a.m. New York City time
on April 19, 2000 and during the period mentioned in Section 6(c), as
many copies of the Final Memorandum, any supplements and amendments
thereto and any documents incorporated by reference therein as you may
reasonably request.
(b) Before amending or supplementing the Final Memorandum, to
furnish to each Placement Agent a copy of each such proposed amendment
or supplement and not to use any such proposed amendment or supplement
without the consent of Morgan Stanley & Co. International Limited,
which consent shall not be unreasonably withheld or delayed.
(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 exist as a result of which
it is necessary to amend or supplement the Final Memorandum in order
to make the statements therein, in the light of the circumstances when
the Final Memorandum is delivered to a purchaser, not misleading, or
if, in the opinion of counsel to the Placement Agents it is necessary
to amend or supplement the Final Memorandum to comply with applicable
law, forthwith to prepare and furnish, at its own expense, to the
Placement Agents, either amendments or supplements to the Final
Memorandum so that the statements in the Final Memorandum as so
amended or supplemented will not, in the light of the circumstances
when the Final Memorandum is delivered to a purchaser, be misleading
or so that the Final 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 or Blue Sky laws of such jurisdictions as the Placement
Agents shall reasonably request; PROVIDED THAT in no event shall the
Company be obligated to qualify to do business in any jurisdiction in
which it is not now so qualified or to take any action which would
subject it to taxation in any jurisdiction in which it is not now so
subject or to service or process in suits, other than those arising
out of the offering or sale of the Notes in any jurisdiction in which
it is not now so subject.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all reasonable
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expenses incident to the performance of its obligations under this
Agreement, including: (i) the preparation of each Final Memorandum and
all amendments and supplements thereto, (ii) the preparation, issuance
and delivery of the Notes, (iii) the fees and disbursements of the
Company's counsel and accountants and the Trustee and its counsel,
(iv) the qualification of such Notes under securities or Blue Sky laws
in accordance with the provisions of Section 6(d), including filing
fees and the fees and disbursements of one 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 hereinabove stated
of copies of the each Memorandum and any amendments or supplements
thereto, (vi) any fees charged by rating agencies, (vii) all
reasonable document production charges and expenses of one counsel to
the Placement Agents (but not including their fees for professional
services) in connection with the preparation of this Agreement, (viii)
the fees and expenses, if any, incurred in connection with the
admission of such Notes for trading in the Private Offerings, Resales
and Trading through Automatic Linkages ("PORTAL") Market or any other
appropriate market system, (ix) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering, whether by traditional
or electronic means, including, without limitation, expenses
associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company
and any such consultants, and the cost of any aircraft chartered in
connection with the road show with the prior approval of the Company,
and (x) such other reasonable costs and expenses incident to the
performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 and
Section 11, the Placement Agents will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Notes by them and any
advertising expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate 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 would be integrated
with the sale of the Notes in a manner which would require the
registration under the Securities Act of such Notes.
(g) Neither the Company nor any Subsidiary will solicit any offer
to buy or offer or sell the Notes by means of any form of general
solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, except as
may be contemplated by the Registration Rights Agreement.
(h) While any of the Notes remain "restricted securities" within
the meaning of Rule 144 under the Securities Act, to make available,
upon request, to any seller of
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<PAGE>
such Notes the information specified in Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act.
(i) Except as may be contemplated by the Registration Rights
Agreement, none of the Company, its Affiliates or any person acting on
its or their behalf (other than the Placement Agents) will engage in
any directed selling efforts (as that term is defined in Regulation S)
with respect to the Notes and the Company and its Affiliates and each
person acting on its or their behalf (other than the Placement Agents)
will comply with the offering restrictions of Regulation S.
(j) To refuse, and to cause the Trustee or the registrar and
transfer agent, as the case may be, to refuse, to register any
transfer of the Notes sold pursuant to Regulation S if such transfer
is not made in accordance with the provisions of Regulation S and the
Indenture.
(k) To use its reasonable 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.
(l) The Company shall not, and shall use its best efforts to
cause its Affiliates not to, purchase and then resell or otherwise
transfer any Notes.
(m) It will use reasonable best efforts to permit the inclusion
of the Notes in the regulated unofficial market (Freiverkehr) on the
Frankfurt Stock Exchange, or another European Stock Market, within six
months after the Closing Date.
7. 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 agrees with the Company that (i) it will not
solicit offers for, or offer or sell, Notes by any form of general solicitation
or general advertising (as those terms are used in Rule 502(c) 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 Notes
only from, and will offer such Notes only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, other QIBs
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)) in reliance upon
Regulation S under the Securities Act that, in each case, in purchasing such
Notes are deemed to have represented and agreed as provided in either Memorandum
under the caption "Transfer Restrictions."
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<PAGE>
(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 the Company that would permit a public offering of
the Notes, or possession or distribution of the Final 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 the
Final Memorandum or any such other material, in all cases at its own
expense;
(iii) the Notes have not been 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
Rule 144A or outside the United States or to, or for the account or
benefit of, non-U.S. persons except in accordance with Regulation S
under the Securities Act, or pursuant to another 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 their 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 as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates 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 requirement of
Regulation S;
(v) such Placement Agent has (A) not offered or sold and,
prior to the date six months after the Closing Date, 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 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;
(B) complied and will comply with all applicable provisions of the
Financial Services Act 1996 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom; and (C) only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with
the issue of the Notes to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions)
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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 for the account of any resident thereof except pursuant to any
exemption from the registration requirements of the Securities and
Exchange Law of Japan and otherwise in compliance with applicable
provisions 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 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 7(b) have the meanings given to them by
Regulation S.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees 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 from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred 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 each Memorandum (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED, HOWEVER, that the Company will not be
liable in any such case to the extent, but only to the extent, that any such
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 furnished to the Company in writing by the
Placement Agents expressly for use therein.
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(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company 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 the Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent 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 any provision of Section 8(a) or Section
8(b), such person (the "INDEMNIFIED PARTY") shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
(but the failure to so notify an indemnifying party shall not relieve it from
any liability which it may have under this Section 8, except to the extent that
it has been prejudiced in any material respect by such failure, or from any
liability it may otherwise have) 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 respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable 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. International Limited in the
case of parties indemnified pursuant to Section 8(a) and by the Company in the
case of parties indemnified pursuant to Section 8(b). 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 60 days after
receipt by such indemnifying party of the aforesaid request and (ii) 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
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<PAGE>
party, which consent may not be unreasonably withheld, 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
(whether or not any indemnified party is an actual or potential party to such
proceeding) 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 any
provision of Section 8(a) or Section 8(b) is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such section, 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 the Company, on the one hand, and the Placement
Agents, on the other hand, from the offering of such Notes, or (ii) if the
allocation provided by clause 8(d)(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 8(d)(i) above but also the relative fault of the Company
and the Placement Agents 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 the
Company, 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 (net
of discounts and commissions but before deducting expenses) received by the
Company 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 the Company, on the one hand, and 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 the Company
or 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
Section 8 are several in proportion to the respective principal amount of Notes
they have purchased hereunder, and not joint.
(e) The Company and the Placement Agents agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by PRO RATA allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(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 8, the Placement Agents shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Notes resold
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by it in the initial placement of such 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 remedies provided for in this Section 8 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 8 and the representations, warranties and other statements of the
Company 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 any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Company, or any of its
officers or directors or any person controlling the Company, and (iii)
acceptance of and payment for any of the Notes.
9. TERMINATION. This Agreement shall be subject to termination by notice
given by the Placement Agents to the Company, 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 or the Chicago Board of Trade, (ii) trading of
any securities of the Company 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 specified in clauses 9(a)(i) through 9(a)(iv) above, such event,
singly 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.
10. EFFECTIVENESS; DEFAULTING PLACEMENT AGENTS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Placement Agents shall fail
or refuse to purchase Notes that it or they have agreed to purchase hereunder on
such date, and the aggregate principal amount of Notes which such defaulting
Placement Agent or Placement Agents agreed but failed or refused to purchase is
not more than one-tenth of the aggregate principal amount of Notes to be
purchased on such date, the other Placement Agents shall be obligated severally
in the proportions that the principal amount of Notes set forth opposite their
respective names in Schedule I bears to the aggregate principal amount of Notes
set forth opposite the names of all such non-defaulting Placement Agents, or in
such other proportions as you may specify, to purchase the Notes which such
defaulting Placement Agent or Placement
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Agents 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 this Agreement be increased pursuant to this Section 10
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 aggregate
principal amount of Notes with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Notes to be purchased on such
date, and arrangements satisfactory to you and the Company 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 the Company. In any such case either you or the Company 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 paragraph
shall not relieve any defaulting Placement Agent from liability in respect of
any default of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement (other than by reason of a breach of this Agreement by any of the
Placement Agents), the Company will reimburse the Placement Agent or 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 its counsel) reasonably incurred by such Placement Agents in
connection with this Agreement or the offering contemplated hereunder.
11. NOTICES. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally to the parties hereto as follows:
(a) If to the Placement Agents:
Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Attention: High Yield Capital Markets
18
<PAGE>
(b) If to the Company:
Viatel, Inc.
685 Third Avenue
New York, New York 10017
Attention: James P. Prenetta
Senior Vice President and General
Counsel
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attention: Patricia M. Lee
12. COUNTERPARTS. 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.
13. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
14. HEADINGS. 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.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE>
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 Viatel, Inc. and the
Placement Agents.
Very truly yours,
VIATEL, INC.
By: /s/ Allan L. Shaw
-----------------------
Name: Allan L. Shaw
Title: Chief Financial Officer
<PAGE>
Agreed, April , 2000
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
Acting severally on behalf of the Placement Agents
named in Schedule I hereto
By: Morgan Stanley & Co. International Limited
By: /s/ Alan Jones
______________________________
Name: Alan Jones
Title: Managing Director
<PAGE>
SCHEDULE I
Principal Amount of Notes
Placement Agent to Be Purchased
- - --------------------------------------------------------------------------------
Morgan Stanley & Co. International Limited . . . . . Euro 240,000,000
Chase Securities Inc. . . . . . . . . . . . . . . . . Euro 30,000,000
Credit Suisse First Boston Corporation . . . . . . . Euro 30,000,000
Total: . . . . . . . . . . . . . . . . . . . Euro 300,000,000
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
SUBSIDIARIES OF VIATEL, INC.
Jurisdiction of Incorporation
United States Subsidiary or Organization/ Foreign Qualifications
- - ------------------------ ---------------------------------------
Destia.com, Inc. Delaware
Destia Communications, Inc. Delaware, NY
Off the Mall Advertising Inc. Delaware
Viatel Argentina Holdings, Inc. Delaware
Viatel Argentina Management, Inc. Delaware
Viatel Brazil Holdings, Inc. Delaware
Viatel Brazil Management, Inc. Delaware
Viatel Cable Assets Inc. Delaware
Viatel Circe Cable System, Limited Delaware
Viatel Columbia Management, Inc. Delaware
Viatel Development Company Delaware, TX
Viatel Finance Company L.L.C. Delaware
Viatel Finland, Inc. Delaware
Viatel Finland, Inc. Delaware
Viatel Global Communications, Ltd. Delaware
Viatel Nebraska, Inc. Delaware
Viatel New Jersey, Inc. DE, NJ
Viatel Sales U.S.A., Inc. DE, IN, CA, IL, CO
Viatel Services, Inc. All States
Viatel Sweden, Inc. Delaware
Viatel Virginia, Inc. Delaware
VYTL LLC Delaware (pending)
Voicenet Corporation New York
YYC Communications, Inc. DE, NY
<PAGE>
Name of Foreign Subsidiary Country
- - -------------------------- -------
Econophone GmbH Austria
CallBvBa Belgium
Econophone NV Belgium
Viaphone NV/SA Belgium
Viatel Belgium S.A./N.V Belgium
Destia Communications Canada Inc. Canada
Viacol Ltda. Columbia
Destia Communications SA France
Viatel Operations S.A. France
Viatel S.A. France
VPN S.A.R.L. France
Econophone GmbH Germany
Teleriffic Global Communications GmbH Germany
Viatel Communcations Gmbh Germany
(Formerly Viaphone GmbH
Viatel GmbH Germany
Viatel German Asset GmbH Germany
Viatel Global Communications GmbH Germany
ViCaMe Infrastructure Development GmbH Germany
Econophone (Hellas), SA Greece
Call the World Ireland
Destia Communications Ireland
Destia Communications Services, Ltd. Ireland
Viatel Global Communications S.p.A. Italy
Viatel S.R.L. Italy
Econophone Netherlands B.V. Netherlands
Strijk B.V. Netherlands
Viafoperations Communications B.V. Netherlands
Viatel Global Communications B.V. Netherlands
Viatel European Holding S.R.L. Spain
Viafon Dat Iberica, S.A. Spain
Viatel Global Communications Espana S.A. Spain
<PAGE>
Name of Foreign Subsidiary Country
- - -------------------------- -------
Econophone AG Switzerland
Econophone Services GmbH Switzerland
Phonecentre GmbH Switzerland
Viaphone AG Switzerland
Viatel AG Switzerland
Amber Hold, Limited United Kingdom
America 1st Limited United Kingdom
Destia Communications, Limited United Kingdom
Destia Communications Holdings, Limited United Kingdom
Destia Network Services Limited United Kingdom
Econophone, Limited United Kingdom
Network Managed Services Limited United Kingdom
Viatel Communications U.K. Limited United Kingdom(in formation)
Viatel Austria, Limited United Kingdom
Viatel Belgium Limited United Kingdom
Viatel Cable Assets Limited United Kingdom
Viatel Communications Limited United Kingdom
Viatel (I) Limited United Kingdom
Viatel Spain Limited United Kingdom
Viatel U.K. Limited United Kingdom
Viatel Global Communications (UK) Limited United Kingdom
Viatel Cables Limited United Kingdom
Viatel Holdings (UK) Limited United Kingdom
WaveTech, Limited United Kingdom
WaveTech Network Services Limited United Kingdom
* * * * * * * * *
<PAGE>
EXHIBIT C
FINAL MEMORANDUM,
DATED APRIL 14, 2000
<PAGE>
EXHIBIT D
FORM OF OPINION OF
KELLEY DRYE & WARREN LLP
Pursuant to Section 5(d) of the Placement Agreement, Kelley
Drye & Warren LLP shall deliver an opinion to the effect that:
(A) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and corporate authority to own
its properties and to conduct its business as described in the Final
Memorandum (references herein to the Final Memorandum being taken to
mean the same, as amended or supplemented), and is duly qualified to
transact business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole;
(B) the Company has all necessary corporate power and authority,
and has taken all necessary corporate action, to duly and validly
authorize the issuance and sale of the Notes, the execution, delivery
and performance of, and the consummation of the transactions
contemplated in, this Agreement, the Indenture and the Registration
Rights Agreement (such documents shall, hereinafter, be referred to
collectively as, the "Transaction Documents" and such transactions
shall, hereinafter, be referred to collectively as, the "Contemplated
Transactions"), and no other corporate proceedings by the Company are
necessary to authorize the execution and delivery by the Company of
the Transaction Documents or the performance by the Company of the
Contemplated Transactions;
(C) the Placement Agreement has been duly authorized, executed
and delivered by the Company;
(D) the Notes have been duly authorized, executed, and issued by
the Company and, assuming due authentication thereof by the Trustee in
accordance with the terms of the Indenture and upon payment and
delivery in accordance with the terms of the Placement Agreement, will
(x) constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and equitable
principles (whether considered in a proceeding in equity or at law)
and (y) be entitled to the benefits of the Indenture and the
Registration Rights Agreement;
<PAGE>
(E) each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company, and,
assuming the due authorization, execution and delivery by the other
parties thereto, constitutes a valid and legally binding obligation of
the Company, enforceable against the Company in accordance with its
terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar state or federal laws affecting the
rights and remedies of creditors generally and general equitable
principles (whether considered in a proceeding in equity or at law),
(y) rights to indemnification and contribution may be limited by
public policy and (z) provisions of the Indenture, if any, requiring
any waiver of stay or extension laws, diligent performance or other
acts on the part of the Trustee may be unenforceable under principles
of public policy;
(F) neither the execution, delivery nor performance by the
Company of its obligations under the Transaction Documents nor the
issuance, sale and delivery of the Notes in accordance with their
terms will contravene (i) the DGCL or any U.S. federal or New York
State law, statute, ordinance, rule, regulation, judgment, order or
decree applicable to the Company or any of its assets or properties,
whether owned or leased, (ii) the Certificate of Incorporation or
By-laws of the Company, (iii) any agreement or other instrument
binding upon the Company or any of its Subsidiaries that is material
to the Company and its Subsidiaries, taken as a whole, or (iv) any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any Subsidiary, except, in the
case of clauses (i), (iii) and (iv), for such contraventions which
would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole and, except as may be required under
applicable state securities or Blue Sky laws, and except for the
filing of registration statements under the Securities Act and
qualification of the Indenture under the Trust Indenture Act in
connection with the Registration Rights Agreement, no consent,
approval, authorization or order of, or qualification with, any U.S.
federal or New York or Delaware state governmental body or agency is
required for the performance by the Company of its obligations under
the Transaction Documents;
(G) to the best knowledge of such counsel, there is no legal or
governmental proceeding, now pending or threatened, to which the
Company or any of its Subsidiaries is a party or to which any of the
properties of the Company or any of its Subsidiaries is or may be
subject that is required to be disclosed in the Final Memorandum and
that is not so disclosed, or which could reasonably be expected to
have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole, or on the ability of the Company to perform its
obligations under the Transaction Documents or to consummate the
transactions contemplated by the Final Memorandum;
(H) the Company is not, and after giving effect to the offering
and sale of the Notes and the application of the proceeds thereof as
described in the Final Memorandum,
<PAGE>
will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
(I) the statements in the Final Memorandum under the captions
"Business -- Legal Proceedings," "Description of Certain
Indebtedness," "Description of the Notes," "Private Placement" and
"Transfer Restrictions," in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, constitute accurate summaries of the matters
described therein in all material respects;
(J) the statements in the Final Memorandum under the caption
"Certain Income Tax Considerations -- Certain United States Federal
Income Tax Considerations," insofar as such statements constitute
summaries of certain U.S. federal income tax laws and regulations,
constitute accurate summaries of the matters described therein in all
material respects;
(K) based upon the representations, warranties, and agreements of
the Company in the Placement Agreement and of the Placement Agents in
Section 7 of the Placement Agreement, it is not necessary in
connection with the offer, sale and delivery of the Notes to the
Placement Agents under the Placement Agreement or in connection with
the initial resale of such Notes by the Placement Agents solely in
accordance with Section 7 of the Placement Agreement, to register the
Notes under the Securities Act, it being understood that no opinion is
expressed as to any subsequent resale of any Note; and
(L) any document filed by the Company with the Securities and
Exchange Commission and incorporated by reference in the Final
Memorandum or from which information is so incorporated by reference,
when it was filed or became effective, as the case may be, complied as
to form in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and the rules and
regulations promulgated thereunder.
* * * * * * * * *
<PAGE>
ATTACHMENT A
TO
FORM OF KELLEY DRYE & WARREN LLP OPINION
In the course of the preparation by the Company of the Final Memorandum, we
have participated in conferences with officers, directors and representatives of
the Company, its independent auditors, officers, directors and your
representatives and representatives of your counsel at which conferences the
contents of the Final Memorandum and related matters were discussed. Although we
have not independently verified the accuracy or completeness of, or otherwise
verified the statements made in the Final Memorandum (other than as expressly
provided above), nothing has come to our attention that has led us to believe
that the Final Memorandum, as of its date or the date hereof, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order the make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, we are not expressing any belief as to the financial statements and
supporting notes and schedules and other financial data contained in the Final
Memorandum.
<PAGE>
EXHIBIT E
FORM OF FOREIGN LOCAL COUNSEL OPINION
(A) [________] (the "Company") has been duly incorporated, is validly
existing as a company under the laws of [Name of Country], has the corporate
power and authority to own its property and to conduct its business as described
in the Offering Memorandum of Viatel, Inc. dated April ___, 2000 (the "Final
Memorandum") and is duly qualified to transact business in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification (except to the extent that the failure to be so
qualified would not in our view have a Material Adverse Effect on the Company
and its subsidiaries taken as a whole).
(B) The Company has no subsidiaries.
(C) The Company has all materially necessary certificates, orders, permits,
licenses, authorizations, consents and approvals of and from, and has made all
declarations and filings with all relevant governmental authorities, all
self-regulatory organizations and all relevant courts and tribunals, to own,
lease, license and use its properties and assets and to conduct its business in
the manner described in the Final Memorandum, and, to the best of our knowledge,
after due inquiry has not received any notice of proceedings relating to
revocation or modification of any such certificates, orders, permits, licenses,
authorizations, consents or approvals, nor is the Company in violation of, or in
default under, any federal, state, local, national or regional law, regulation,
rule, decree, order or judgment applicable to the Company, the effect of which,
singly or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or in the earnings, business or
operations of the Company, except as described herein or in the Final
Memorandum.
(D) The statements in the Final Memorandum under the caption "Business --
[_______]" are accurate in all material respects and fairly summarize all
matters referred to therein.
(E) There are no restrictions (legal, contractual or otherwise) on the
ability of the Company to declare and pay any dividend or make any payment or
transfer of property or assets to its stockholders other than those described in
the Final Memorandum and such restrictions as would not have a material adverse
effect on the prospects, condition, financial or otherwise, or in the earnings,
business or operations of the Company and such descriptions, if any, fairly
summarize such restrictions.
* * * * * * * * *
<PAGE>
EXHIBIT G
FORM OF U.S. REGULATORY COUNSEL OPINION
Pursuant to Section 5(f) of the Placement Agreement, Morrison & Foerster
LLP, regulatory counsel for the Company, shall furnish an opinion to the effect
that:
(A) (1) the execution and delivery of the Placement Agreement
by the Company and the consummation of the transactions contemplated
thereby do not violate (i) the federal Communications Act of 1934, as
amended, and the Telecommunications Act of 1996, any rules or
regulations of the Federal Communications Commission ("FCC") applicable
to the Company (collectively, the "Communications Act"), (ii) any state
telecommunications law, rules or regulations ("State Law") applicable
to the Company, and (iii) to the best of such counsel's knowledge, any
decree from any court, and (2) no consent, approval, authorization or
order of or filing with the FCC or any state authority overseeing
telecommunications matters ("State Authority") is necessary for the
execution and delivery of the Placement Agreement by the Company and
except to the extent that the failure to obtain such consents,
approvals, authorizations or orders or to make filings with the FCC or
any State Authority would not, individually or in the aggregate, have a
material adverse effect on the prospects, condition (financial or
otherwise) or on the earnings, business or operations of the Company
and the subsidiaries listed in Schedule B to the Purchase Agreement
(the "Subsidiaries") taken as a whole;
(B) except as indicated in this paragraph B, to the best of
our knowledge, (1) the Company and its Subsidiaries have made all
reports and filings, and paid all fees, required by the FCC and the
State Authorities, and have all certificates, orders, permits,
licenses, authorizations, consents and approvals of and from, and have
made all filings and registrations, with the FCC and the State
Authorities necessary to own, lease, license and use its properties and
assets and to conduct its respective business in the manner described
in the Final Memorandum, except for those filings, fees, and approvals
the failure to obtain or file of which would not have material adverse
effect on the financial condition, or on the earnings, business, or
operations of the Company and its Subsidiaries, taken as a whole; (2)
has not received any notice of proceedings relating to the violation,
revocation or modification of any such certificates, orders, permits,
licenses, authorizations, consents or approvals, or the qualification
or rejection of any such filing or registration, the effect of which,
singly or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or in the earnings,
business or operations of the Company, taken as a whole; and (3)
neither the Company nor its Subsidiaries is in violation of, or in
default under, the Communications Act or State Law, the effect of
which, singly or in the aggregate, would have a material adverse effect
on the prospects, condition, financial or otherwise, or in the
earnings, business or operations of the Company and its Subsidiaries,
taken as a whole;
<PAGE>
(C) to the best of such counsel's knowledge after due inquiry
(i) no adverse judgment, decree or order of the FCC or any State
Authority has been issued against the Company or its Subsidiaries and
(ii) no litigation, proceeding, inquiry or investigation has been
commenced or threatened against the Company or its Subsidiaries before
or by the FCC or any State Authority which, if decided adversely to the
interests of the Company or its Subsidiaries would have a material
adverse effect on the Company and its Subsidiaries, taken as a whole;
and
(D) the statements in the Final Memorandum under the captions
"Risk Factors -- Competition," "Risk Factors -- Substantial Government
Regulation," and "Business -- Government Regulation," insofar as such
statements constitute a summary of the legal matters, documents or
proceedings of the FCC and State Authorities with respect to
telecommunications regulation referred to therein, fairly summarize the
matters referred to therein.
* * * * * * * * *
3,000,000 TRUST CONVERTIBLE PREFERRED SECURITIES
VIATEL FINANCING TRUST I
7 3/4% TRUST CONVERTIBLE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $50 PER CONVERTIBLE PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH IN THE GUARANTEE AGREEMENT BY,
AND CONVERTIBLE INTO THE COMMON STOCK OF,
VIATEL, INC.
PLACEMENT AGREEMENT
APRIL 6, 2000
<PAGE>
PLACEMENT AGREEMENT
April 6, 2000
Morgan Stanley & Co. Incorporated
Solomon Smith Barney Inc.
Banc of America Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036-8293
Dear Sirs and Mesdames:
Viatel Financing Trust I, a special purpose statutory business
trust formed under the laws of the State of Delaware (the "TRUST"), proposes to
issue and sell to the several placement agents named in Schedule I hereto (the
"PLACEMENT AGENTS") 3,000,000 of its 7 3/4% Trust Convertible Preferred
Securities, liquidation amount $50 per convertible preferred security (the "FIRM
SECURITIES"). The Trust also proposes to issue and sell to the several Placement
Agents not more than an additional 600,000 of its 7 3/4% Trust Convertible
Preferred Securities, liquidation preference $50 per convertible preferred
security (the "ADDITIONAL SECURITIES"), if and to the extent that the Placement
Agents shall have determined to exercise the right to purchase such additional
securities granted to the several Placement Agents in Section 2 hereof. The Firm
Securities and the Additional Securities are hereinafter collectively referred
to as the "CONVERTIBLE PREFERRED SECURITIES."
The Convertible Preferred Securities will be guaranteed (the
"GUARANTEE") by Viatel, Inc. a Delaware corporation ("VIATEL" or the "COMPANY"),
to the extent provided in the Preferred Securities Guarantee Agreement to be
dated as of April 12, 2000 (the "PREFERRED SECURITIES GUARANTEE AGREEMENT")
between the Company and The Bank of New York, as preferred guarantee trustee
(the "GUARANTEE TRUSTEE"), and will be convertible into the common stock, par
value $0.01 per share, of Viatel ("VIATEL COMMON STOCK" or the "COMMON STOCK").
The Trust will use the proceeds from the sale of the Convertible Preferred
Securities and the sale of the Trust Common Securities (as defined below) to
purchase from the Company $154,639,175 aggregate principal amount of its 7 3/4%
Convertible Junior Subordinated Debentures due 2015 (up to $185,567,010
aggregate principal amount, if and to the extent that the Placement Agents shall
have determined to exercise the right to purchase Additional Securities granted
to the Placement Agents in Section 2 hereof) (the "CONVERTIBLE DEBENTURES")
pursuant to a Debenture Purchase Agreement to be dated as of April 12, 2000 (the
"DEBENTURE PURCHASE AGREEMENT") between the Trust and the Company. The
Convertible Debentures will be issued under an Indenture to be dated as of April
12, 2000 (the "INDENTURE") between the Company and The Bank of New York, as
trustee (the "INDENTURE TRUSTEE"). The Company will also be the holder
1
<PAGE>
of one hundred percent of the common securities representing undivided
beneficial interests in the assets of the Trust (the "TRUST COMMON SECURITIES"),
which the Company will purchase from the Trust pursuant to a Common Securities
Purchase Agreement to be dated as of April 12, 2000 (the "COMMON SECURITIES
PURCHASE AGREEMENT" and, together with the Debenture Purchase Agreement, the
"PURCHASE AGREEMENTS") between the Company and the Trust. The Trust Common
Securities will be guaranteed by the Company to the extent provided in the
Common Securities Guarantee Agreement to be dated as of April 12, 2000 (the
"COMMON SECURITIES GUARANTEE AGREEMENT" and, together with Preferred Securities
Guarantee Agreement, the "GUARANTEE AGREEMENTS") to be entered into by the
Company.
The Trust has been formed under Delaware law pursuant to a
Declaration of Trust, dated as of March 31, 2000, as amended by an Amended and
Restated Declaration of Trust to be dated as of April 12, 2000 (as so amended
and restated, the "DECLARATION"), executed by the Company, as sponsor, and by
the trustees of the Trust (the "VFT TRUSTEE"), all of whom have been appointed
by the Company as holder of one hundred percent of the Trust Common Securities.
A majority of the VFT Trustees (the "REGULAR TRUSTEES") are persons who are
employees or officers of the Company. One VFT Trustee, The Bank of New York, is
unaffiliated with the Company and shall act as institutional trustee (the
"INSTITUTIONAL TRUSTEE") and as indenture trustee under the Declaration for the
purposes of the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"). The Bank of New York (Delaware) will act as Delaware trustee (the
"DELAWARE TRUSTEE") under the Declaration.
The Company and the Trust will be obligated to file with the
Securities and Exchange Commission (the "COMMISSION"), and to use their
reasonable best efforts to cause the Commission to declare effective, a shelf
registration statement covering certain resales of the Convertible Preferred
Securities, Convertible Debentures, the Guarantee and Viatel Common Stock
pursuant to the Registration Rights Agreement to be dated as of April 6, 2000
(the "REGISTRATION RIGHTS AGREEMENT") among the Trust, the Company and the
Placement Agents and to be substantially in the form attached hereto as EXHIBIT
A.
The Declaration, the Convertible Preferred Securities, the
Trust Common Securities, the Indenture, the Convertible Debentures, the Purchase
Agreements, the Guarantee Agreements, the Registration Rights Agreement and this
Agreement are hereinafter called, collectively, the "OPERATIVE INSTRUMENTS."
The Convertible Preferred Securities will be offered without
being registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), to "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) in compliance with the exemption from registration provided by
Rule 144A under the Securities Act.
In connection with the sale of the Convertible Preferred
Securities, the Company has prepared a preliminary Offering Memorandum issued on
March 31, 2000 (the "PRELIMINARY MEMORANDUM") and a final Offering Memorandum
dated April 6, 2000 (the "FINAL
2
<PAGE>
MEMORANDUM" and, together with the Preliminary Memorandum, the "MEMORANDUM")
setting forth or including a description of the terms of the Convertible
Preferred Securities, the Convertible Debentures, the Guarantee and the Viatel
Common Stock, the terms of the offering, a description of the Trust and a
description of the Company and its business.
1. REPRESENTATIONS AND WARRANTIES. The Trust and the Company
jointly and severally represent and warrant to, and agree with, each of the
Placement Agents that as of the date hereof:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and corporate authority to own
its properties and to conduct its business as described in the Final
Memorandum and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect (as defined below) on the Company and its Subsidiaries
(as defined below), taken as a whole.
(b) Each subsidiary of the Company is listed on EXHIBIT B
hereto (each a "SUBSIDIARY" and, collectively, the "SUBSIDIARIES") and,
if applicable to such country, each of the Subsidiaries operating in
such country has been duly incorporated or otherwise organized, is
validly existing in good standing under the laws of the jurisdiction of
its incorporation or organization, with full corporate power and
corporate authority to own its properties and to conduct its business
as described in the Final Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a Material
Adverse Effect (defined below) on the Company and the Subsidiaries,
taken as a whole.
(c) The Trust has been duly created and is validly existing in
good standing as a business trust under the Business Trust Act of the
State of Delaware (the "DELAWARE ACT"), is classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation, has the business trust power and
authority to conduct its business as presently conducted and as
described in the Final Memorandum, and is not required to be authorized
or qualified to do business in any other jurisdiction; the Company and
the Trust will treat the Convertible Debentures as indebtedness of the
Company for United States federal income tax purposes; and the Trust is
and will be treated as a consolidated subsidiary of the Company
pursuant to generally accepted accounting principles.
3
<PAGE>
(d) All of the issued shares of capital stock or other equity
interests, as the case may be, of each Subsidiary of the Company have
been duly authorized and are validly issued, fully paid and
non-assessable and are owned, either directly or indirectly, by the
Company, free and clear of all liens, encumbrances, equities or claims,
other than those indicated in the Final Memorandum.
(e) This Agreement has been duly authorized, executed and
delivered by each of the Trust and the Company.
(f) The Indenture has been duly authorized by the Company and,
when duly executed and delivered by the Company, will constitute valid
and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as the enforceability thereof may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and subject to general equitable principles (whether
considered in a proceeding in equity or at law) (the "ENFORCEABILITY
EXCEPTIONS"), except that (x) rights to indemnification and
contribution may be limited by public policy and (y) provisions of the
Indenture, if any, requiring any waiver of stay or extension laws,
diligent performance or other acts on the part of the Indenture Trustee
may be unenforceable under principles of public policy.
(g) The Convertible Debentures have been duly authorized by
the Company and, when duly executed, authenticated, issued and
delivered in the manner provided for in the Indenture and sold and paid
for as provided in the Debenture Purchase Agreement, will be valid and
binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, subject to the Enforceability Exceptions and except that rights
to indemnification and contribution may be limited by public policy.
(h) The Preferred Securities Guarantee Agreement has been duly
authorized by the Company and, when duly executed and delivered by the
Company, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject
to the Enforceability Exceptions and except that rights to
indemnification and contribution may be limited by public policy.
(i) The Registration Rights Agreement has been duly authorized
by each of the Trust and the Company and, when duly executed and
delivered by each of the Trust and the Company, will constitute a valid
and binding obligation of each of the Trust and the Company,
enforceable against each of the Trust and the Company in accordance
with its terms, subject to the Enforceability Exceptions and except
that rights to indemnification and contribution may be limited by
public policy.
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(j) The Declaration has been duly authorized by the Company
and, when duly executed and delivered by the Company, will constitute a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the Enforceability
Exceptions and except that rights to indemnification and contribution
may be limited by public policy.
(k) The Convertible Preferred Securities have been duly
authorized by the Declaration and, when issued and authenticated in
accordance with the Declaration and delivered to and paid for by the
Placement Agents in accordance with the terms of this Agreement, will
be validly issued, fully paid and non-assessable undivided beneficial
interests in the assets of Trust the and will be entitled to the
benefits of the Declaration; the issuance of the Convertible Preferred
Securities is not subject to any preemptive or similar rights; and
holders of the Convertible Preferred Securities will be entitled to the
same limitation of liability extended to stockholders of private
corporations for profit under Delaware law.
(l) The Trust Common Securities have been duly authorized by
the Declaration and, when issued and executed in accordance with the
provisions of the Declaration and delivered to the Company against
payment of the consideration therefor set forth in the Common
Securities Purchase Agreement, will be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust; the issuance of the Trust Common Securities is not subject to
any preemptive or similar rights; and at the Closing Date, all of the
issued and outstanding Trust Common Securities will be owed by the
Company, directly or through wholly owned subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(m) The Purchase Agreements have been duly authorized by the
Company and the Trust and, at the Closing Date, the Purchase Agreements
will have been duly executed and delivered.
(n) The Final Memorandum does not, 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
paragraph do not apply to statements in or omissions from the Final
Memorandum (or any supplement or amendment thereto) based upon
information relating to any Placement Agent furnished to the Company in
writing by such Placement Agent expressly for use therein.
(o) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Operative
Instruments to which the Company is a party, the execution and delivery
by the Trust of, and the performance by the Trust of its obligations
under, the Operative Instruments to which the Trust is a party, the
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performance by the Trust of its obligations under the Declaration, and
the issuance, sale and delivery of the Convertible Preferred Securities
in accordance with their terms, Trust Common Securities, Convertible
Debentures and the shares of Common Stock issuable upon conversion of
the Convertible Debentures and the Convertible Preferred Securities (A)
will not contravene (i) any provision of applicable law, (ii) the
Declaration or the certificate of incorporation or by-laws of the
Company, (iii) any material agreement or other instrument binding upon
the Company or any of its Subsidiaries, (iv) any material agreement or
other instrument binding upon the Trust, or (v) any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over (x) the Company or any Subsidiary or (y) the Trust, except with
respect to clauses (A)(i) and (A)(iii) to the extent that any
contravention would not have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole, and except with respect to
clauses (A)(i) and (A)(iv) to the extent that any such contravention
would not have a Material Adverse Effect on the Trust, (B) do not and
will not result in the imposition of any lien, charge or encumbrance
upon any assets of (i) the Company or any of its Subsidiaries or (ii)
the Trust, pursuant to the terms of any agreement or instrument to
which the Company or any of its Subsidiaries or the Trust is a party or
by which any of them or any of their respective properties is bound,
except for any liens, charges or encumbrances which would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings or business affairs of, with respect to clause (B)(i), the
Company and its Subsidiaries taken as a whole or, with respect to
clause (B)(ii), the Trust, and (C) no consent, approval, authorization,
exemption or order of, or qualification or filing with, any
governmental body or agency is required for the performance by the
Company or the Trust of their respective obligations under the
Operative Instruments (other than such consent, approval,
authorization, exemption, order or other action which has been
obtained), except (x) such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of
the Convertible Preferred Shares, (y) such as may be required by
federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement and (z) for any
consents, approvals, authorizations, orders or qualifications, the
failure to obtain which would not have a Material Adverse Effect on the
ability of the Company or the Trust to perform their respective
obligations under the Operative Instruments.
(p) Any Company document incorporated by reference in the
Final Memorandum, or filed with the Securities and Exchange Commission
after the date hereof, or from which information is so incorporated by
reference when filed or becoming effective, as the case may be, shall
comply in all material respects with the requirements of the Securities
Act and the Securities Exchange Act of 1934 (the "EXCHANGE ACT"), as
applicable, and the rules and regulations promulgated thereunder.
(q) The authorized capital stock of the Company conforms in
all material respects to the descriptions thereof contained in the
Final Memorandum.
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(r) The shares of Viatel Common Stock issuable upon the
conversion of the Convertible Debentures and the Convertible Preferred
Securities have been duly authorized and reserved for issuance upon
such conversion and, when issued upon such conversion, will be validly
issued, fully paid and non-assessable, and the issuance of such shares
upon such conversion is not and will not be subject to any preemptive
or similar rights.
(s) The shares of outstanding Common Stock have been duly
authorized and validly issued, and are fully paid and non-assessable
and are not subject to any preemptive or similar rights.
(t) Assuming the accuracy of the Placement Agents'
representations contained herein and the Placement Agents' compliance
with their agreements hereunder, it is not necessary to register the
Convertible Preferred Securities, the Guarantee, the Convertible
Debentures or the shares of Common Stock issuable upon conversion of
the Convertible Debentures and the Convertible Preferred Securities
(collectively, the "OFFERED SECURITIES") under the Securities Act or to
qualify the Declaration, the Preferred Securities Guarantee Agreement
or the Indenture under the Trust Indenture Act.
(u) 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 (a "MATERIAL ADVERSE EFFECT") of (A) the Trust or (B) the
Company and its Subsidiaries, taken as a whole, from that set forth in
the Final Memorandum, attached as EXHIBIT C; furthermore, (i) other
than the transactions contemplated hereby, the Company and its
Subsidiaries or the Trust have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) the Company
has not purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its
capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its consolidated
Subsidiaries, taken as a whole, except in each case as described in the
Final Memorandum.
(v) There are no legal or governmental proceedings pending or,
to the knowledge of the Trust and the Company, threatened to which the
Trust or the Company or any of its Subsidiaries is or may be a party,
or to which any of the properties of the Trust or the Company or any of
its Subsidiaries is or may be subject other than proceedings accurately
described in all material respects in the Final Memorandum and
proceedings that are not reasonably likely to have a Material Adverse
Effect on Company and its Subsidiaries, taken as a whole, or on the
power or ability of the Trust or the Company to perform its respective
obligations under any of the Operative Instruments or to consummate the
transactions contemplated by the Final Memorandum.
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<PAGE>
(w) Each of the Trust and the Company is not, and after giving
effect to the issuance of the Convertible Preferred Securities and the
Convertible Debentures, and the application of the proceeds of the
Convertible Preferred Securities as described in the Final Memorandum
under the caption "Use of Proceeds," will not be an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended.
(x) Neither the Company nor any affiliate of the Company (as
defined in Rule 501(b) of Regulation D under the Securities Act, an
"AFFILIATE") 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 any of the Offered Securities in a manner
that would require the registration under the Securities Act of any of
the Offered Securities or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering
of any of the Offered Securities in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(y) The Company and its 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, singly or in the aggregate, have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole.
(z) There are no costs and liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole.
(aa) The Convertible Preferred Securities and the Convertible
Debentures satisfy the requirements set forth in Rule 144A(d)(3) under
the Securities Act.
(bb) Except as described in the Final Memorandum, the Company
and its Subsidiaries (i) have all necessary consents, authorizations,
approvals, orders, certificates and permits of and from, and have made
all declarations and filings with, all federal, state, local and other
governmental, administrative or regulatory authorities, all
8
<PAGE>
self-regulatory organizations and all courts and other tribunals, to
own, lease, license and use their properties and assets and to conduct
their business in the manner described in the Final Memorandum, except
to the extent that the failure to obtain such consents, authorizations,
approvals, orders, certificates or permits or make such declarations or
filings would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole; and (ii) have not received any notice
of proceedings relating to the violation, revocation or modification of
any such license, consent, authorization, approval, order, certificate
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected
to have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole.
(cc) The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, taken as a whole, in each
case free and clear of all liens, encumbrances and defects except (i)
such as are reflected in the Company's financial statements or are
described in the Final Memorandum; (ii) such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
Subsidiaries; or (iii) such as do not have a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole; and any real
property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, binding and enforceable
leases with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such property
and buildings by the Company and its Subsidiaries, in each case except
as described in or contemplated by the Final Memorandum and subject to
the Enforceability Exceptions.
(dd) The Company and its Subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business
now operated by them, and, except as set forth in the Final Memorandum,
neither the Company nor any of its Subsidiaries has received any notice
of infringement of or conflict with asserted rights of others with
respect to any of the foregoing which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would be
reasonably likely to have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole.
(ee) No material labor dispute with the employees of the
Company or any of its Subsidiaries exists, except as described in or
contemplated by the Final Memorandum, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing,
threatened or imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that might reasonably
be expected to have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
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(ff) (i) The Company and its Subsidiaries are insured against
such losses and risks and in such amounts as the Company reasonably
believes are prudent and customary in the businesses in which they are
engaged; (ii) neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for; and (iii) neither
the Company nor any such Subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, except as described in or contemplated
by the Final Memorandum.
(gg) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
2. AGREEMENTS TO SELL AND PURCHASE. The Trust hereby agrees to
sell to the several Placement Agents, and each Placement Agent upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
the respective number of Firm Securities set forth in Schedule II opposite its
name from the Trust, at a purchase price of $50.00 per Convertible Preferred
Security (the "PURCHASE PRICE").
On the basis of the representations and warranties of the
Trust and the Company contained in this Agreement, and subject to its terms and
conditions, the Trust agrees to sell to the Placement Agents the Additional
Securities, and the Placement Agents shall have a right to purchase, severally
and not jointly, up to 600,000 Additional Securities at the Purchase Price, plus
accrued dividends, if any. If the Placements Agents elect to exercise such
option, the Placements Agents shall so notify the Trust and the Company in
writing not later than 30 days after the date of this Agreement, which notice
shall specify the number of Additional Securities to be purchased by the
Placement Agents and the date on which such Additional Securities are to be
purchased. Such date may be the same as the Closing Date but not earlier than
the Closing Date nor later than ten business days after the date of such notice.
If any Additional Securities are to be purchased, each Placement Agent agrees,
severally and not jointly, to purchase the number of Additional Securities
(subject to such adjustments to eliminate fractional securities the Placement
Agents may determine) that bears the same proportion to the total number of
Additional Securities to be purchased as the number of Firm Securities set forth
in Schedule I hereto opposite the name of such Placement Agent bears to the
total number of Firm Securities.
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In view of the fact that proceeds from the sale of the
Convertible Preferred Securities will be invested by the Trust in the
Convertible Debentures, the Company hereby agrees to pay the Placement Agents as
compensation (the "PLACEMENT AGENTS' COMPENSATION") for the Placement Agents'
arranging for the investment therein of such proceeds, $1.75 per Convertible
Preferred Security purchased by the Placement Agents on the Closing Date and the
Option Closing Date (as defined below), if any ($5,250,000 in the aggregate
assuming no exercise of the Placement Agents' option or $6,300,000 in the
aggregate assuming exercise of such option in full). The Placement Agents'
Compensation shall be payable to the Placement Agents by wire transfer of
immediately available funds on the Closing Date and on the Option Closing Date,
if any.
The Trust and the Company hereby agree, jointly and severally,
that, without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Placement Agents, they will not, during the period ending 90 days
after the date of this Agreement, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any equity securities of the Company, the
Trust or any similar trust or any securities convertible into or exercisable or
exchangeable for any equity security of the Company, the Trust or any similar
trust or (ii) enter into any swap or other agreement or arrangement that
transfers to another, in whole or in part, directly or indirectly, any of the
economic consequences of ownership of any equity securities of the Company, the
Trust or any similar trust, whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of equity securities of the Company,
the Trust or any similar trust, other securities, in cash or otherwise. The
foregoing sentence shall not apply to (A) the Convertible Preferred Securities
to be sold hereunder, (B) the issuance by the Company of the Convertible
Debentures pursuant to the Debenture Purchase Agreement, (C) the issuance by the
Trust of the Trust Common Securities pursuant to the Common Securities Purchase
Agreement, (D) the issuance by the Company of shares of Common Stock upon
conversion of the Convertible Preferred Securities sold hereunder and the
related Convertible Debentures, (E) the issuance by the Company of shares of
Common Stock or options to purchase Common Stock pursuant to employee benefit
plans described in the Final Memorandum or (F) transactions by an person other
than the Company or the Trust pertaining to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of Convertible Preferred Securities.
3. TERMS OF OFFERING. The Placement Agents have advised the
Trust and the Company that the Placement Agents will make an offering of the
Convertible Preferred Securities purchased by the Placement Agents hereunder on
the terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into as in the judgment of the Placement Agents is
advisable.
4. PAYMENT AND DELIVERY. Payment for the Firm Securities shall
be made in federal or other funds immediately available in New York City against
delivery of such Firm Securities for the respective accounts of the several
Placement Agents at the closing to be held at
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the office of Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022, at
9:00 A.M., local time, on April 12, 2000, or at such other time on the same or
such other date, not later than April 22, 2000, as shall be agreed to by the
Company and Morgan Stanley & Co. Incorporated. The time and date of such payment
are herein referred to as the "CLOSING DATE."
Payment for any Additional Securities shall be made in federal
or other immediately available funds against delivery of such Additional
Securities for the respective accounts of the Placement Agents at 9:00 A.M., New
York City time, on the date specified in the notice described in Section 2 or on
such other date, in any event not later than May 8, 2000, as shall be designated
in writing by the Placement Agents. The time and date of such payment are
hereinafter referred to as the "OPTION CLOSING DATE."
Certificates for the Firm Securities and Additional Securities
shall be in definitive form or global form, as specified by the Placement
Agents, and registered in such names and in such denominations as the Placement
Agents shall request in writing not later than two full business days prior to
the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Securities and Additional Securities shall be
delivered to the Placement Agents on the Closing Date or the Option Closing
Date, as the case may be, with any transfer taxes payable in connection with the
transfer of the Convertible Preferred Securities to the Placement Agents duly
paid, against payment of the Purchase Price therefor.
5. CONDITIONS TO THE PLACEMENT AGENTS' OBLIGATION. The
obligations of the Placement Agents to purchase and pay for the Convertible
Preferred Securities on the Closing Date is subject to the following conditions:
(a) Subsequent to the execution and delivery 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,
other than any notice which shall already have been given as
of the date hereof, in the rating accorded to the Company or
any of the Company's securities or in the rating outlook for
the Company 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, business or
operations, of the Company, its Subsidiaries or the Trust,
taken as a whole, from that set forth in the Final Memorandum
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in the reasonable
judgment of the Placement Agents, is material and adverse
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and that makes it, in the reasonable judgment of the Placement
Agents, impracticable to market the Convertible Preferred
Securities on the terms and in the manner contemplated in the
Final Memorandum.
(b) The Placement Agents shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company and a Regular Trustee of the Trust, to the
effect set forth in Section 5(a)(i) of this Agreement and to the effect
that the representations and warranties of the Company and the Trust
contained in this Agreement are true and correct as of the Closing Date
and that each of the Company and the Trust has complied with all of the
agreements and satisfied all of the conditions contained herein on its
part to be performed or satisfied hereunder on or before the Closing
Date. The officer of the Company and Regular Trustee signing and
delivering such certificate may rely upon the best of his or her
knowledge as to any proceedings threatened.
(c) The Placement Agents shall have received, (A) on each of
the date hereof and the Closing Date, a letter dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Placement Agents, from KPMG 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 and (B) on the date
hereof, letters dated the date hereof, in form and substance
satisfactory to the Placement Agents, from KPMG LLP, independent public
accountants, with respect to agreed-upon procedures to be applied to
information contained in the Final Memorandum with respect to billable
minutes, revenue per billable minute and number of customers; PROVIDED
THAT the letters delivered pursuant to Section 5(c)(A) and Section
5(c)(B) shall use a "cut-off date" not earlier than 2 business days
prior to the date hereof.
(d) The Placement Agents shall have received on the Closing
Date an opinion of Kelley Drye & Warren LLP, outside counsel to the
Company, dated the Closing Date, to the effect set forth in EXHIBIT D.
Such opinion shall be rendered to the Placement Agents at the request
of the Company and the Trust and shall so state therein.
(e) The Placement Agents shall have received on the Closing
Date opinions of foreign local counsel in Germany, Switzerland, Italy,
France, Belgium, Spain, The Netherlands and the United Kingdom, dated
the Closing Date, each to the effect set forth in EXHIBIT E or as to
such other form as agreed to by the Placement Agents. Such opinions
shall be rendered to the Placement Agents at the request of the Company
and the Trust and shall so state therein.
(f) The Placement Agents shall have received on the Closing
Date an opinion of Morrison & Forester, LLP, special U.S.
communications counsel to the Company,
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together with an opinion of Nebraska counsel, each dated the Closing
Date, substantially to the effect set forth in EXHIBIT F. Such opinions
shall be rendered to the Placement Agents at the request of the Company
and the Trust and shall so state therein.
(g) The Placement Agents shall have received on the Closing
Date an opinion of Emmet, Marvin & Martin, LLP, counsel to the
Institutional Trustee and the Guarantee Trustee, dated the Closing
Date, substantially to the effect set forth in EXHIBIT G.
(h) The Placement Agents shall have received on the Closing
Date an opinion of Richards, Layton & Finger, counsel to the Delaware
Trustee, dated the Closing Date, substantially to the effect set forth
in EXHIBIT H.
(i) The Placement Agents shall have received on the Closing
Date an opinion of Shearman & Sterling, counsel to the Placement
Agents, dated the Closing Date, in form and substance satisfactory to
you.
(j) The Registration Rights Agreement shall be executed and in
full force and effect.
(k) On or prior to the close of business on the day after the
date of this Agreement, the Placement Agents shall have received a
lock-up agreement, substantially in the form attached hereto as EXHIBIT
I, from each of the persons listed in EXHIBIT J, and each such
agreement shall be in full force and effect on the Closing Date.
(l) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
The obligation of the Placement Agents to purchase Additional
Securities hereunder is subject to the delivery to the Placement Agents on the
Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company and the Trust, the due authorization
and issuance of the Additional Securities and other matters related to the
issuance of the Additional Securities.
6. COVENANTS OF THE COMPANY AND THE TRUST. In further
consideration of the agreements of the Placement Agents contained in this
Agreement, each of the Company and the Trust covenants with each Placement Agent
as follows:
(a) To use its best efforts to furnish to each Placement Agent
in New York City, without charge, prior to 9:00 a.m. New York City time
on April 10, 2000 and during the period mentioned in Section 6(c), as
many copies of the Final Memorandum, any supplements and amendments
thereto and any documents incorporated by reference therein as such
Placement Agent may reasonably request.
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(b) Before amending or supplementing the Final Memorandum, to
furnish to each Placement Agent a copy of each such proposed amendment
or supplement and not to use any such proposed amendment or supplement
without the consent of Morgan Stanley & Co. Incorporated, which consent
shall not be unreasonably withheld or delayed.
(c) If, during such period after the date hereof and prior to
the date on which all of the Convertible Preferred Securities shall
have been sold by the Placement Agents, any event shall occur or
condition exist as a result of which it is necessary to amend or
supplement the Final Memorandum in order to make the statements
therein, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, not misleading, or if, in the opinion of
counsel to the Placement Agents it is necessary to amend or supplement
the Final Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Placement Agents,
either amendments or supplements to the Final Memorandum so that the
statements in the Final Memorandum as so amended or supplemented will
not, in the light of the circumstances when the Final Memorandum is
delivered to a purchaser, be misleading or so that the Final
Memorandum, as so amended or supplemented, will comply with applicable
law.
(d) To endeavor to qualify the Offered Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as
the Placement Agents shall reasonably request; PROVIDED THAT in no
event shall the Company be obligated to qualify to do business in any
jurisdiction in which it is not now so qualified or to take any action
which would subject it to taxation in any jurisdiction in which it is
not now so subject or to service or process in suits, other than those
arising out of the offering or sale of the Offered Securities in any
jurisdiction in which it is not now so subject.
(e) To reserve and keep available at all times, free of
preemptive and similar rights, shares of Viatel Common Stock for the
purpose of enabling the Company to satisfy any obligations to issue
shares of Viatel Common Stock upon the conversion of the Convertible
Debentures and the Convertible Preferred Securities.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all reasonable expenses incident to the performance of
its obligations under this Agreement, including: (i) the preparation of
each Memorandum and all amendments and supplements thereto, (ii) the
preparation, issuance and delivery of the Offered Securities, (iii) the
fees and disbursements of the Company's and the Trust's counsel and
accountants and the Institutional Trustee, the Guarantee Trustee and
the Indenture Trustee and their respective counsel, (iv) the
qualification of such Offered Securities under securities or Blue Sky
laws in accordance with the provisions of Section 6(d), including
filing fees and the fees and disbursements of one 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
above stated
15
<PAGE>
of copies of each Memorandum and any amendments or supplements thereto,
(vi) any fees charged by rating agencies, (vii) all reasonable document
production charges and expenses of one counsel to the Placement Agents
(but not including their fees for professional services) in connection
with the preparation of this Agreement, (viii) the fees and expenses,
if any, incurred in connection with the admission of such Offered
Securities for trading in the Private Offerings, Resales and Trading
through Automatic Linkages ("PORTAL") Market or any other appropriate
market system, (ix) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with
the marketing of the offering, whether by traditional or electronic
means, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road show
with the prior approval of the Company, (x) all fees and expenses
incident to listing the shares of Common Stock issuable upon conversion
of the Convertible Preferred Securities and the Convertible Debentures
on the Nasdaq National Market, (xi) the costs and charges of any
transfer agents, registrars and depositaries, and (xii) such other
reasonable costs and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not
otherwise made in this Section. It is understood, however, that except
as provided in this Section 6, Section 8 and Section 10, the Placement
Agents will pay all of their costs and expenses, including fees and
disbursements of their counsel, transfer taxes payable on resale of any
of the Convertible Preferred Securities by them and any advertising
expenses connected with any offers they may make.
(g) Neither the Company nor the Trust nor any of their
respective 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 would be integrated with the sale of any of
the Offered Securities in a manner which would require the registration
under the Securities Act of any of such Offered Securities.
(h) Neither the Company nor any Subsidiary will solicit any
offer to buy or offer or sell any of the Offered Securities by means of
any form of general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act, except as may be contemplated by the Registration
Rights Agreement.
(i) While any of the Offered Securities remain "restricted
securities" within the meaning of Rule 144 under the Securities Act, to
make available, upon request, to any seller of any of such Offered
Securities the information concerning the Company and the Trust
specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to and in compliance with Section 13 or 15(d)
of the Exchange Act.
16
<PAGE>
(j) To use its reasonable best efforts to permit the
Convertible Preferred Securities and, if the Convertible Debentures are
at any time distributed to holders, the Convertible Debentures 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) The Company shall not, and shall use its best efforts to
cause its Affiliates not to, purchase and then resell or otherwise
transfer any of the Offered Securities.
7. OFFERING OF CONVERTIBLE PREFERRED SECURITIES; 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 the Company and the Trust that (i) it will not
solicit offers for, or offer or sell, Convertible Preferred Securities by any
form of general solicitation or general advertising (as those terms are used in
Rule 502(c) 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 Convertible Preferred Securities only from, and will
offer such Convertible Preferred Securities only to, persons that it reasonably
believes to be other QIBs who, in purchasing such Convertible Preferred
Securities are deemed to have represented and agreed as provided in either
Memorandum under the caption "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 the Company or the Trust that would permit a public
offering of the Convertible Preferred Securities, or possession or
distribution of either Memorandum or any other offering or publicity
material relating to the Convertible Preferred Securities, 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 Convertible Preferred Securities or has in its
possession or distributes either Memorandum or any such other material,
in all cases at its own expense;
(iii) such Placement Agent has (A) not offered or sold and,
prior to the date six months after the Closing Date, will not offer or
sell any Convertible Preferred Securities 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
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; (B) complied and will comply
with all
17
<PAGE>
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Convertible Preferred
Securities in, from or otherwise involving the United Kingdom; and (C)
only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Convertible Preferred Securities to a person who 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; and
(iv) such Placement Agent understands that the Convertible
Preferred Securities 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
Convertible Preferred Securities directly or indirectly in Japan or for
the account of any resident thereof except pursuant to any exemption
from the registration requirements of the Securities and Exchange Law
of Japan and otherwise in compliance with applicable provisions of
Japanese law.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Placement Agent, and each person, if any, who
controls any Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred 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 each Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the foregoing indemnity agreement with respect to any Preliminary
Memorandum shall not inure to the benefit of any Placement Agent from whom the
person asserting any such losses, claims, damages or liabilities purchased
Convertible Preferred Securities, or any person controlling such Placement
Agent, if a copy of the Final Memorandum (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Placement Agent to such person at or prior to
the written confirmation of the sale of the Convertible Preferred Securities to
such person, and if the Final Memorandum (as so amended or supplemented) would
have cured the defect giving rise to such losses, claims, damages or
liabilities, unless such failure is the result of noncompliance by the Company
with Section 6(a) hereof; PROVIDED FURTHER that each of the Company will not be
liable in any such case to the extent, but only to the extent, that any 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 the Company in writing by such
Placement Agent expressly for use therein.
18
<PAGE>
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company 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 the Company to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent 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 any provision of Section 8(a) or Section
8(b), such person (the "INDEMNIFIED PARTY") shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
(but the failure to so notify an indemnifying party shall not relieve it from
any liability which it may have under this Section 8, except to the extent that
it has been prejudiced in any material respect by such failure, or from any
liability it may otherwise have) 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 respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable 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 Section 8(a) and by the Company in the case of
parties indemnified pursuant to Section 8(b). 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 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) 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, which consent may not be
19
<PAGE>
unreasonably withheld, 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 (whether or not any
indemnified party is an actual or potential party to such proceeding) 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 any
provision of Section 8(a) or Section 8(b) is unavailable to an indemnified party
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such section, 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 the Company and the Trust, on the one hand, and
Placement Agents, on the other hand, from the offering of such Convertible
Preferred Securities, or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above but
also the relative fault of the Company and the Trust and the Placement Agents 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 the Company and the Trust, on
the one hand, and the Placement Agents, on the other hand, in connection with
the offering of the Convertible Preferred Securities shall be deemed to be in
the same respective proportions as the net proceeds from the offering of the
Convertible Preferred Securities (net of discounts and commissions but before
deducting expenses) received by the Company and the Trust and the total
discounts and commissions received by the Placement Agents in respect thereof
bear to the aggregate offering price of $50 per Convertible Preferred Security.
The relative fault of the Company and the Trust, on the one hand, and 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 the Company and the Trust or 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 Section 8 are several in
proportion to the respective number of Convertible Preferred Securities they
have purchased hereunder and not joint.
(e) The Company, the Trust and the Placement Agents agree that
it would not be just or equitable if contribution pursuant to this Section 8
were determined by PRO RATA allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in Section 8(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 8, the Placement Agents
20
<PAGE>
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Convertible Preferred Securities resold by it in
the initial placement of such Convertible Preferred Securities were offered to
investors exceeds the amount of any damages that the Placement Agents have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 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 8 and the representations, warranties and other statements of the
Company and the Trust 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 any Placement Agent or any person
controlling any Placement Agent or by or on behalf of the Trust, the VFT
Trustees, the Company, or any of its officers or directors or any person
controlling the Company or the Trust, and (iii) acceptance of and payment for
any of the Convertible Preferred Securities.
9. TERMINATION. This Agreement shall be subject to termination
by notice given by the Placement Agents to the Company, 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 or the Chicago Board
of Trade, (ii) trading of any securities of the Company 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 specified in clauses 9(a)(i)
through 9(a)(iv) above, such event, singly or together with any other such
event, makes it, in your judgment, impracticable to market the Convertible
Preferred Securities on the terms and in the manner contemplated in the Final
Memorandum.
10. EFFECTIVENESS; DEFAULTING PLACEMENT AGENTS. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date or the Option Closing Date, as the
case may be, any one or more of the Placement Agents shall fail or refuse to
purchase Convertible Preferred Securities that it has or they have agreed to
purchase hereunder on such date, and the aggregate number of Convertible
Preferred Securities which such defaulting Placement Agent or Placement Agents
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Convertible Preferred Securities to be purchased on such
date, the other Placement Agents shall be obligated severally in the proportions
that the number of Firm Securities set forth opposite
21
<PAGE>
their respective names in Schedule I bears to the aggregate number of Firm
Securities set forth opposite the names of all such non-defaulting Placement
Agents, or in such other proportions as you may specify, to purchase the
Convertible Preferred Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Convertible Preferred Securities that any
Placement Agent has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 10 by an amount in excess of one-ninth of such number
of Convertible Preferred Securities 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 Firm Securities and the aggregate number
of Firm Securities with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Securities to be purchased, and
arrangements satisfactory to you, the Trust and the Company for the purchase of
such Firm Securities are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Placement Agent, the Trust or the Company. In any such case either you or the
Trust 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. If, on the
Option Closing Date, any Placement Agent or Placement Agents shall fail or
refuse to purchase Additional Securities and the aggregate number of Additional
Securities with respect to which such default occurs is more than one-tenth of
the aggregate number of Additional Securities to be purchased, the
non-defaulting Placement Agents shall have the option to (i) terminate their
obligation hereunder to purchase Additional Securities or (ii) purchase not less
than the number of Additional Securities that such non-defaulting Placement
Agents would have been obligated to purchase in the absence of such default. Any
action taken under this paragraph shall not relieve any defaulting Placement
Agent from liability in respect of any default of such Placement Agent under
this Agreement.
If this Agreement shall be terminated by the Placement Agents,
or any of them, because of any failure or refusal on the part of the Company or
the Trust to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or the Trust shall be unable to
perform its obligations under this Agreement (other than by reason of a breach
of this Agreement by any of the Placement Agents), the Company and the Trust
will reimburse the Placement Agent or 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 its counsel)
reasonably incurred by such Placement Agents in connection with this Agreement
or the offering contemplated hereunder.
11. NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally to the parties hereto as
follows:
22
<PAGE>
(a) If to the Placement Agents:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: James D. Allen
(b) If to the Company or the Trust:
Viatel, Inc.
685 Third Avenue
New York, New York 10017
Attention: James P. Prenetta
Vice President and General Counsel
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, New York 10178
Attention: Patricia M. Lee
12. COUNTERPARTS. 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.
13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
14. HEADINGS. 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.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
23
<PAGE>
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 Viatel,
Inc., Viatel Financing Trust I and the Placement Agents.
Very truly yours,
VIATEL, INC.
By: /s/ Allan L. Shaw
-------------------------------------
Name: Allan L. Shaw
Title: Chief Financial Officer
VIATEL FINANCING TRUST I
By: VIATEL, INC., as Sponsor
By: /s/ Allan L. Shaw
-------------------------------
Name: Allan L. Shaw
Title: Chief Financial Officer
<PAGE>
Agreed, April 6, 2000
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH-BARNEY INC.
BANC OF AMERICA SECURITIES LLC
Acting severally on behalf of themselves
and the several Placement Agents named
in Schedule I hereto
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ James D. Allen
--------------------------------------------
Name: James D. Allen
Title: Principal
<PAGE>
SCHEDULE I
PLACEMENT AGENT NUMBER OF CONVERTIBLE PREFERRED
SECURITIES TO BE PURCHASED
Morgan Stanley & Co. Incorporated 1,950,000
Salomon Smith Barney Inc. 675,000
Banc of America Securities LLC 375,000
Total:............................................3,000,000
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT B
SUBSIDIARIES OF VIATEL, INC.
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
OR ORGANIZATION
<S> <C>
Viatel Cable Assets, Inc. Delaware
Viatel Financing Trust I Delaware
Viatel Services, Inc. Delaware
VYTL LLC Delaware
Destia Communications Delaware
Destia.com, Inc. Delaware
Off the Mall Advertising Inc. Delaware
Voicenet Corporation New York
Viatel (Bermuda) Cable Assets Limited Bermuda
Viatel Cable Assets Limited United Kingdom
Viatel Global Communications (UK) Limited United Kingdom
Viatel Communications, Ltd. United Kingdom
Destia Communications Holdings, Ltd. United Kingdom
Destia Communications, Ltd. United Kingdom
Wavetech, Ltd. United Kingdom
America 1st United Kingdom
Destia Network Services Ltd. United Kingdom
AmberHold Ltd. United Kingdom
Econophone, Ltd. United Kingdom
Viatel Ltd. Ireland
Destia Communications Limited Ireland
Destia Communications Services Ltd. Ireland
Econophone GmbH Austria
Econophone N.V. Belgium
Call BVBA Belgium
Destia Communications S.A. France
Viatel German Holding GmbH Germany
Viatel Global Communications GmbH Germany
Econophone GmbH Germany
Teleriffic Global Communications GmbH Germany
Econophone (Hellas) S.A. Greece
Viaphon N.V./S.A. Netherlands
Viatel European Holding S.R.L. Spain
Econophone AG Switzerland
Phonecentre GmbH Switzerland
</TABLE>
<PAGE>
EXHIBIT C
FINAL OFFERING MEMORANDUM,
DATED APRIL 6, 2000
<PAGE>
EXHIBIT D
FORM OF OPINION OF
KELLEY DRYE & WARREN LLP
<PAGE>
ATTACHMENT A
TO
FORM OF KELLEY DRYE & WARREN LLP OPINION
In the course of the preparation by the Trust and the Company
of the Final Memorandum, we have participated in conferences with officers,
directors and representatives of the Trust and the Company, its independent
auditors, officers, directors and your representatives and representatives of
counsel for the Placement Agents at which conferences the contents of the Final
Memorandum and related matters were discussed. Although we have not
independently verified the accuracy or completeness of, or otherwise verified
the statements made in the Final Memorandum (other than as expressly provided
above), nothing has come to our attention that has led us to believe that the
Final Memorandum, as of its date or the date hereof, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order the make the statements therein, in the light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, we are not
expressing any belief as to the financial statements and supporting notes and
schedules and other financial data contained in the Final Memorandum.
<PAGE>
EXHIBIT E
FORM OF FOREIGN LOCAL COUNSEL OPINION
(A) [________] (the "Company") has been duly incorporated, is
validly existing as a company under the laws of [Name of Country], has the
corporate power and authority to own its property and to conduct its business as
described in the Offering Memorandum of Viatel Financing Trust I dated April __,
2000 (the "Final Memorandum") and is duly qualified to transact business in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification (except to the extent that the failure to
be so qualified would not in our view have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole).
(B) The Company has no subsidiaries.
(C) The Company has all materially necessary certificates,
orders, permits, licenses, authorizations, consents and approvals of and from,
and has made all declarations and filings with all relevant governmental
authorities, all self-regulatory organizations and all relevant courts and
tribunals, to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Final Memorandum, and, to
the best of our knowledge, after due inquiry has not received any notice of
proceedings relating to revocation or modification of any such certificates,
orders, permits, licenses, authorizations, consents or approvals, nor is the
Company in violation of, or in default under, any federal, state, local,
national or regional law, regulation, rule, decree, order or judgment applicable
to the Company, the effect of which, singly or in the aggregate, would have a
material adverse effect on the prospects, condition, financial or otherwise, or
in the earnings, business or operations of the Company, except as described
herein or in the Final Memorandum.
(D) The statements in the Final Memorandum under the caption
"Business -- [_______]" are accurate in all material respects and fairly
summarize all matters referred to therein.
(E) There are no restrictions (legal, contractual or
otherwise) on the ability of the Company to declare and pay any dividend or make
any payment or transfer of property or assets to its stockholders other than
those described in the Final Memorandum and such restrictions as would not have
a material adverse effect on the prospects, condition, financial or otherwise,
or in the earnings, business or operations of the Company and such descriptions,
if any, fairly summarize such restrictions.
* * * * * * * * *
<PAGE>
F-1
EXHIBIT F
FORM OF U.S. REGULATORY COUNSEL OPINION
Pursuant to Section 5(f) of the Placement Agreement, Morrison &
Foerster LLP, regulatory counsel for the Company, shall furnish an opinion to
the effect that:
(A) (1) the execution and delivery of the Placement Agreement
by the Trust and the Company and the consummation of the transactions
contemplated thereby do not violate (i) the federal Communications Act
of 1934, as amended, and the Telecommunications Act of 1996, any rules
or regulations of the Federal Communications Commission ("FCC")
applicable to the Company (collectively, the "Communications Act"),
(ii) any state telecommunications law, rules or regulations ("State
Law") applicable to the Company, and (iii) to the best of such
counsel's knowledge, any decree from any court, and (2) no consent,
approval, authorization or order of or filing with the FCC or any state
authority overseeing telecommunications matters ("State Authority"), is
necessary for the execution and delivery of the Placement Agreement by
the Company and the Trust and except to the extent that the failure to
obtain such consents, approvals, authorizations or orders or to make
filings with, the FCC or any State Authority would not, individually or
in the aggregate, have a material adverse effect on the prospects,
condition (financial or otherwise) or in the earnings, business or
operations of the Trust and the Company and the subsidiaries listed in
Schedule B to the Placement Agreement (the "Subsidiaries") taken as a
whole;
(B) except as indicated in this paragraph B, to the best of
our knowledge, (1) the Company and its Subsidiaries have made all
reports and filings, and paid all fees, required by the FCC and the
State Authorities, and have all certificates, orders, permits,
licenses, authorizations, consents and approvals of and from, and have
made all filings and registrations, with the FCC and the State
Authorities necessary to own, lease, license and use its properties and
assets and to conduct its respective business in the manner described
in the Final Memorandum, except for those filings, fees, and approvals
the failure to obtain or file of which would not have material adverse
effect on the financial condition, or on the earnings, business, or
operations of the Company and its Subsidiaries, taken as a whole; (2)
has not received any notice of proceedings relating to the violation,
revocation or modification of any such certificates, orders, permits,
licenses, authorizations, consents or approvals, or the qualification
or rejection of any such filing or registration, the effect of which,
singly or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or in the earnings,
business or operations of the Company, taken as a whole; and (3)
neither the Company nor its Subsidiaries is in violation of, or in
default under, the Communications Act or State Law, the effect of
which, singly or in the aggregate, would have a material
<PAGE>
F-2
adverse effect on the prospects, condition, financial or otherwise, or
in the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole;
(C) to the best of such counsel's knowledge after due inquiry
(i) no adverse judgment, decree or order of the FCC or any State
Authority has been issued against the Company or its Subsidiaries and
(ii) no litigation, proceeding, inquiry or investigation has been
commenced or threatened against the Company or its Subsidiaries before
or by the FCC or any State Authority which, if decided adversely to the
interests of the Company or its Subsidiaries would have a material
adverse effect on the Company and its Subsidiaries, taken as a whole;
and
(D) the statements in the Final Memorandum under the captions
"Risk Factors -- Competition," "Risk Factors -- Substantial Government
Regulation," "Business -- Government Regulation," insofar as such
statements constitute a summary of the legal matters, documents or
proceedings of the FCC and State Authorities with respect to
telecommunications regulation referred to therein, fairly summarize the
matters referred to therein.
* * * * * * * * *
<PAGE>
EXHIBIT G
FORM OF OPINION OF
EMMET, MARVIN & MARTIN, LLP
[Attach form provided by Emmet, Marvin & Martin, LLP]
<PAGE>
EXHIBIT H
FORM OF OPINION OF
RICHARDS, LAYTON & FINGER
[Attach form provided by Richards, Layton & Finger]
H-1
<PAGE>
I-1
EXHIBIT I
Form of Lock-Up Agreement
April 6, 2000
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
Banc of America Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Re: VIATEL FINANCING TRUST I
Ladies and Gentlemen:
The undersigned, an officer and/or director of Viatel, Inc., a Delaware
corporation (the "Company"), understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley") intends to enter into a Placement Agreement (the "Placement
Agreement") with the Company and Viatel Financing Trust I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), providing
for the offering by the several Placement Agents, including Morgan Stanley (the
"Placement Agents") of convertible preferred securities (the "Preferred
Securities") of the Trust.
To induce the Placement Agents to enter into the Placement Agreement,
and in recognition of the benefit that the offering of the Preferred Securities
will confer upon the undersigned as an officer and/or director of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned hereby agrees that, without the
prior written consent of Morgan Stanley on behalf of the Placement Agents, the
undersigned will not, during the period commencing on the date hereof and ending
90 days after the date of the Placement Agreement, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any equity securities
of the Company, the Trust or any similar trust or any securities convertible
into or exchangeable or exercisable for any equity securities of the Company,
the Trust or any similar trust, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition, or (ii) enter into any swap or any other agreement or
arrangement that transfers to another, in whole or in part, directly or
indirectly, any of the economic consequences of ownership of any equity
securities of the Company, the Trust or any similar trust, whether any such
transaction described in clause (i) or
<PAGE>
I-2
(ii) above is to be settled by delivery of any equity securities of the Company,
the Trust or any similar trust, other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) the sale of any equity securities to
the Placement Agents pursuant to the Placement Agreement, or (b) transactions
relating to equity securities acquired in open market transactions after the
completion of the offering of the Preferred Securities.
The undersigned recognizes that whether or not the offering of the
Preferred Securities actually occurs depends on a number of factors, including
market conditions. Any such offering will only be made pursuant to a Placement
Agreement, the terms of which are subject to negotiation between the Company,
the Trust and the Placement Agents.
In the event the Closing Date (as defined in the Placement Agreement)
does not occur by April 17, 2000, this lock-up agreement will automatically
expire and be of no further effect.
This agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
Signature:
Print Name:
<PAGE>
EXHIBIT J
Persons to Deliver Lock-Up Agreements
<TABLE>
<CAPTION>
EXECUTIVE OFFICER TITLE
<S> <C>
Michael J. Mahoney Chairman of the Board and Chief Executive
Officer
Alfred West Vice Chairman of the Board
William C. Murphy President and Director
Allan L. Shaw Chief Financial Officer and Director
Sheldon M. Goldman Executive Vice President, Corporate
Development and Director
Francis J. Mount Chief Technology Officer and Director
Lawrence G. Malone Executive Vice President, Wholesale Sales and
Marketing
</TABLE>
Draft: April 3, 2000
EXECUTION COPY
PREFERRED SECURITIES GUARANTEE AGREEMENT
Viatel, Inc
Dated as of April 12, 2000
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation...........................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.........................5
SECTION 2.2 Lists of Holders of Securities...........................5
SECTION 2.3 Reports by the Preferred Guarantee Trustee...............6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee..........6
SECTION 2.5 Evidence of Compliance with Conditions Precedent.........6
SECTION 2.6 Events of Default; Waiver................................6
SECTION 2.7 Event of Default; Notice.................................6
SECTION 2.8 Conflicting Interests....................................7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee.....7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee............9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee...11
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility................11
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees......................................12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee...............................................12
SECTION 5.2 Subordination...........................................13
SECTION 5.3 Waiver of Notice and Demand.............................13
SECTION 5.4 Obligations Not Affected................................13
SECTION 5.5 Rights of Holders.......................................14
SECTION 5.6 Guarantee of Payment....................................15
SECTION 5.7 Subrogation.............................................15
<PAGE>
SECTION 5.8 Independent Obligations.................................15
SECTION 5.9 Conversion..............................................15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions..............................15
SECTION 6.2 Ranking.................................................16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................17
SECTION 8.2 Indemnification.........................................18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns..................................18
SECTION 9.2 Amendments..............................................18
SECTION 9.3 Notices.................................................18
SECTION 9.4 Benefit.................................................19
SECTION 9.5 Governing Law...........................................19
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of April 12, 2000, is executed and delivered by
Viatel, Inc., a Delaware corporation (the "Guarantor"), and The Bank of New
York, a New York State banking corporation, as trustee (the "Preferred Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Preferred Securities (as defined herein) of Viatel Financing Trust I, a
Delaware statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 12, 2000, among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 3,000,000 preferred securities, having an aggregate
liquidation amount of $150,000,000 (plus up to an additional 600,000 preferred
securities, having an aggregate liquidation amount of $30,000,000, to cover
over-allotments), designated the 7 3/4% Trust Convertible Preferred Securities
(the "Preferred Securities").
WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this preferred Securities Guarantee, to
guarantee the obligations of the Trust to the Holders of the Preferred
Securities on the terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an event of
default (as defined in the Indenture (as defined herein)), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments (as defined in the Common Securities Guarantee) under the Common
Securities Guarantee shall be subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments (as defined herein) under this
Preferred Securities Guarantee.
NOW THEREFORE, in consideration of the purchase by each Holder
of Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
1
<PAGE>
(a) Capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred
Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or unless the
context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa;
(g) a reference to any Person shall include its successors and
assigns;
(h) a reference to any agreement or instrument shall mean such
agreement or instrument, as supplemented, modified, amended, or amended
and restated, and in effect from time to time; and
(i) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to the relevant Person, and
any successor statute, law, rule or regulation.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in Wilmington, Delaware are authorized or
required by any applicable law or executive order to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular
2
<PAGE>
time, be principally administered, which office at the date of execution of this
Agreement is located at 101 Barclay Street, Floor 21 West, New York, New York
10286, Attention: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the 7 3/4% Convertible Junior Subordinated
Debentures due April 15, 2015 of the Guarantor held by the Institutional Trustee
(as defined in the Declaration).
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee or
the failure of the Guarantor to convert the Preferred Securities into shares of
common stock of the Guarantor pursuant to the terms of the Declaration.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Trust: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Trust shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), with respect
to any Preferred Securities called for redemption by the Trust to the extent the
Trust has funds available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with a distribution of the Debentures to the Holders in exchange for Preferred
Securities or the redemption of all of the Preferred Securities as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
Holders upon liquidation of the Trust (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Trust of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of April 12, 2000,
among the Guarantor (the "Convertible Debenture Issuer") and The Bank of New
York, as trustee, pursuant to which the Debentures are to be issued to the
Property Trustee of the Trust.
3
<PAGE>
"Indenture Trustee" means the Person acting as trustee under
the Indenture, initially The Bank of New York.
"Majority in liquidation amount of the Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Preferred Securities, voting separately as a class, of more than 50% of the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" mean The Bank of New York, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice president, any assistant vice
president, the treasurer, any assistant treasurer or other officer of the
Corporate Trust Office of the Preferred Guarantee Trustee customarily performing
functions
4
<PAGE>
similar to those performed by any of the above designated offices and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject and who has direct responsibility for
the administration of this Preferred Securities Guarantee.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within one Business Day
after January 1 and June 30 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more that 14 days before such List of Holders is given to the
Preferred Guarantee Trustee, PROVIDED that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guarantee Trustee by
the Guarantor or the Preferred Securities are represented by one or more Global
Securities (as defined it the Indenture). The Preferred Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
5
<PAGE>
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice; PROVIDED that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Preferred
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders of the Preferred Securities.
6
<PAGE>
(b) The Preferred Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Preferred Guarantee Trustee
shall have received written notice, or of which a Responsible Officer of the
Preferred Guarantee Trustee charged with the administration of the Declaration
shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.5(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
7
<PAGE>
(d) No provision of this Preferred Securities Guarantee shall
be construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Preferred Guarantee Trustee,
the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability it the performance of
any of its duties or in the exercise of any of its rights or powers, if
the Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under
8
<PAGE>
the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against
such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel
of its selection, and the written advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advise or
opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Preferred
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Preferred Securities Guarantee
from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or
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direction, including such reasonable advances as may be requested by
the Preferred Guarantee Trustee; PROVIDED that nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee 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
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority
of the Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions.
(xi) The Preferred Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good faith
and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Preferred Securities
Guarantee.
(b) No provision of this Preferred Securities Guarantee shall
be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or
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exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Preferred Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Preferred
Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
Securities and Exchange commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall
hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such appointment
by instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery to the Guarantor of an instrument of removal or
resignation, the resigning or removed Preferred Guarantee Trustee may petition
any court of competent jurisdiction for appointment of a Successor Preferred
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all fees
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust may have or
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assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Trust to pay such amounts to the Holders.
SECTION 5.2 Subordination
If an Event of Default (as defined in the Indenture), has
occurred and is continuing, the rights of Holders of Common Securities to
receive Guarantee Payments under the Common Securities Guarantee are subordinate
to the rights of Preferred Securities to receive Guarantee Payments under this
Preferred Securities Guarantee.
SECTION 5.3 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.4 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be affected
or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all
or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures or any extension of the maturity date of the
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of the
Trust granting indulgence or extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.4 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.5 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may directly institute
a legal proceeding against the Guarantor to enforce the obligations of the
Guarantor under this Preferred Securities Guarantee without first instituting a
legal proceeding against the Trust, the Preferred Guarantee Trustee or any other
Person to the fullest extent permitted by law.
(c) If an Event of Default with respect to the Debentures (an
"Indenture Event of Default"), constituting the failure to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable has occurred and is continuing, then a Holder of Preferred Securities
may directly, at any time, institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder on or after the respective due date specified in the Debentures. The
Holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures unless the Institutional
Trustee (as defined in the Indenture) fails to do so.
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SECTION 5.6 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.7 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders
of Preferred Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this Preferred Securities Guarantee; PROVIDED,
HOWEVER, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Preferred Securities
Guarantee, if, at the time of any such payment, any amounts are due and unpaid
under this Preferred Securities Guarantee. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.8 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.4 hereof.
SECTION 5.9 Conversion
The Guarantor acknowledges its obligation to issue and deliver
common stock of the Guarantor upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if (i)
the Guarantor has exercised its option to defer interest payments on the
Debentures by extending the interest payment period and such period or extension
thereof, shall be continuing, (ii) there shall have occurred any Event of
Default or (iii) there shall have occurred and be continuing any event that,
with the giving of notice or the lapse of time or both, would constitute an
event of default under the Declaration, then the Guarantor (a) shall not declare
or pay dividends on, make distributions
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with respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock, (b) shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities of the Guarantor that rank PARI PASSU with or junior in interest
to the Debentures and (c) shall not make any guarantee payments with respect to
any guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks PARI PASSU with or junior in interest to the
Debentures (other than (i) as a result of a reclassification of the Guarantor's
capital stock or the exchange or conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock; (ii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted into or exchanged for the Guarantor's
capital stock; (iii) the payment of dividends or distributions in common stock
of the Guarantor; (iv) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; (v) payments under this Preferred Securities Guarantee and the
Common Securities Guarantee; (vi) purchases of the Guarantor's common stock
related to the issuance of the Guarantor's common stock or rights under any of
the Guarantor's benefit plans for the Guarantor's directors, officers or
employees; or (vii) obligations of the Guarantor under any dividend reinvestment
and stock purchase plans).
SECTION 6.2 Ranking
(a) This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor except any
liabilities that may be PARI PASSU expressly by their terms, (ii) PARI PASSU
with the most senior preferred or preference stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock or preferred
securities of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
(b) The holders of any obligations of the Guarantor that are
senior in priority to the obligations under this Preferred Securities Guarantee
will be entitled to all of the rights inuring to the holders of "Senior
Indebtedness" under Article 12 of the Indenture, and the Holders of the
Preferred Securities will be subject to all of the terms and conditions of such
Article 12 with respect to any claims or rights hereunder with the same effect
as though fully set forth herein.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate as to each
Holder of Preferred Securities upon (i) full payment of the Redemption Price of
all Preferred Securities, (ii) upon the distribution of the Debentures held by
the Trust to the Holders of all of the Preferred Securities of the Trust, (iii)
upon the distribution of the Guarantor's common stock to such Holder in respect
of the conversion of such Holder's Preferred Securities into common stock of the
Guarantor and (iv) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Trust. Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
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SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities the outstanding. Except in connection with any
merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of the Guarantor's assets to another entity, each as
permitted by the Indenture, the Guarantor may not assign its rights or delegate
its obligations under this Preferred Securities Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the
Preferred Securities.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Preferred Securities Guarantee may be amended only with the
prior approval of the Holders of at least a Majority in liquidation amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Preferred Securities apply to the giving
of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, sent by facsimile or mailed by registered or certified mail
or overnight courier, as follows:
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(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such
other address as the Preferred Guarantee Trustee may give notice of to
the Holders of the Preferred Securities):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Preferred Securities):
Viatel, Inc.
685 Third Avenue, 24th Floor
New York, New York 10017
Attention: General Counsel
(c) If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
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THIS PREFERRED SECURITIES GUARANTEE IS EXECUTED AS OF THE DAY
AND YEAR FIRST ABOVE WRITTEN.
VIATEL, INC., as Guarantor
By: /s/ James P. Prenetta
--------------------------------------
Name: James P. Prenetta
Title: Senior Vice President and
General Counsel
THE BANK OF NEW YORK, as Preferred
Guarantee Trustee
By: /s/ Ming J. Shiang
--------------------------------------
Name: Ming J. Shiang
Title: Vice President
20
EXECUTION COPY
COMMON SECURITIES GUARANTEE AGREEMENT
Viatel, Inc
Dated as of April 12, 2000
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions Interpretation.............................2
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee..............................................3
SECTION 2.2. Subordination..........................................4
SECTION 2.3. Waiver of Notice and Demand............................4
SECTION 2.4. Obligations Not Affected...............................4
SECTION 2.5. Rights of Holders......................................5
SECTION 2.6. Guarantee of Payment...................................5
SECTION 2.7. Subrogation............................................5
SECTION 2.8. Independent Obligations................................6
SECTION 2.9. Acknowledgment by Guarantor............................6
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions.............................6
SECTION 3.2. Ranking................................................7
ARTICLE IV
TERMINATION
SECTION 4.1. Termination............................................7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns.................................8
SECTION 5.2. Amendments.............................................8
SECTION 5.3. Notices................................................8
SECTION 5.4. Benefit................................................9
SECTION 5.5. Governing Law..........................................9
NYDOCS01/689470 2
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
This COMMON SECURITIES Guarantee Agreement (the "Common
Securities Guarantee"), dated as of April 12, 2000, is executed and delivered by
VIATEL, INC., a Delaware corporation (the "Guarantor"), for the benefit of the
Holders (as defined herein) from time to time of the Common Securities (as
defined herein) of Viatel Financing Trust I, a Delaware statutory business trust
(the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 12, 2000, among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 92,783.5 common securities, having an aggregate
stated liquidation amount of $4,639,175 designated the 7 3/4% Trust Common
Securities (the "Common Securities") (plus up to an additional 18,556.7 Common
Securities, having an aggregate liquidation amount of $927,835, to meet capital
requirements of the Trust in the event of an issuance of Additional Securities
(as defined in the Placement Agreement dated April 6, 2000 among Morgan Stanley
& Co., Incorporated, Salomon Smith Barney Inc., Banc of America Securities LLC,
the Trust and the Guarantor)), designated the 7 3/4% Convertible Common
Securities;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Common Securities Guarantee, to guarantee the
obligations of the Trust to the Holders of Common Securities on the terms and
conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Preferred Securities Guarantee") in substantially
identical terms to this Common Securities Guarantee for the benefit of the
holders of the Convertible Preferred Securities (as defined herein), except that
if an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments (as defined herein) under this Common Securities Guarantee shall be
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments (as defined in the Preferred Securities Guarantee) under the
Preferred Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each
Holder of Common Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common
Securities Guarantee for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. DEFINITIONS INTERPRETATION
In this Common Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Common Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) terms defined in the Declaration as at the date hereof
have the same meaning when used in this Common Securities Guarantee
unless otherwise defined in the Common Securities Guarantee;
(c) a term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or
"this Common Securities Guarantee" are to this Common Securities
Guarantees as modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Common Securities Guarantee, unless otherwise
defined in this Common Securities Guarantee or unless the context
otherwise requires;
(g) a reference to the singular includes the plural and vice
versa;
(h) a reference to any person shall include its successors and
assigns;
(i) a reference to any agreement or instrument shall mean such
agreement or instrument as supplemented, modified, amended, or amended
and restated, and in effect from time to time; and
(j) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to relevant Person, and any
successor statute, law, rule or regulation.
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"Convertible Debentures" means the 7 3/4% Convertible Junior
Subordinated Debentures due April 15, 2015 of the Guarantor held by the
Institutional Trustee (as defined in the Declaration).
"Convertible Preferred Securities" means the securities
representing preferred undivided beneficial interests in the assets of the
Trust.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Trust: (i) any accrued and unpaid
Distributions as defined in the Declaration that are required to be paid on such
Common Securities to the extent the Trust shall have funds available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Trust has funds
available therefor, with respect to any Common Securities called for redemption
by the Trust, and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Trust (other than in connection with the distribution of
Convertible Debentures to the Holders in exchange for Common Securities as
provided in the Declaration or the redemption of all the Common Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Common Securities to the date of payment to the extent the
Trust has funds available therefor, and (b) the amount of assets of the Trust
remaining available for distribution to Holders upon liquidation of the Trust
(in either case, the "Liquidation Distribution"). If an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of Holders
of the Common Securities to receive Guarantee Payments under this Common
Securities Guarantee are subordinated to the rights of Holders of Convertible
Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Common Securities.
"Indenture" means the Indenture dated as of April 12, 2000
among the Guarantor and The Bank of New York, a New York banking corporation, as
trustee, pursuant to which the Convertible Debentures are to be issued to the
Institutional Trustee (as defined in the Indenture) of the Trust.
ARTICLE II
GUARANTEE
SECTION 2.1. GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
3
<PAGE>
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
SECTION 2.2. SUBORDINATION
If an event of default under the Indenture has occurred and is
continuing, the rights of Holders of the Common Securities to receive Guarantee
Payments under this Common Securities Guarantee are subordinated to the rights
of Holders of Convertible Preferred Securities to receive Guarantee Payments
under the Preferred Securities Guarantee.
SECTION 2.3. WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.4. OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Common
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all
or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Convertible Debentures or any extension of the maturity date of
the Convertible Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Common Securities, or any action on the part of the Trust
granting indulgence or extension of any kind;
4
<PAGE>
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Common Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 2.4 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders or any other
Persons to give notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing.
SECTION 2.5. RIGHTS OF HOLDERS
The Guarantor expressly acknowledges that any Holder of Common
Securities may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Common Securities Guarantee, without first
instituting a legal proceeding against the Trust or any other Person.
SECTION 2.6. GUARANTEE OF PAYMENT
This Common Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 2.7. SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Common Securities against the Trust in respect of any amounts
paid to such Holders by the Guarantor under this Common Securities Guarantee;
PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Common
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Common Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
5
<PAGE>
SECTION 2.8. INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.4 hereof.
SECTION 2.9. ACKNOWLEDGMENT BY GUARANTOR
The Guarantor acknowledges its obligation to issue and deliver
common stock, par value $0.01 per share, of the Guarantor (the "Common Stock"),
upon the conversion of the Common Securities.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. LIMITATION OF TRANSACTIONS
So long as any Common Securities remain outstanding, if (i)
the Guarantor has exercised its option to defer interest payments on the
Convertible Debentures by extending the interest payment period and such period
or extension thereof, shall be continuing, (ii) there shall have occurred any
default by the Guarantor on any of its payment or other obligations under this
Common Securities Guarantee or (iii) there shall have occurred and be continuing
any event that, with the giving of notice or the lapse of time or both, would
constitute an event of default under the Declaration, then the Guarantor (a)
shall not declare or pay dividends on, make distributions with respect to, or
redeem, purchase or acquire, or make a liquidation payment with respect to, any
of its capital stock, (b) shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Guarantor that rank PARI PASSU with or junior in interest to the Convertible
Debentures and (c) shall not make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks PARI PASSU with or junior in interest to the
Convertible Debentures (other than (i) a reclassification of the Guarantor's
capital stock or the exchange or conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock; (ii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted into or exchanged for the Guarantor's
capital stock; (iii) the payment of dividends or distributions in common stock
of the Guarantor; (iv) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; (v) payments under this Common Securities Guarantee and the
Preferred Securities Guarantee; (vi) purchases of the Guarantor's common stock
related to the issuance of the
6
<PAGE>
Guarantor's common stock or rights under any of the Guarantor's benefit plans
for the Guarantor's directors, officers or employees; or (vii) obligations of
the Guarantor under any dividend reinvestment and stock purchase plans).
SECTION 3.2. RANKING
(a) This Common Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor,
except any liabilities that may be made PARI PASSU expressly by their
terms, (ii) PARI PASSU with the most senior preferred or preference
stock now or hereafter issued by the Guarantor and with any guarantee
now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Common Stock.
(b) The holders of any obligations of the Guarantor that are
senior in priority to the obligations under this Common Securities
Guarantee will be entitled to all of the rights inuring to the holders
of "Senior Indebtedness" under Article 12 of the Indenture, and the
Holders of the Common Securities will be subject to all of the terms
and conditions of such Article 12 with respect to any claims or rights
hereunder with the same effect as though fully set forth herein.
ARTICLE IV
TERMINATION
SECTION 4.1. TERMINATION
This Common Securities Guarantee shall terminate upon (i) full
payment of the amount payable upon redemption of the Common Securities, (ii) the
distribution of the Guarantor's Common Stock to the Holders in respect of the
conversion of the Convertible Preferred Securities into the Common Stock or the
distribution of the Convertible Debentures (as defined in the Declaration) to
the Holders of all of the Common Securities or (iii) full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust.
Notwithstanding the foregoing, this Common Securities Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Common Securities must restore payment of any sums paid under the
Common Securities or under this Common Securities Guarantee.
7
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ARTICLE V
MISCELLANEOUS
SECTION 5.1. SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Common Securities then outstanding.
SECTION 5.2. AMENDMENTS
Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of Holders of the Securities apply to the giving of
such approval.
SECTION 5.3. NOTICES
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, sent by facsimile or mailed by registered or certified mail or
overnight courier, as follows:
(a) if given to the Trust, in care of the Regular Trustees at
the Trust's mailing address set forth below (or such other address as
the Trust may give notice of to the Holders of the Common Securities):
c/o Viatel, Inc.
685 Third Avenue
24th Floor
New York, New York 10017
Attention: General Counsel
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Common Securities):
Viatel, Inc.
685 Third Avenue
24th Floor
New York, New York 10017
Attention: General Counsel
8
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(c) if given to any Holder of Common Securities, at the
address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4. BENEFIT
This Common Securities Guarantee is solely for the benefit of
the Holders of the Common Securities and is not separately transferable from the
Common Securities.
SECTION 5.5. GOVERNING LAW
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
9
<PAGE>
THIS COMMON SECURITIES GUARANTEE AGREEMENT is executed as of
the day and year first above written.
VIATEL, INC.,
as Guarantor
By: /s/ James P. Prenetta
------------------------------
Name: James P.Prenetta
Title: Senior Vice President and
General Counsel
10
EXECUTION COPY
AMENDED AND RESTATED
ENGINEERING, PROCUREMENT
AND CONSTRUCTION CONTRACT
(OUTSIDE PLANT WORK)
DATED AS OF NOVEMBER 15, 1999,
EFFECTIVE AS OF FEBRUARY 19, 1999
BETWEEN
BECHTEL LIMITED
AS CONTRACTOR
AND
VICAME INFRASTRUCTURE DEVELOPMENT GMBH
AS DEVELOPER
and
VIATEL GERMAN ASSET GMBH
AS OWNER
AND
METROMEDIA FIBER NETWORK GMBH
AS OWNER
AND
CARRIER 1 FIBER NETWORK GMBH & CO. OHG
AS OWNER
---------------------------------------
GERMAN NETWORK DEVELOPMENT PROJECT
GND NO. 1
AND
GND NO. 2
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; INTERPRETATION......................................2
1.1. DEFINED TERMS....................................................2
1.2. RULES OF CONSTRUCTION............................................2
SECTION 2. INTENT OF CONTRACT AND RELATIONSHIP OF THE PARTIES...............3
2.1. Generally........................................................3
2.2. Interpretation...................................................3
2.3. Relationships Among the Parties..................................3
SECTION 3. CONTRACT DOCUMENTS...............................................4
3.1. Form Part of this Contract.......................................4
3.2. Conflicts........................................................4
SECTION 4. RESPONSIBILITIES OF THE CONTRACTOR...............................5
4.1. Scope of Work....................................................5
4.2. Overall System Design Responsibility.............................6
4.3. Technical Information............................................7
SECTION 5. TECHNICAL REQUIREMENTS, MILESTONE SCHEDULE AND PROGRESS
MEETINGS.........................................................7
2 5.1. Technical Requirements...........................................7
5.2. Milestone Schedule...............................................7
5.3. Progress Meetings................................................8
SECTION 6. COMPLIANCE WITH LAWS; PERMITS....................................8
6.1. Compliance With Laws.............................................8
6.2. Variations Required By Law.......................................8
6.3. Permits..........................................................9
6.4. No Liability....................................................10
SECTION 7. THE SCHEDULED ROUTE.............................................10
7.1. Generally.......................................................10
7.2. Wayleave Procurement and Approval...............................10
7.3. Alternative Wayleaves...........................................11
SECTION 8. OWNER OBLIGATIONS...............................................12
8.1. Owner-Procured Equipment and Vendor Specifications..............12
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TABLE OF CONTENTS (CONTINUED) PAGE
8.2. POP Sites and Owner Specifications..............................13
8.3. The Developer's Review and Approval.............................14
8.4. Owner Permits...................................................15
8.5. Access to Owner Facilities......................................15
8.6. Cooperation and Non-Interference with Work......................15
8.7. No Diminishment.................................................15
SECTION 9. MAINTENANCE OF BOOKS AND RECORDS................................15
9.1. Maintenance of Records..........................................15
9.2. Access to Records...............................................16
9.3. Subcontractors..................................................16
SECTION 10. TAXES...........................................................17
10.1. General.........................................................17
10.2. Exemption from Taxes............................................17
10.3. Withholding.....................................................17
10.4. Indemnity.......................................................17
SECTION 11. INTELLECTUAL PROPERTY RIGHTS....................................18
11.1. Generally.......................................................18
11.2. Injunction......................................................18
11.3. Infringement Order..............................................19
11.4. New Developments by the Contractor..............................19
11.5. The Contractor's Existing Intellectual Property.................19
SECTION 12. PAYMENTS FOR THE WORK...........................................20
12.1. Compensation....................................................20
12.2. Fixed and Incentive Fees........................................20
(a) GND No. 1 Outside Plant...................................20
(b) GND No. 2 Outside Plant...................................20
12.3. General Conditions of Payment...................................21
12.4. Timing of Payments..............................................22
12.5. Contractor Invoices.............................................24
(b) Reimbursement Invoices....................................24
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TABLE OF CONTENTS (CONTINUED) PAGE
(c) Documents.................................................25
12.6. The Developer's Right to Withhold Payment.......................26
12.7. Overdue Payments................................................27
SECTION 13. DEDUCTIONS FROM PAYMENTS TO THE CONTRACTOR......................27
13.1. Amounts Payable.................................................27
13.2. Deduction.......................................................27
13.3. Certificate.....................................................28
SECTION 14. CONTRACTOR SECURITY.............................................28
14.1. Generally.......................................................28
14.2. Form of Contractor Surety Bond..................................28
14.3. Issuer Requirements.............................................28
SECTION 15. CONTRACT VARIATIONS.............................................29
15.1. Equitable Relief................................................29
15.2. Procedure For Implementing Contract Variations..................30
15.3. Effect of Contract Variations...................................30
15.4. Performance Pending Resolution..................................30
15.5. No Delay........................................................30
SECTION 16. OWNER-CAUSED DELAYS.............................................31
16.1. Generally.......................................................31
16.2. Effect..........................................................32
SECTION 17. GUARANTEED RFS DATE.............................................32
17.1. Guaranteed RFS Date.............................................32
17.2. [intentionally omitted].........................................32
SECTION 18. FORCE MAJEURE...................................................32
18.1. Definition......................................................32
18.2. Mitigation......................................................33
18.3. Notice..........................................................33
18.4. Application.....................................................34
18.5. Extension of Time...............................................34
18.6. Limitation......................................................34
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TABLE OF CONTENTS (CONTINUED) PAGE
SECTION 19. PROJECT MANAGER AND THE DEVELOPER'S REPRESENTATIVE.............34
19.1. Project Manager.................................................34
19.2. The Developer's Representative..................................35
SECTION 20. INSPECTION RIGHTS...............................................35
20.1. Generally.......................................................35
20.2. Covered Work....................................................36
20.3. No Relief.......................................................36
SECTION 21. DEFECTIVE WORK..................................................36
21.1. Generally.......................................................36
21.2. Existence of Defects............................................36
SECTION 22. SUSPENSION OF WORK BY THE DEVELOPER.............................37
22.1. Generally.......................................................37
22.2. The Contractor's Duties Upon Suspension.........................37
22.3. The Contractor's Duties After Suspension........................38
SECTION 23. TERMINATION FOR CONVENIENCE.....................................38
23.1. Termination.....................................................38
23.2. Termination Date................................................38
23.3. Termination Payment (Convenience)...............................38
SECTION 24. EVENTS OF DEFAULT AND REMEDIES..................................40
24.1. Events of Default and Remedies..................................40
24.2. No Prejudice....................................................42
24.3. Notice of Exercise of Remedies..................................42
24.4. Contractor's Right to Suspend Work and Terminate Contract.......42
SECTION 25. TAKE OVER AND PAYMENTS TO THE DEVELOPER.........................43
25.1. Replacement Contractors.........................................43
25.2. No Right of Compensation........................................43
25.3. Payments to the Owners..........................................43
SECTION 26. TERMINATION FOR DEFAULT.........................................44
26.1. Effect of Termination...........................................44
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TABLE OF CONTENTS (CONTINUED) PAGE
26.2. Termination Date................................................44
26.3. Right to Terminate..............................................44
26.4. Right to Complete the Work......................................44
SECTION 27. DUTIES UPON TERMINATION.........................................44
27.1. Generally.......................................................44
27.2. Subcontractor Claims............................................46
27.3. Funds Held by the Owners........................................46
SECTION 28. LIMITATION OF LIABILITY.........................................46
28.1. No Consequential Damages........................................46
28.2. Other Limitations...............................................47
28.3. Scope of Limitations............................................47
28.4. Work Provided By Others.........................................47
28.5. Loss, Injury or Damage to Persons, the System or the Work.......47
28.6. Transfer of Ownership...........................................47
28.7. Hazardous Waste or Materials....................................47
SECTION 29. THE CONTRACTOR'S ON-SITE DUTIES.................................48
29.1. Reasonable Precautions..........................................48
29.2. Waste Disposal..................................................48
SECTION 30. PERFORMANCE TESTS...............................................48
30.1. Generally.......................................................48
30.2. Right of Waiver.................................................48
30.3. Long-Term Obligations...........................................49
30.4. Operating Revenues..............................................49
SECTION 31. PLANT ACCEPTANCE................................................49
31.1. Initial Plant Commissioning Report..............................49
31.2. RFS Acceptance..................................................49
31.3. Commercial Acceptance...........................................51
31.4. Documentation to be Delivered Upon RFS Acceptance or
Commercial Acceptance...........................................52
31.5. Failure to Achieve RFS Acceptance or Commercial Acceptance......52
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TABLE OF CONTENTS (CONTINUED) PAGE
31.6. Final Acceptance................................................53
SECTION 32. WARRANTIES......................................................53
32.1. General Warranties..............................................53
32.2. Notification of Breach of Warranty..............................53
32.3. Repair Generally................................................54
32.4. Repair or Replacement...........................................54
32.5. Repair by the Developer.........................................55
32.6. Repaired or Replacement Parts...................................55
32.7. The Developer's Expenses........................................55
32.8. Scope of Liability for Defects..................................55
SECTION 33. ASSIGNMENT AND SUBCONTRACTING...................................55
33.1. Generally.......................................................55
33.2. Subcontracts....................................................56
33.3. Existing Subcontracts...........................................56
33.4. Breach..........................................................56
33.5. Conditional Assignment..........................................56
33.6. No Obligations of Owner Persons to Subcontractors...............57
SECTION 34. THE CONTRACTOR'S PERSONNEL......................................57
SECTION 35. THE DEVELOPER'S STAFF...........................................57
35.1. Generally.......................................................57
35.2. Limitations.....................................................57
SECTION 36. TITLE...........................................................57
36.1. Generally.......................................................57
36.2. Title to Supplies and Work......................................58
36.3. Transfer of Title...............................................58
36.4. Removal of Liens................................................58
36.5. No Release of the Contractor; Contractor Obligations
in Lieu of Transfer of Direct Possession........................59
36.6. Bailment........................................................59
36.7. Title to the Cable Links........................................59
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TABLE OF CONTENTS (CONTINUED) PAGE
SECTION 37. REPRESENTATIONS AND WARRANTIES..................................60
37.1. Contractor's Representations and Warranties.....................60
37.2. The Developer's Representations and Warranties..................62
37.3. Representations and Warranties of the Owners....................63
SECTION 38. DISPUTE RESOLUTION AND CONSENT TO JURISDICTION..................64
38.1. Mutual Discussions; Mediation...................................64
38.2. Consent to Jurisdiction.........................................64
SECTION 39. INDEMNIFICATION.................................................65
39.1. Contractor to Indemnify.........................................65
39.2. Owners to Indemnify.............................................66
39.3. Conditions to Effect Indemnification............................66
SECTION 40. RISK OF LOSS....................................................66
40.1. Generally.......................................................66
40.2. Payments to the Owners..........................................67
SECTION 41. INSURANCE.......................................................67
41.1. Types of Insurance..............................................67
41.2. Notice of Cancellation..........................................67
41.3. Copies..........................................................67
41.4. Failure to Maintain Insurance...................................67
41.5. Compliance With Policies........................................67
41.6. Claim Information...............................................67
41.7. Remedy of Loss or Damage........................................67
41.8. Insolvency of Insurers..........................................67
SECTION 42. DOCUMENTS, INFORMATION AND CONFIDENTIALITY......................68
42.1. Generally.......................................................68
42.2. The Contractor to Retain Drawings...............................68
42.3. Confidentiality.................................................68
SECTION 43. PUBLICITY.......................................................69
SECTION 44. CORRUPT GIFTS AND THE PAYMENT OF COMMISSIONS....................69
44.1. Gifts, Etc......................................................69
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TABLE OF CONTENTS (CONTINUED) PAGE
44.2. Payments........................................................70
44.3. Foreign Corrupt Practices Act...................................70
44.4. Permitted Activities............................................70
44.5. Materiality.....................................................71
SECTION 45. NOTICES.........................................................71
45.1. Methods and Effectiveness.......................................71
45.2. Addresses.......................................................72
45.3. English Language................................................74
SECTION 46. NO CONFLICTS....................................................74
SECTION 47. MISCELLANEOUS...................................................74
47.1. Headings........................................................74
47.2. GOVERNING LAW...................................................74
47.3. Severability....................................................74
47.4. Integration.....................................................75
47.5. Amendments and Waivers..........................................75
47.6. Further Assurances..............................................75
47.7. Counterparts....................................................75
47.8. Successors and Assigns..........................................75
47.9. No Third Party Beneficiaries....................................75
47.10.United Nations Convention On Contracts For The
International Sale Of Goods.....................................75
47.11 Remedies Cumulative.............................................76
EXHIBIT 1 DEFINED TERMS
EXHIBIT 2 FORM OF CONTRACTOR SURETY BOND
EXHIBIT 3 FORM OF CERTIFICATE AND PAYMENT AND FINAL RELEASE
EXHIBIT 4 FORM OF LIEN RELEASE
EXHIBIT 5 FORM OF RETAINAGE LC
EXHIBIT 6 FORM OF CORPORATE GUARANTEE
EXHIBIT 7 FORM OF OWNER ESCROW AGREEMENT
APPENDIX 1 REIMBURSABLE COSTS
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TABLE OF CONTENTS (CONTINUED) PAGE
APPENDIX 1 REIMBURSABLE COSTS TABLE (1-A) STANDARD RATES
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE TABLE (2-A) ROUTE DISTANCES
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE TABLE (2-B) DETAILED CABLE
ROUTING
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE TABLE (2-C) TECHNICAL
SPECIFICATIONS AND STANDARDS
APPENDIX 2 NETWORK DESCRIPTION AND PROJECT SCOPE TABLE (2-D) DESCRIPTION OF
CONTRACTOR PROVIDED MATERIALS
APPENDIX 3 OWNER-PROCURED EQUIPMENT
APPENDIX 4 MILESTONE SCHEDULE
APPENDIX 5 WAYLEAVE APPLICATION PROCESS
APPENDIX 5 TABLE A WAYLEAVE CRITERIA
APPENDIX 6 INSURANCE
APPENDIX 7 PERFORMANCE TEST STANDARDS
APPENDIX 7 TABLE 7-A PERFORMANCE TEST STANDARDS
APPENDIX 8 STORAGE AND MARKING PROCEDURES
APPENDIX 9 PAYMENT METHODOLOGY [INTENTIONALLY OMITTED]
APPENDIX 10 OWNER ESCROW SCHEDULE
APPENDIX 11 INDEPENDENT EXPERT PROCEDURES
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<PAGE>
GND NO. 1
AND
GND NO. 2
GERMAN NETWORK DEVELOPMENT PROJECT
AMENDED AND RESTATED
ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT
(OUTSIDE PLANT WORK)
AMENDED AND RESTATED ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACT (OUTSIDE
PLANT WORK), dated as of November 15, 1999, effective as of February 19, 1999,
among and between:
BECHTEL LIMITED, a United Kingdom limited liability company (the
"CONTRACTOR"); and
VICAMEINFRASTRUCTURE DEVELOPMENT GmbH, a GESELLSCHAFT MIT BESCHRANKTER
HAFTUNG organized under the laws of Germany (the "DEVELOPER"); and
VIATELGERMAN ASSET GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany ("VIATEL"); and
METROMEDIA FIBER NETWORK GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG
organized under the laws of Germany ("MFN"); and
CARRIER 1 FIBER NETWORK GmbH & Co. OHG, an OFFENE HANDELSGESELLSCHAFT
organized under the laws of Germany ("CARRIER 1"),
with each of Viatel, MFN and Carrier 1 acting as an Owner hereunder, and
hereinafter individually referred to as an "OWNER" or, collectively, as the
"OWNERS".
W I T N E S S E T H :
WHEREAS, the Owners are developing certain fiber optic
telecommunications networks, consisting, in part, of the Systems (as hereinafter
defined) to be located along the Scheduled Route (as hereinafter defined) in the
Federal Republic of Germany; and
WHEREAS, the Owners previously entered into the Engineering,
Procurement and Construction Contract (Outside Plant Work) dated February 19,
1999 (the "FIXED PRICE CONTRACT") with Contractor and the Developer pursuant to
which the Contractor was to perform certain services necessary for the design,
engineering, procurement, construction, installation and testing of the Outside
Plants (as hereinafter defined) for the German Network Development Project GND
No. 1 and GND No. 2 on a fixed price, turnkey, date-certain basis in accordance
with the Performance Parameters (as hereinafter defined); and
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WHEREAS, the Parties now desire to amend and restate the Fixed
Price Contract so that, among other things, such Fixed Price Contract reflects a
cost plus arrangement with fixed and incentive fees, effective as of February
19, 1999.
NOW, THEREFORE, the Parties, in consideration of the mutual
undertakings herein expressed, covenant and agree with each other as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
1.1 DEFINED TERMS. As used in this Contract and in all Contract
Documents, capitalized terms shall have the meanings ascribed
thereto in EXHIBIT 1 hereto.
1.2 RULES OF CONSTRUCTION. In the interpretation of this Contract,
unless the context otherwise requires:
(a) The singular includes the plural and vice versa and, in
particular (but without limiting the generality of the
foregoing), any word or expression defined in the singular has
the corresponding meaning used in the plural and vice versa;
(b) The term "or" is not exclusive;
(c) The term "including" shall mean "including, without
limitation";
(d) Any reference to any gender includes the other gender;
(e) Any reference to any agreement, instrument, contract or other
document shall:
(i) Include all appendices, exhibits, annexes and schedules
thereto; and
(ii) Be a reference to such agreement, instrument, contract
or other document as amended, supplemented, modified,
suspended, restated or novated from time to time;
(f) Any reference to any Codes and Standards shall include all
statutory and administrative provisions consolidating,
amending or replacing such Codes and Standards, and shall
include all rules and regulations promulgated thereunder;
(g) Any reference to "hereof", "hereto", "herein", "hereunder" or
any other similar term is a reference to this Contract as a
whole, and not to any particular provision or part of this
Contract;
(h) Any reference to any Person includes its permitted successors
and assigns;
(i) Unless otherwise specified, a reference to a Section, Exhibit,
or Appendix is to the Section, Exhibit, or Appendix of this
Contract;
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(j) Unless otherwise specified, any right may be exercised at any
time and from time to time;
(k) The fact that counsel to any Party shall have drafted this
Contract shall not affect the interpretation of any provision
of this Contract in a manner adverse to such Party or
otherwise prejudice or impair the rights of such Party; and
(l) If an index or similar reference referred to in this Contract
is changed or no longer published or reported by the Person
(or such Person's successor) who, on the date hereof,
publishes or reports such index or reference, then the Parties
shall use their best efforts to replace such index with the
best substitute for the changed or nolonger published index or
reference.
SECTION 2. INTENT OF CONTRACT AND RELATIONSHIP OF THE PARTIES
2.1. GENERALLY. The Contractor shall:
(a) undertake all necessary Work and perform in full its obligations
hereunder in order to plan, supply, install, assemble, test and
furnish to each Owner (to the extent of its respective ownership
interest therein) each Outside Plant (or segment thereof) as set
forth in the Technical Requirements; and
(b) achieve RFS Acceptance for each Outside Plant (or segment thereof)
on or before the Guaranteed RFS Date therefor,
in each case, upon and subject to the provisions of this Contract.
2.2. INTERPRETATION. The Contractor shall perform all of the Work specified or
reasonably inferred from this Contract. The Contractor's performance
hereunder shall include everything requisite and necessary to complete the
entire Work notwithstanding the fact that every item necessarily involved
may not be specifically mentioned in the Technical Requirements. The
intent of this Contract is to relieve the Owner Persons of the necessity
of engaging or supplying any labor, service, equipment or material to
complete the Outside Plants, unless the labor, service, equipment or
material is expressly itemized in this Contract as being furnished by any
such Owner Persons.
2.3. RELATIONSHIPS AMONG THE PARTIES. The Parties hereto agree that:
(a) THE OWNERS. Each of the Owners is entering into this Contract as a
several but not joint obligor, and, in any event, each such Owner's
liability with respect to all obligations hereunder shall be limited
pro rata to its percentage of ownership in the Outside Plants to be
delivered by the Contractor hereunder, which percentage shall be:
(i) [REDACTED], in the case of Viatel;
(ii) [REDACTED], in the case of MFN; and
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(iii) [REDACTED], in the case of Carrier 1,
subject to the proviso that, such percentages may be adjusted from
time to time and the Developer shall provide timely Notice to the
Contractor with respect to any such adjustment.
(b) APPOINTMENT OF DEVELOPER AS AGENT. Each Owner has appointed the
Developer as its sole and exclusive agent, with full and complete
authority to act on its behalf with respect to all matters relating
to the administration and performance of this Contract.
(c) NON-LIABILITY OF THE DEVELOPER TO THE CONTRACTOR. The Developer is
acting solely in the capacity as an agent of each Owner and shall
bear no liability hereunder to any Contractor Person.
(d) EXCLUSIVE POINT OF CONTACT. No Owner Person other than the Developer
shall be entitled to instruct or direct the Contractor with respect
to any matter hereunder. The Contractor shall disregard any
instructions purported to be given on behalf of any Owner unless
given by the Developer acting through its Developer's Representative
appointed pursuant to Section 19.2. In the event, however, that the
Contractor has failed to achieve RFS Acceptance of the Outside
Plants by March 31, 2000, each Owner (acting singly or with other
Owners as they may elect) shall be entitled to pursue all available
remedies against the Contractor to the full extent of such Owner's
(or Owners') pro rata ownership interest in the Outside Plants.
(e) NO IMPLIED RELATIONSHIPS. Unless expressly contemplated herein, the
relationships between and among the Parties shall not be that of
partners or joint venturers, and nothing herein contained shall be
deemed to constitute a partnership or joint venture among them.
Except for the Developer's agency for the Owners as expressed in
clause (b) of this Section 2.3 and elsewhere in this Contract, or
unless otherwise expressly stipulated herein, no Party shall have
authority or power to bind or act unilaterally as agent for any
other Party.
SECTION 3. CONTRACT DOCUMENTS
3.1. FORM PART OF THIS CONTRACT. Each Contract Document shall be deemed to form
and be read and construed as part of this Contract, and all matters and
things herein expressed as a duty or obligation of either Party (either
actual or potential) therein shall be the duty or obligation of such Party
hereunder.
3.2. CONFLICTS. In the event of any conflict between a provision of this
Contract and a provision of any Contract Document, the former shall
prevail. In the event of any conflict between or among the provisions of
one or more Contract Documents that cannot be resolved by any provision of
this Contract, then the provision in the Contract Document having the
highest order of precedence below shall prevail:
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(a) Network Description and Project Scope;
(b) Milestone Schedule; and
(c) other Technical Requirements.
SECTION 4. RESPONSIBILITIES OF THE CONTRACTOR
4.1. SCOPE OF WORK. The Contractor shall plan, supply, install, assemble and
test each Outside Plant in accordance with all terms and conditions
contained in this Contract. Each Outside Plant shall be in full accordance
with the Technical Requirements and the other requirements of this
Contract and the Contract Documents. As more specifically described in the
Technical Requirements, including the Network Description and Project
Scope, the Contractor shall perform or continue to perform the following
obligations, with each item listed herein constituting, individually and
as referenced collectively with any other such items, the Work (the
"WORK"):
(a) WAYLEAVE SUPPORT AND SCHEDULED ROUTE SPECIFICATIONS. In accordance
with and subject to the Wayleave Criteria and the terms and
provisions of Section 7 hereof, procurement, as agent for the
Owners, of all Wayleaves necessary to complete each Outside Plant,
including preparation and presentation to the Developer, on an
ongoing basis in accordance with the Wayleave Criteria and this
Contract, of all Wayleave documentation, together with periodic
written updates as to Scheduled Route specifications and completion
status;
(b) FIBER OPTIC CABLE ASSEMBLY AND INSTALLATION. Installation of ducts
and assembly and installation of the Fiber Optic Cable, including
the procurement and provision of all materials, equipment and
services necessary for the joining, secure placement, safeguarding
and maintenance of such Fiber Optic Cable along the Scheduled Route
in accordance with the Technical Requirements;
(c) FIBER OPTIC CABLE SPLICING AND TESTING. Splicing and testing of the
Fiber Optic Cable as provided in the Technical Requirements,
including testing of such Fiber Optic Cable over the entire length
thereof, on an ODF-to-ODF basis, in accordance with the Performance
Test Standards;
(d) REPEATER AND POP SITE SUPPORT. As specified in the Technical
Requirements, identification and presentation to the Developer of
potential Repeater Sites (including preparation and submission for
the Developer's approval of title documents or other instruments
necessary to convey to the Developer the requisite interests in such
sites) complying in all respects with the Vendor Specifications (as
such exist as of the date of this Contract) therefor, as well as
construction of Repeater Facilities and refurbishment of the POP
Sites, in each case, as specified in the Network Description and
Project Scope (Appendix 2) and the other Technical Requirements;
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(e) COORDINATION WITH VENDORS. Technical coordination with the Vendors
in all aspects of the Work, such that each Outside Plant shall be
compatible with, and meet or exceed, the Performance Parameters and
the other Technical Requirements;
(f) PERFORMANCE PARAMETERS AND THE WARRANTIES. Meeting all terms and
conditions of the Technical Requirements (including the relevant
Performance Parameters) by each Guaranteed RFS Date, and complying
with all Warranties throughout the Warranty Period;
(g) MEET INTENT OF CONTRACT. All other matters specified as the
responsibility of the Contractor in this Contract or any Contract
Document, and satisfying in all respects the intent of this Contract
as expressed in Section 2 hereof and elsewhere in the Contract
Documents; and
(h) RELATED WORK; ADVISORY SERVICES AND ANCILLARY WORK AND SUPPLIES AND
SERVICES. In connection with any and all of the foregoing, the
Contractor shall:
(i) attend and observe final System testing conducted by the
Vendors and others and assist with the resolution of any
issues relating to the Work;
(ii) furnish all construction tools and equipment, small tools and
temporary electricity, water, heat, telephone and other
construction utilities required to complete each Outside
Plant;
(iii) compile and deliver to the Developer all such documents,
drawings, specifications and other data developed by the
Contractor in its performance of the Work (including, subject
to Section 4.2 hereof, all relevant technical and design data)
that are necessary to allow the Owners to own and operate the
Outside Plants as contemplated by this Contract and the
Contract Documents;
(iv) arrange for transportation and receipt, unloading and storage
at appropriate locations of all supplies and other components
of each Outside Plant and the Work;
(v) carry out all Work-item storage, inventory, handling and
marking activities as specified in the Storage and Marking
Procedures in order to maintain and deliver, as the separate
and distinct property of each Owner, all equipment, materials,
supplies and other items of Work procured or installed by the
Contractor that are to be delivered to such Owner hereunder;
and
(vi) obtain, furnish and maintain in effect all Contractor Permits,
to the extent provided for in Section 6.3(a) hereof.
4.2. OVERALL SYSTEM DESIGN RESPONSIBILITY. Each Owner shall, to the extent of
its ownership interest in the Outside Plants, be responsible for (and the
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Developer, acting on behalf of each Owner, shall provide to the Contractor
all technical data and specifications as required hereunder for) the
overall network design for the System, including the selection,
configuration and integration of System components.
4.3. TECHNICAL INFORMATION. In addition to the requirements for the provision
of technical information described in this Contract, the Contractor shall,
upon request, provide the Developer with such additional technical
information in connection with this Contract as the Developer may
reasonably require.
SECTION 5. TECHNICAL REQUIREMENTS, MILESTONE SCHEDULE
AND PROGRESS MEETINGS
5.1. TECHNICAL REQUIREMENTS. In accordance with Section 4.1 hereof, the Work
shall comply with the Technical Requirements.
5.2. MILESTONE SCHEDULE. The Contractor shall perform all Work in conformity
with the Guaranteed RFS Dates and Critical Path Items set forth in the
Milestone Schedule.
(a) Schedule Recovery. If the Contractor fails to complete (or has
reason to believe that it is likely to fail to complete) any (i)
Critical Path Item or (ii) other items of Work that, taken
individually or in the aggregate, are likely to result in a failure
to complete any Critical Path Item, in each case, by the scheduled
date identified in the Milestone Schedule therefor, the Contractor
shall:
(i) immediately notify the Developer in writing of such failure or
likelihood of delay, specifying the reasons therefor, and
provide the Developer with a detailed work-around plan (a
"SCHEDULE RECOVERY PLAN") for correcting delays or potential
delays in meeting all scheduled dates and the Guaranteed RFS
Date which includes forecasts of the amount of additional
Reimbursable Costs that would be incurred to implement such
Schedule Recovery Plan;
(ii) at the Developer's direction, accelerate its performance of
the Work by providing whatever efforts, resources or means
necessary (which efforts, resources or means shall, in any
event, comply with all other requirements of this Contract) to
recover adherence to the Milestone Schedule, including,
without limitation, additional or overtime labor and
additional construction equipment; and
(iii) furnish to the Developer weekly written status reports
detailing the Contractor's progress under any Schedule
Recovery Plan.
The Contractor hereby acknowledges that its failure (i) to notify the
Developer and furnish a Schedule Recovery Plan within [REDACTED] Days
after becoming aware (or after it should have become aware) of any
delay affecting or likely to affect any Critical Path Item set forth
in the Milestone Schedule or, (ii) with respect to any such delay
actually occurring and continuing, to implement the
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Schedule Recovery Plan immediately after directed by the Developer
to implement such Schedule Recovery Plan and its failure to
implement it at the rate of progress set forth therein, shall
constitute an Event of Default under Section 24.1(a) hereof.
(b) NO DIMINISHMENT. The Contractor's preparation and implementation of
any Schedule Recovery Plan shall in no way relieve or limit the
Contractor's obligations to comply with the Critical Path Items set
forth in the Milestone Schedule and to achieve RFS Acceptance by
each Guaranteed RFS Date, and the Developer's acceptance of Work
performed pursuant to any such Schedule Recovery Plan shall not be
deemed or construed as a waiver by the Developer or any Owner of any
of its rights or remedies under this Contract.
5.3. PROGRESS MEETINGS. The Contractor shall prepare and submit to the
Developer on a monthly basis, accurate and detailed progress reports
providing a narrative description of the status of Work items as against
the Milestone Schedule, and providing projections (identifying anticipated
items of Subcontractor Supplies and Subcontractor Services together with
the Subcontractor Costs payable in respect thereof) of the Reimbursable
Costs that the Contractor reasonably expects to incur during the
subsequent month with a comparison of such Reimbursable Costs as against
the budget; and, in connection therewith, the Contractor shall (i) attend
meetings with the Developer's Representative, at such times and places as
may be reasonably required by the Developer, to discuss the general
progress of the Work, and (ii) furnish, at least twice monthly, summary
progress reports as against the budget and the Milestone Schedule and any
monthly report(s).
SECTION 6. COMPLIANCE WITH LAWS; PERMITS
6.1. COMPLIANCE WITH LAWS. The Contractor shall comply with all Laws and Codes
and Standards of the countries, states, provinces and territories in which
any part of the Work is to be done and with all international treaties in
any way affecting this Contract or applicable to any of the Work.
6.2. VARIATIONS REQUIRED BY LAW. The Contractor shall, before making any
variation from any design, drawing, plan or procedure that may be
necessitated by complying with Laws and Codes and Standards, give to the
Developer written Notice, specifying the variations proposed to be made,
and the reasons for making them, and make proposals for a
Contractor-requested variation in accordance with Section 15.1. The
Contractor shall, upon and subject to the provisions of this Contract:
(a) give all notices required by Codes and Standards to be given to any
Governmental Authority;
(b) perform or permit the performance by authorized Persons of any
inspection required by applicable Codes and Standards; and
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(c) pay as Reimbursable Costs hereunder all fees, charges, impositions
or any other moneys payable to any Governmental Authority or any
public officer in respect of the Work.
6.3. PERMITS.
(a) CONTRACTOR PERMITS. The Contractor shall be responsible for
obtaining, maintaining and complying with all Permits in connection
with the installation of each Outside Plant (collectively, the
"CONTRACTOR PERMITS") including the following (which shall be
Reimbursable Costs hereunder):
(i) Permits from environmental, municipal and highway authorities,
including approvals of all quasi-governmental associations,
corporations and public-interest groups to conduct clearing,
digging, installation and remediation Work (but excluding any
Work in respect of environmentally hazardous materials) upon
public or municipal lands along the Scheduled Route;
(ii) Permits for the Contractor's and its Subcontractors' personnel
and equipment used to perform the Work;
(iii) Permits necessary for the Contractor's and its Subcontractors'
vehicles and equipment to enter and work at all Sites in the
applicable regions or municipalities; and
(iv) all other Permits and approvals for the removal or remediation
of natural and man-made obstructions along the Scheduled
Route.
(b) OWNER PERMITS. Except to the extent of the Contractor's obligations
specified in Section 7 hereof, each Owner shall be solely
responsible, at its expense, for obtaining, maintaining and
complying with all Permits in connection with the permanent
ownership and operation of each Outside Plant (collectively, the
"OWNER PERMITS"), including:
(i) Permits for each Outside Plant to be operated and maintained
(including any Telecom Licenses) on and after RFS Acceptance
along the Scheduled Route;
(ii) Permits and Wayleaves for the permanent or long-term
occupation of public lands along the Scheduled Route; and
(iii) Permits and Wayleaves from the respective owners (including
planning permissions and landlords' consents) to occupy or
cross private lands, existing cable systems, pipelines or
lease blocks and for long-term maintenance agreements at the
occupation or crossing points.
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(c) COOPERATION. Each Party shall:
(i) use all reasonable efforts in assisting the other Party to
obtain the Permits contemplated by this Section 6.3; and
(ii) exchange material information and attend meetings, as
reasonably necessary, with the other Party regarding the
progress in obtaining such Permits.
6.4. NO LIABILITY. No Party shall be responsible for any act or omission of the
other Party that violates any Law.
SECTION 7. THE SCHEDULED ROUTE
7.1. GENERALLY. APPENDIX 2 hereto sets forth the planned Scheduled Route upon
which each Outside Plant is to be completed. It is the intent of this
Contract that such Scheduled Route shall, to the maximum extent
practicable, be located in its entirety upon Public Wayleaves that the
Contractor, as agent for the Owners, shall procure and present to the
Developer for approval and signature in accordance with Section 7.2
hereof.
7.2. WAYLEAVE PROCUREMENT AND APPROVAL. As part of the Work, the Contractor has
conducted, and shall continue to conduct, negotiations with Governmental
Authorities and others in appropriate jurisdictions to document and
secure, as agent for the Owners, sufficient Public Wayleaves to allow the
Outside Plants to be completed along the entirety of the Scheduled Route
in accordance with the Technical Requirements and applicable Codes and
Standards.
(a) DOCUMENTATION PROCEDURES. As part of the Work, the Contractor shall
compile and prepare all documentation necessary to secure each such
Public Wayleave for the benefit of the Owners, and shall present
such documentation to the Developer, whereupon the Developer shall:
(i) in the case of Public Forms, approve and sign (or, in the
Developer's discretion, cause each relevant Owner to grant
power of attorney to a Contractor Person to approve and sign)
each such Public Form, returning the same to the Contractor or
the appropriate Governmental Authority, as applicable, within
a period of [REDACTED] Business Days after the Developer's
receipt thereof; and
(ii) in the case of Public Contracts meeting all criteria specified
in APPENDIX 5 hereto, review, approve, sign and return each
such Public Contract to the Contractor or the appropriate
Governmental Authority, as applicable, within a period of
[REDACTED] Business Days after the Developer's receipt
thereof.
(b) GENERAL TERMS AND CONDITIONS OF PUBLIC WAYLEAVES. Without limiting
the criteria specified with respect to Public Contracts in APPENDIX
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5 hereto, each Public Wayleave procured by the Contractor, as agent
for the Owners, shall, absent a Regulatory Change occurring after
the RFS Date:
(i) be effective for the period provided by the relevant Laws and
Codes and Standards relating thereto; and
(ii) [REDACTED]
(c) APPROVAL BY THE DEVELOPER. The Owners shall assume (in proportion to
their pro rata ownership interests in the Outside Plants) any and
all costs or fees payable to any Governmental Authority in respect
of the use and maintenance of Public Wayleaves entered into by the
Developer, and the Contractor shall be relieved from any further
liability with respect thereto.
7.3. ALTERNATIVE WAYLEAVES. If the Contractor is unable, despite commercially
reasonable professional efforts and compliance with all applicable Laws
and Codes and Standards, to procure Public Wayleaves with respect to any
portion or portions of the Scheduled Route it shall provide Notice to the
Developer and, after consultation with the Developer, as part of the Work,
prepare a work-around plan identifying alternative wayleaves or other
System access rights ("ALTERNATIVE WAYLEAVES") complying with this Section
7.3 and the other requirements of this Contract and the Contract
Documents.
(a) GENERAL REQUIREMENTS FOR CONTRACTOR PROPOSALS. Each Alternative
Wayleave proposed by the Contractor shall (x) be effective (or be
subject to successive renewal) for a period of no less than
[REDACTED] from the RFS Date for the Outside Plant of which it
is a part, and (y) comply in all respects with the criteria set
forth therefor in APPENDIX 5 hereto. Each work-around plan prepared
and submitted by the Contractor in connection with any Alternative
Wayleave shall:
(i) contain a detailed description of the terms and conditions of
each Alternative Wayleave, demonstrating, by specific
reference to the appropriate sections of APPENDIX 5 hereto,
satisfaction of each of the criteria set forth therein;
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(ii) attach form documentation for the conveyance of each such
Alternative Wayleave; and
(iii) specify the adjustment to the Milestone Schedule, if any, to
which the Contractor would be entitled if Outside Plant
completion were to be effected on the basis of such
Alternative Wayleaves.
(b) DEVELOPER REVIEW AND APPROVAL. The Developer shall, immediately upon
receipt thereof, review and consider each such work-around plan and,
within [REDACTED] after such receipt, shall notify the Contractor:
(i) of its acceptance of such plan, whereupon the Developer shall
(x) execute and return to the Contractor the documentation
presented to the Developer for the conveyance of the
applicable Alternative Wayleaves and, (y) if applicable, enter
into a Contract Variation with the Contractor reflecting the
appropriate adjustment to the Guaranteed RFS Dates; or
(ii) of its rejection thereof, specifying, by detailed reference to
each relevant Contract Document, the Developer's reasons for
its determination that (x) the Alternative Wayleaves proposed
do not comply with the criteria set forth in APPENDIX 5
hereto, or (y) such work-around plan is not acceptable to the
Developer in light of the Vendor Specifications, other
Technical Requirements or applicable Codes and Standards;
PROVIDED, that nothing in this Section 7.3 shall be deemed to (A)
require the Developer to consider or accept as part of the Work or
pay for any Contractor proposal that does not comply with the
express terms of this Section 7 or any Contract Document, or (B)
prohibit or limit any activity by the Developer in the
identification, development and implementation of suitable
work-around plans, subject to any rights that the Contractor may
have for Contract Variations in respect of Work affected by any such
plans.
SECTION 8. OWNER OBLIGATIONS
8.1. OWNER-PROCURED EQUIPMENT AND VENDOR SPECIFICATIONS. Each Owner shall
procure and install (or cause to be installed) each item of equipment
identified in APPENDIX 3 hereto (such items individually or collectively,
the "OWNER-PROCURED EQUIPMENT"), in each case, by the date(s) set forth in
the Milestone Schedule for the Contractor's commencement of Work on or
involving any such item. All vendors of Owner-Procured Equipment shall be
obligated by the Developer or, as applicable, the relevant Owner(s) to
cooperate with the Contractor and to so conduct their operations so as not
to interfere with or impede the Contractor in carrying out the Work, and,
to the extent of any Owner-Caused Delay on account of any Vendor's
non-cooperation, the Contractor shall be entitled to a Contract Variation
in respect thereof pursuant to Section 15.1 hereof. Contractor shall use
reasonable efforts to avoid waste of Owner-Procured Equipment. Prior to
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the Contractor's commencement of any Work (i) on or with respect to any
item(s) of Owner-Procured Equipment or (ii) that is, by its nature,
dependent upon or subject to coordination with the specifications for any
item(s) of Owner-Procured Equipment, the Developer shall furnish to the
Contractor any modifications or supplements to the Vendor Specifications
(all of which shall be integrated into and form a part of the Technical
Requirements) for each relevant item of Owner-Procured Equipment on or
before the date set forth in the Milestone Schedule for the Contractor's
commencement of any such Work. If any modification or supplement to any
Vendor Specification requires a change in the scope of Work as set forth
in the Technical Requirements which affects materially a Guaranteed RFS
Date, the Parties shall equitably adjust the applicable Guaranteed RFS
Date pursuant to a Contract Variation.
8.2. POP SITES AND OWNER SPECIFICATIONS. The Developer shall, as agent for and
at the sole cost and expense of the Owners, select and procure POP Sites
complying in all respects with the POP Site Specifications annexed as
APPENDIX 2 hereto.
(a) POP SITES GENERALLY. With respect to each such POP Site so selected
and procured after the effective date of this Contract, the
Developer shall:
(i) promptly notify the Contractor of the location thereof, and
furnish all specifications and data necessary for the
Contractor to verify its compliance with the POP Site
Specifications, however, such verification shall not confer
any responsibility on the part of the Contractor for floor
loadings or hazardous materials;
(ii) obtain all landlord consents, planning permissions, Permits
and Wayleaves necessary for refurbishment of the POP Sites and
the conversion thereof, if applicable (other than building
permits which will be procured by the Contractor) to the uses
envisioned by this Contract; and
(iii) secure all other consents and approvals, if any, necessary to
allow Contractor Persons to enter upon such POP Site and
commence the Work to be performed thereon on or prior to the
date specified in the Milestone Schedule for the commencement
of such Work.
The Contractor shall review all POP Site specifications, records and
documents supplied by the Developer and shall notify the Developer, no
later than ten (10) Business Days after its receipt of the relevant data,
of its consent, not to be unreasonably withheld, to the proposed POP Site
(PROVIDED, that the Contractor shall not be entitled to any such right of
consent with respect to the selection of POP Sites procured or
contractually committed to by the Owners, or by the Developer on behalf of
such Owners, on or before the effective date of this Contract). As the
Contractor's review of proposed POP Sites shall not encompass any
assessment of potentially hazardous materials or floor loadings, the
Contractor's consent to any POP Site shall not be construed as its approval
with respect tosuch matters. In the event that the Contractor is unable to
grant its consent to any such Developer proposal, it shall provide a
written statement identifying, by specific reference to the relevant
sections of the POP Site Specifications, the reasons for its rejection
thereof. The Contractor shall, in
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accordance with and subject to Section 15.1 hereof, be entitled to
appropriate adjustments through a Contract Variation for any material
Owner-Caused Delays associated with the Developer's selection (on behalf of
the Owners) of acceptable POP Sites, or if any such POP Site selected is
subsequently found to contain hazardous materials or substandard floor
loadings rising to the level of Owner-Caused Delay.
(b) OWNER SPECIFICATIONS. Included as part of the Technical Requirements
are Owner Specifications that provide (subject to the remainder of
this Section 8.2(b)), with respect to the POP Sites and in relation
to items of equipment, materials and services to be furnished by the
Owners (whether acting directly or by and through the Developer)
hereunder, detailed specifications therefor (the "OWNER
SPECIFICATIONS") containing sufficient technical data and
instruction to enable the Contractor to complete each Outside Plant
in accordance with the Technical Requirements. From time to time,
the Developer may provide on behalf of the Owners modifications,
clarifications or additions to the Owner Specifications. The
Contractor shall comply in all respects with and be entitled to rely
upon such Owner Specifications, as modified, in the performance of
the Work. The Owners shall be responsible (to the extent of their
respective ownership interests in the Outside Plants) for the
overall network design for the System, including the selection,
configuration and integration of System components. The Owners
shall, in accordance with their pro rata ownership interests in the
Outside Plants indemnify the Contractor from and against any Losses
to the extent arising from any infringement or claimed infringement
of patent, copyright or other industrial or intellectual property
rights by reason of the Contractor's use, in accordance with the
terms and conditions of this Contract, of the Owners' overall system
design or Owner-supplied or Owner-supplied technology, design and
equipment. To the extent that any modifications to the Owner
Specifications purport to require a change in the scope of Work as
set forth in the Technical Requirements, the applicable Guaranteed
RFS Date(s) shall be equitably adjusted pursuant to a Contract
Variation subject to Section 15.1 hereof. In the event, however,
that the Contractor determines, in respect of any item of Work, that
(x) an Owner Specification conflicts with any Vendor Specification
or other Technical Requirement, or (y) any technical information
needed by the Contractor for due performance of the Work is not
accurately or comprehensively set forth in the Contract Documents,
it shall immediately apply to the Developer for instruction thereon
and shall not continue such Work until it has received an Owner
Specification with respect thereto. The Contractor shall not be
entitled to receive any payment for Work performed in contravention
of the preceding sentence.
8.3. THE DEVELOPER'S REVIEW AND APPROVAL. The Developer hereby undertakes to,
as expeditiously as possible (but in no event later than the dates herein
specified therefor), to (i) review and approve all items of Work complying
with the Contract Documents for which such approval is required hereunder
and, (ii) in relation to any application for, or granting of any
authorizations or rights of way (including any Wayleaves, Permits, or
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<PAGE>
other rights and interests in the Sites and the Systems) required for the
installation of Outside Plant components, review, approve and sign all
relevant documentation conforming to this Contract submitted to it by the
Contractor (unless the Contractor is duly authorized to sign on the
Owners' behalf) and take such other steps that may be necessary (including
the payment of any fees, premiums or rents) in connection with such
applications, authorizations and grants hereunder. The Developer
recognizes that such expeditious review and approval is critical to the
Contractor's completion of the Work in accordance with the Milestone
Schedule, and the Developer acknowledges that its unreasonable refusal or
delay with respect to conforming Work may entitle the Contractor to
schedule relief pursuant to Contract Variations. In addition, the
Developer shall use commercially reasonable efforts to meet the
Contractor's requests for accelerated review of all submissions to the
Developer conspicuously marked "Urgent - For Expedited Review" or with
words of similar effect.
8.4. OWNER PERMITS. The Owners shall, at their own expense and in proportion to
their respective ownership interests, procure and maintain the Owner
Permits.
8.5. ACCESS TO OWNER FACILITIES. The Developer shall grant or obtain permission
for Contractor Persons to enter into Owner facilities forming a part of
the Systems to perform items of Work hereunder.
8.6. COOPERATION AND NON-INTERFERENCE WITH WORK. The Developer shall cooperate
with, and refrain from interfering with, the Contractor Persons in their
performance of the Work, and the Developer shall cause all Owner Persons
to so cooperate and refrain from such interference.
8.7 NO DIMINISHMENT. The Contractor's responsibility for the design and
installation of each Outside Plant shall not in any way be diminished, nor
shall the Contractor's design approach be restricted or limited, by any
Owner Person's:
(a) acceptance of the Contractor's guidance or recommendations as to
engineering standards and design specifications;
(b) suggestions or recommendations on any aspect of the design of any
part of the Outside Plants, except to the extent specifically set
forth in any Vendor Specification or in an Owner Specification
expressly marked as such;
(c) acceptance or approval of any portion of the Work delivered in
connection therewith; or
(d) acceptance or approval of any Subcontractor.
SECTION 9. MAINTENANCE OF BOOKS AND RECORDS
9.1. MAINTENANCE OF RECORDS. The Contractor shall compile and shall maintain
for a period ending upon the later of:
(a) three (3) years after the RFS Date; and
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<PAGE>
(b) the date on which no claim based upon, arising out of or related to
this Contract is outstanding,
all books, records, vouchers and accounts pertaining to this Contract and
the Work, including such books, records, accounts and vouchers related to
the Contractor's payments to Subcontractors and the Reimbursement
Invoices.
All such books, records, vouchers and accounts shall be maintained in
accordance with generally accepted accounting principles and practices
consistently applied, and shall, upon the Developer's prior instruction,
be organized to allow for segregation of System investment and related
records as the Developer may direct. At the Developer's request, all
records required to be maintained pursuant to this Section 9.1 shall be
delivered to the Developer on Final Acceptance, in which case the
Contractor shall be entitled to keep copies thereof (subject to its
confidentiality obligations under Section 42 hereof). The Contractor shall
maintain its customary fiscal records and books of account in accordance
with generally accepted accounting principles and practices consistently
applied. Nothing contained herein shall give any Owner Person the right to
audit or examine the actual costs incurred by the Contractor with respect
to any Reimbursable Costs for which the Owners have agreed to pay the
rates specified on Table (1-A) to Appendix 1 to this Contract.
9.2. ACCESS TO RECORDS. The Contractor shall, during the period in which
Contractor is required to compile and maintain books, records, vouchers
and accounts pursuant to Section 9.1 hereof, give each Owner Person
access, at the times and in such a manner as the Developer may direct, to
all documentation and records required to be kept, obtained and maintained
pursuant to Section 9.1 hereof; PROVIDED, HOWEVER, that with respect to
all such books, vouchers, documentation and records created prior to the
execution date of this Contract (the "PRE-CONTRACT EXECUTION PERIOD"), the
Contractor shall provide all such material to the Owner Persons to the
extent and in the form it exists and to provide it in a format the
Developer or such Owner Person may reasonably request, to the extent to
which it has not previously been delivered. The Contractor shall not
destroy any such documentation or records without affording the Developer
an opportunity to review or copy the same. At the Developer's request,
prior to Final Acceptance, copies of all documentation and records
required to be kept, obtained and maintained pursuant to Section 9.1
hereof shall be delivered to the Developer (subject to any confidentiality
obligations under Section 42 hereof).
Notwithstanding any of the foregoing, with respect to the Pre-Contract
Execution Period, the Contractor shall be relieved of any obligation to
provide any Owner Person with access to or copies of documentation of the
nature set forth in Section 9.1 hereof that were not in existence during
the Pre-Contract Execution Period. To the extent that such documentation
was in existence during the Pre-Contract Execution Period and in
Contractor's possession, the provisions of the first paragraph of Section
9.1 hereof shall apply to such documentation.
9.3. SUBCONTRACTORS. The Contractor shall obtain from its Subcontractors such
supporting records, as applicable, in form and substance similar to
thoserequired of the Contractor
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<PAGE>
under Section 9.1 above, and the Contractor shall maintain such records
for the period referred to in Section 9.1 above.
SECTION 10. TAXES
10.1. GENERAL. The Owner acknowledges that Taxes in respect of the Work shall
constitute Reimbursable Costs, and that any Taxes actually paid in respect
of any Subcontractor Services or Subcontractor Supplies shall constitute
Subcontractor Costs.
10.2. EXEMPTION FROM TAXES. The Parties shall take commercially reasonable
measures (including, without limitation, the accommodation of
Tax-efficient Owner Person entity structures and title-transfer
arrangements) to have all items of Work made exempt from all Taxes (or to
maximize later refunds or credits in respect of Value Added Taxes and
other Taxes already assessed or paid), whether in the procurement,
assembly or installation thereof, and shall cooperate fully with each
other in this respect.
10.3. WITHHOLDING. With respect to any Tax payable or assessed in relation to
any payment due to the Contractor, the following procedures shall apply:
(a) If the Developer or any Owner:
(i) receives a notice, order or instruction from a competent
Governmental Authority that a Tax is required to be withheld
by Law; or
(ii) otherwise has a reasonable belief that any Tax is required to
be withheld from any payment due to the Contractor,
then the Developer (acting for itself or on behalf of the relevant
Owner) shall promptly so inform the Contractor as far in advance of
any proposed withholdings as practicable.
(b) If any requirement to withhold Tax becomes applicable, the
Contractor shall obtain documentary evidence from the relevant
taxing authorities reasonably satisfactory to the Developer that the
Developer (or relevant Owner) is not required to withhold such Tax.
If the Contractor is unable to obtain such documentary evidence on a
timely basis, then the Developer (or relevant Owner) shall proceed
to withhold any such Tax via an escrow agent or other mutually
agreeable procedure. Thereafter, the Developer (or relevant Owner)
shall, at the Contractor's expense, provide any documentation or
other cooperation as may be reasonably requested by the Contractor
to permit the Contractor to recover any withheld amounts to which
the Contractor is entitled.
10.4. INDEMNITY. The Contractor shall protect, defend, indemnify in full and
hold harmless each Owner Person from and against any Losses based upon,
arising out of or otherwise related to Taxes that are owed by the
Contractor to any taxing authority.
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SECTION 11. INTELLECTUAL PROPERTY RIGHTS
11.1. GENERALLY. The Parties hereby acknowledge and agree that:
(a) the Developer shall furnish on behalf of the Owners, and the Owners
shall be solely responsible (to the pro rata extent of their
respective ownership interests in the Outside Plants) for the
procurement of intellectual property rights, if any, sufficient to
realize the goals contemplated by this Contract relating to, the
Owner-Procured Equipment, the Vendor Specifications, the Owner
Specifications and the overall network design for the Systems
(including the selection, configuration and integration of System
components), and that the Owners shall (to such pro rata extent)
indemnify, protect, defend and hold harmless the Contractor from and
against all Losses based upon, arising out of, or otherwise related to
an infringement or claimed infringement of patent, copyright or other
industrial or intellectual property rights by reason of the
Contractor's possession or use of such Owner- or Developer-supplied
items in its performance of the Work; PROVIDED, that (i) the Developer
shall bear no such indemnity liability hereunder,and (ii) the Owners
shall be under no indemnity obligation with respect to any Losses
arising out of or relating to any Contractor Person's possession or
use of any such item in a manner or for a purpose inconsistent with
terms of this Contract or any Contract Document; and
(b) with respect to all items other than as addressed in the preceding
clause (a) of this Section 11.1, the Contractor (i) grants to or
shall cause the respective owners of such intellectual property
rights to grant to Developer and the Owners all other patent,
copyright and other industrial or intellectual property rights
applicable to the Work or necessary for completion, use and
operation of each Outside Plant or any part thereof in accordance
with this Contract (and all costs incurred by the Contractor
relating to this clause (i) shall be Reimbursable Costs hereunder),
and (ii) in connection with clause (i) above, shall indemnify,
protect, defend and hold harmless each Owner Person from and against
all Losses based upon, arising out of, or otherwise related to an
infringement or claimed infringement of patent, copyright or other
industrial or intellectual property rights by reason of any Owner
Person's possession, enjoyment or use of the Work or the Outside
Plants or any part thereof. Notwithstanding the foregoing, the
Contractor shall be under no obligation to indemnify Owner Persons
with respect to any Losses relating to any infringement or claimed
infringement where the assembly, installation, possession or use for
which infringement is claimed was undertaken by the Contractor at
the Developer's express written instruction or direction. The Owners
(to the pro rata extent of their respective ownership interests in
the Outside Plants) shall, in such cases, indemnify and hold
harmless the Contractor from and against any Losses so incurred by
the Contractor at the Developer's written direction.
11.2. INJUNCTION. If, as a consequence of any action or claim described in
Section 11.1 hereof, the use of either Outside Plant is enjoined, the
Party subject to the indemnity obligation therefor shall use its best
efforts to negotiate with the claimant so as to remove such injunction or
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<PAGE>
to obtain for the Developer, the Contractor or the relevant Owner(s), as
the case may be, a license or other agreement in respect thereof as soon
as possible. If such responsible Party is unable to have the injunction
removed, and such Party is (i) the Contractor, it shall be liable to the
Owners for any and all Losses arising as a result of such injunction, or
(ii) the Developer (or any Owner or all of them), the Developer shall
execute and deliver to the Contractor, in accordance with and subject to
Section 15.1 hereof, a Contract Variation providing for equitable relief
to Contractor in respect of the material impact upon the Guaranteed RFS
Date(s) caused by such injunction on the Work.
11.3. INFRINGEMENT ORDER. Except to the extent relating to the Owner-Procured
Equipment, the Vendor Specifications and the Owner Specifications, in the
event that either Outside Plant or any part thereof is held to constitute
infringement and is subject to an order restraining its use or providing
for its surrender or destruction, the Contractor shall at its own expense
promptly (but in no event later than sixty (60) Days after such
injunction, or such shorter period imposed by any claimant) either:
(a) procure for the Developers and the Owners the right to retain and
continue to use the affected portions of the Outside Plant; or
(b) modify the Outside Plant so that it becomes non-infringing in a
manner acceptable to the Developer.
11.4. NEW DEVELOPMENTS BY THE CONTRACTOR. If, in performing the Work, the
Contractor develops any new items or processes that are independent of
items or processes developed by the Contractor otherwise than pursuant to
this Contract, any intellectual property rights therein shall belong to
the Owners (pro rata in accordance with their ownership interests in the
Outside Plants), and the Contractor shall have a non-exclusive
royalty-free license to use the same for any purpose.
11.5. THE CONTRACTOR'S EXISTING INTELLECTUAL PROPERTY. All intellectual property
rights in items or processes developed by the Contractor otherwise than
pursuant to this Contract shall remain the property of the Contractor, but
to the extent that the Contractor uses any such items or processes in
performing the Work, the Owners (pro rata in accordance with their
ownership interests in the Outside Plants) shall have a non-exclusive,
royalty-free license to use the same for any purpose connected with the
Systems, including the right to grant sub-licenses for any such purpose.
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<PAGE>
SECTION 12. PAYMENTS FOR THE WORK
12.1. COMPENSATION. The Developer on behalf of the Owners shall pay the
Contractor for its Work in the manner and at the times specified in
Section 12.3 hereof, compensation consisting of an amount equal to the sum
of (a) Reimbursable Costs, as set forth in APPENDIX 1 hereto, and (b) a
fixed fee (the "FIXED FEE") as set forth in Section 12.2 below. In
addition, the Contractor may be entitled to certain Incentive Fees as set
forth in Section 12.2 below.
12.2. FIXED AND INCENTIVE FEES. Upon RFS Acceptance of GND No. 1 Outside Plant,
the Contractor shall be paid a Fixed Fee of [REDACTED]. In addition,
provided that no Event of Default has occurred and is continuing, the
Contractor shall be entitled to receive certain incentive fees (each, an
"INCENTIVE FEE") within [REDACTED] the applicable invoice therefor, in the
following amounts and subject to the following conditions and the terms
hereof:
(a) GND NO. 1 OUTSIDE PLANT. If the GND No. 1 Outside Plant meets the
criteria for RFS Acceptance set forth in Section 31.2 hereof on or
before the Guaranteed RFS Date applicable thereto, the Contractor
shall be entitled to receive an Incentive Fee of [REDACTED].
(b) GND NO. 2 OUTSIDE PLANT. For each segment of GND No. 2 Outside Plant
other than Hamburg-Berlin (i.e., Essen-Dortmund, Dortmund-Bremen,
Bremen-Hamburg, Berlin-Dresden, Dresden-Leipzig, Leipzig-Nurnberg,
Nurnberg-Munchen and Munchen-Karlsruhe) that meets the criteria for
RFS Acceptance set forth in Section 31.2 hereof on or before the
Guaranteed RFS Date applicable thereto, the Contractor shall be
entitled to receive an Incentive Fee of [REDACTED]; and if the
Hamburg-Berlin segment of GND No. 2 Outside Plant meets the criteria
for RFS Acceptance set forth in Section 31.2 hereof on or before the
Guaranteed RFS Date applicable thereto, the Contractor shall be
entitled to receive an Incentive Fee of [REDACTED].
(c) TOTAL COMPLETION COST UNDERRUN FEE. If the Total Completion Cost is
equal to or less than the amount set forth in the Total Completion
Cost column in the table below, the Contractor shall be entitled to
the applicable Incentive Fee set forth in the corresponding column
below:
<TABLE>
<S> <C>
- - ---------------------------------------------------------------
TOTAL COMPLETION COST INCENTIVE FEE ENTITLEMENT
- - ---------------------------------------------------------------
- - ---------------------------------------------------------------
[REDACTED] [REDACTED]
- - ---------------------------------------------------------------
- - ---------------------------------------------------------------
[REDACTED] [REDACTED]
- - ---------------------------------------------------------------
- - ---------------------------------------------------------------
[REDACTED] [REDACTED]
- - ---------------------------------------------------------------
</TABLE>
For purposes of calculating an adjustment to the Fixed Fee and the
Incentive Fees described in Section 12.2 and paragraphs (a) and (b) of
Section 12.2 above in accordance with Section 15.1(b) hereof, such Fixed
Fee and Incentive Fees are based on the following percentages of Target
Cost:
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<PAGE>
<TABLE>
<S> <C> <C>
- - ---------------------------------------------------------------------
FIXED FEE INCENTIVE FEE
- - ---------------------------------------------------------------------
- - ---------------------------------------------------------------------
GND 1 [REDACTED] [REDACTED]
- - ---------------------------------------------------------------------
- - ---------------------------------------------------------------------
GND 2 - each segment other [REDACTED] [REDACTED]
than Hamburg-Berlin
- - ---------------------------------------------------------------------
- - ---------------------------------------------------------------------
GND 2 -Hamburg-Berlin segment [REDACTED] [REDACTED]
- - ---------------------------------------------------------------------
</TABLE>
If the Target Cost increases or decreases in accordance with Section
15.1(b) hereof, the Total Completion Cost column in the table set forth in
Section 12.2(c) will be increased or decreased by the amount of the
adjustment in the Target Cost.
12.3. GENERAL CONDITIONS OF PAYMENT.
(a) PAYMENTS IN DEUTSCHE MARKS. All payments to the Contractor hereunder
shall be made in Deutsche Marks; PROVIDED, that (i) to the extent
that applicable Law otherwise requires, the currency of any
relevant payment shall be as specifically provided in such Law or
Laws, and (ii) upon the general unavailability, for any reason, of
Deutsche Marks, all payments and obligations arising or denominated
hereunder in Deutsche Marks shall be valued and payable in the Euro
equivalent thereof. All payments hereunder are to be made to
Contractor by electronic wire transfer or Automated Clearing House
transfer to:
Citibank N.A.
Cottons Centre
London SE1 2QT
Account Number : 3155161
Credit: Bechtel Limited
Reference: (Bechtel Invoice Number)
Swift Code: CITIGB2L
(b) INVOICES. All Contractor Invoices shall be submitted to the
Developer in accordance with Section 12.5 hereof.
(c) FINAL PAYMENT. On receipt by the Contractor of the final payment of
the Reimbursable Costs, the Fixed Fee and the Incentive Fee
hereunder (the "FINAL PAYMENT"):
(i) the Developer and each Owner shall thereby be released from
all claims whatsoever by the Contractor, whether at law or in
equity, contract or tort or otherwise, by reason of anything
based upon, arising out of or relating to this Contract, other
than:
(A) claims asserted in writing on or before the Final
Payment is made;
(B) claims arising from circumstances, acts or events
occurring after the Final Payment is made; and
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(C) claims that the Contractor was not aware of, and could
not have been aware of, and that are based on the acts
or omissions of Owner Persons; and
(ii) the covenants and agreements of the Developer and each Owner
shall terminate and be of no further force and effect except
the requirement of the Developer to return to the Contractor
the Retainage LC at the expiration of the Warranty Period.
(d) EFFECT OF PAYMENT. No payment (final or otherwise) made under or in
connection with this Contract shall be conclusive evidence of the
performance of the Work, or of this Contract, in whole or in part,
and no such payment shall:
(i) be construed to constitute the acceptance of any Defective
Work or supplies containing Defects; or
(ii) release the Contractor from any of its obligations under this
Contract.
(e) EXCHANGE RATE. The rate of exchange to be used by the Contractor in
the conversion of all non-Euro currencies shall be the average daily
rate of exchange for the period covered by the invoice. The exchange
rates shall be those published in THE FINANCIAL TIMES.
12.4. TIMING OF PAYMENTS.
(a) RETAINAGE LC. On or before March 16, 1999, the Contractor shall
deliver in favor of the Developer an irrevocable, first-demand
letter of credit (the "RETAINAGE LC") in the amount, until the
[REDACTED] anniversary of the later to occur of the two RFS Dates,
of [REDACTED] and reduced to [REDACTED] of such stated amount
thereafter, as security for performance of the Contractor's
obligations hereunder. The Retainage LC shall be effective as of the
date of this Contract and shall remain in effect until the Final
Acceptance Date. Nothing in this Contract shall limit the
Developer's ability to draw on the Retainage LC in connection with
any Event of Default or with respect to any amount due from the
Contractor to the Developer or any Owner in satisfaction (or in
partial satisfaction) of any obligation of the Contractor to such
Persons under this Contract. If the Retainage LC has an expiry date
which is prior to the date of Final Acceptance, the Retainage LC
shall provide for a right of the Developer to draw down in full all
available amounts thereunder if the Retainage LC is not renewed or
extended prior to thirty (30) Days before such expiry date. The
Developer shall return the Retainage LC to the Contractor
concurrently with the Developer's delivery of the Certificate of
Final Acceptance.
(b) RETURN OF CONTRACTOR SURETY BOND. The Developer shall return the
Contractor Surety Bond to the Contractor concurrently with delivery
of the Certificate of RFS Acceptance in respect of the later of the
two Outside Plants to achieve RFS Acceptance.
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<PAGE>
(c) PAYMENTS GENERALLY. Neither the Developer nor any Owner shall have
any obligation to pay for any portion of the Work that is not
complete or has a Defect; and all amounts invoiced pursuant to this
Section 12.4 shall be:
(i) subject to appropriate inspection by the Developer or its
designee of any Work tendered by the Contractor and the
Developer's determination in accordance with Sections 12.6 and
13 hereof;
(ii) due and payable [REDACTED] Days after the earlier of:
(A) the date that the Contractor provides the Developer a
copy of the Contractor Invoice by facsimile (PROVIDED
that the original Contractor Invoice is delivered to the
Developer within one week thereafter); or
(B) the date that the Developer receives the original
Contractor Invoice.
(d) OWNER ESCROW. The Owners shall, on or before March 31, 1999,
establish for the benefit of the Contractor, an escrow account (the
"OWNER ESCROW") on terms substantially in the form of EXHIBIT 7
hereto and with a bank reasonably acceptable to the Contractor as
security for payments for the Work. The Owners shall maintain in
such Owner Escrow, for each relevant period, the amounts set forth
in APPENDIX 10 hereto (as such amounts may be revised from time to
time pursuant to the Owner Escrow Agreement). The Owners shall be
entitled to withdraw from the Owner Escrow any amounts that are in
excess of the required amount specified in APPENDIX 10 hereto (as
such required amount may be revised from time to time pursuant to
the Owner Escrow Agreement). If the Owners, or the Developer on
behalf thereof, request the Contractor to review proposed changes to
the Owner Escrow, the Contractor shall respond to any such request
within [REDACTED] following receipt of such request. The Contractor
shall be entitled to have a security interest in the Owner Escrow.
Prior to exercising any rights against the Owner Escrow, the
Contractor shall notify the Developer and each Owner that the
Developer has failed to pay on behalf of the Owners, within the
period specified for such payment, an amount due and payable to the
Contractor in respect of a Contractor Invoice duly submitted by the
Contractor in accordance with this Section 12. The Developer shall,
to the extent that no Event of Default nor other event entitling the
Developer to withhold payments to the Contractor has occurred and is
continuing, reimburse the requested amount on behalf of the Owners
to the Contractor by the close of business on the [REDACTED]
Business Day next succeeding the Contractor's Notice, whereupon the
Developer's failure to do so, shall entitle the Contractor to draw
upon the Owner Escrow in the amount of such outstanding payment.
Upon the Contractor's exercise of any rights
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<PAGE>
against the Escrow Account in accordance with this Section 12.4(d),
the Owners shall, within [REDACTED] Business Days thereafter,
deposit (in accordance with such Owners' respective ownership
interests in the Outside Plants) funds in an aggregate amount
sufficient to restore the balance of the Escrow Account to the
required amount specified in APPENDIX 10 hereto (as such required
amount may be revised from time to time pursuant to the Owner Escrow
Agreement), for the date on which such funds are restored. Any
failure by the Owners to so replenish the Owner Escrow to the full
required balance thereof within such [REDACTED] period shall be
deemed an Owner Default for purposes of Section 24.4 hereof.
12.5. CONTRACTOR INVOICES.
(a) GENERALLY. The Contractor shall be entitled to submit to the
Developer twice monthly Contractor Invoices for its Reimbursable
Costs applicable to the Work performed ("REIMBURSEMENT INVOICE").
Each Reimbursement Invoice shall be a Contractor Invoice in form and
substance satisfactory to the Developer and shall detail, in respect
of each of the individual Owners and with specific reference to
applicable item numbers stated in any Vendor Specification or Owner
Specification, the Work items deliverable to such Owners, together
with all amounts payable to the Contractor in respect thereof.
(b) REIMBURSEMENT INVOICES. The Contractor shall attach to or include in
each Reimbursement Invoice a statement (x) certifying to the
Developer (together with such proof of payment as the Developer may
reasonably request) that the full amount of the invoiced
Reimbursable Costs have in fact been expended or disbursed by the
Contractor as of the date of such Reimbursement Invoice, and (y)
allocating the Reimbursable Costs between those costs described on
APPENDIX 1 and Subcontractor Costs, and shall submit together
therewith the following - documents:
(i) as to Reimbursable Costs described on APPENDIX 1, (1) an
itemized statement supported by data indicating the names,
dates of performance, salary grades, job positions and job
hours of Contractor's personnel who have been engaged in the
performance of the Work during the period covered by such
invoice; (2) a Lien Release executed by the Contractor,
certifying that each person engaged by it to perform Work
hereunder has been paid in full and that there are no Liens
asserted with respect to the Work for which reimbursement is
sought; and (3) in the case of Other Direct Costs, such
substantiating data as the Developer may require; and
(ii) as to Subcontractor Costs, (1) an itemized statement detailing
each payment made to or Contractor-approved invoice from the
Subcontractor(s) with specific identification (by reference to
the relevant Subcontract) of items of Subcontractor Supplies
or Subcontractor Services for which reimbursement is claimed;
(2) the Subcontractor Cost Verification as to Subcontractor
Services or Subcontractor Supplies having a Subcontractor Cost
(including all prior payments made to the relevant
Subcontractor in respect thereof) in excess of [REDACTED] for
which reimbursement is sought; and (3) a lien release
certification executed by each Subcontractor with respect to
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<PAGE>
all Subcontractor Services or Subcontractor Supplies having a
Subcontractor Cost (including all prior payments made to the
relevant Subcontractor in respect thereof) in excess of
[REDACTED] for which reimbursement is sought; PROVIDED,
HOWEVER, that if the Contractor has certified in its
Subcontractor Cost Verification, submitted pursuant to (2) of
this clause (ii), that it will pay the relevant
Subcontractor(s) when due, the Contractor can satisfy such
lien release certification requirement by certifying to the
Developer that such lien release certification will be
furnished within [REDACTED] after the Contractor has effected
its payment to the Subcontractor(s).
Notwithstanding anything contained in this clause (ii) to the
contrary, at the request of the Developer, the Contractor
shall submit the documents referred to in (2) and (3) of this
clause (ii) without regard to whether the Subcontractor Costs
are less than [REDACTED] for which reimbursement is sought if
the Subcontract or Subcontracts associated with the
Developer's request are still open and have not been closed
out as a result of the completion of the Subcontractor(s)
work.
The Contractor shall indemnify in full and hold harmless the
Developer and the Owners from and against any Losses suffered
or incurred by the Developer or the Owners arising out of or
related to instances wherein the Contractor has certified to
the Developer that it will pay the relevant Subcontractor(s)
when due or that it will furnish the lien release
certification from such Subcontractor(s) within [REDACTED]
after the Contractor has effected its payment to the
Subcontractor(s) and the Contractor either has not effectuated
such payment when due or at all or has not provided such lien
release certification within [REDACTED] after the Contractor
has effected its payment to the Subcontractor(s) or at all.
Notwithstanding the foregoing, with respect to the
Pre-Contract Execution Period, the Contractor shall be
relieved of the obligation to provide the Developer with
documentation of the nature set forth in this clause (ii) that
(A) was not in existence during the Pre-Contract Execution
Period and (B) cannot be procured by the Contractor using
Prudent Practices. To the extent that such documentation was
in existence during the Pre-Contract Execution Period or can
be procured by the Contractor using Prudent Practices, the
provisions of this clause (ii) shall apply to such
documentation.
(c) DOCUMENTS. The Contractor shall provide one (1) original and three
(3) copies of each Reimbursement Invoice, plus one (1) additional
copy to be sent by facsimile on the date of issuance of such
Reimbursement Invoice. At a minimum and where applicable, the
following documents in the following quantities shall accompany each
Contractor Invoice:
(i) Lien Release - One (1) original and three (3) copies;
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(ii) Work Release Certificate, signed by the Contractor and the
QA/QC Contractor, and counter-signed by the Developer's
Representative or other Developer designee (in each case,
within a reasonable time after the Contractor's submission
thereof for signature) - One (1) original and three (3)
copies; and
(iii) such other documentation necessary to demonstrate compliance
with the terms of this Contract in such quantities as the
Developer shall request.
12.6. THE DEVELOPER'S RIGHT TO WITHHOLD PAYMENT.
(a) GENERALLY. Notwithstanding the foregoing, the Developer may withhold
any payment or other amount due to the Contractor hereunder in an
amount and to such extent as the Developer may determine to be
reasonably necessary to protect the Owners from any Loss or damage
reasonably determined by the Developer to exceed the then-available
funds under the Contractor Security because of:
(i) Defective Work not remedied in accordance with this Contract;
(ii) Work that has been paid for and is not complete;
(iii) the Contractor's failure to comply with any Warranty;
(iv) the Contractor's failure to perform the Work in accordance
with this Contract;
(v) third-party suits, stop notices, attachments, levies or Liens
(other than Owner Liens) against either Outside Plant, the
Work or any Party resulting from the Contractor's failure to
perform its obligations in accordance with this Contract;
(vi) Losses or other damage to any Owner or any Subcontractor that
results from the Contractor's failure to obtain or maintain
insurance required hereunder;
(vii) the Contractor's failure to provide on a timely basis the
documentation required under Section 12 hereof; or
(viii)reasonable evidence that any payment previously made
hereunder (together with all other previously requested
amounts) exceeds the amount payable with respect to the Work
actually performed.
In the Notice to the Contractor referenced above, the Developer
shall set forth its justification for the proposed withholding and
provide the Contractor with a [REDACTED] period to cure the matter
(or agree in principle with the Developer on a plan for remedial
action with respect thereto) giving rise to the proposed withholding
prior to the implementation thereof.
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(b) THE DEVELOPER'S APPLICATION OF FUNDS WITHHELD. The Developer may,
upon Notice to the Contractor of its intention to do so, apply any
funds withheld or moneys to become due to the Contractor to satisfy,
discharge or secure the matters set forth in Section 12.6(a) above
if the Contractor has continued to fail to cure such matter within
[REDACTED] after Notice by the Developer as provided in Section
12.6(a) above. Any such application shall be deemed payment to the
Contractor. No action by either Party during the above activities
shall affect the Milestone Schedule unless a Contract Variation is
agreed to by the Developer. If the Developer's withholding is
determined to be wrongful, the Developer shall promptly pay on
behalf of the Owners the withheld amount with interest at the rate
set forth in Section 12.7 from the due date thereof until the date
of payment.
(c) RELEASE OF PUNCH LIST RESERVE. Within [REDACTED] after the
Contractor has, to the Developer's satisfaction, remedied the
deficiencies and completed the Work indicated on any Punch List, the
Developer shall release to the Contractor the Punch List Reserve
held by the Developer in respect of such incomplete or Defective
Work.
12.7. OVERDUE PAYMENTS. If a party shall fail to pay any undisputed amount
within [REDACTED] after the due date for such payment, such amount shall
accrue interest, at a rate equal to the lesser of (i) the one (1) month
London Interbank Offered Rate for Euros (as published for such period in
THE FINANCIAL TIMES) PLUS [REDACTED] percent ([REDACTED]%) or (ii) the
maximum interest rate permitted by applicable Law, for each day from such
due date until payment in full.
SECTION 13. DEDUCTIONS FROM PAYMENTS TO THE CONTRACTOR
13.1. AMOUNTS PAYABLE. To the extent that an amount is not withheld in respect
thereof pursuant to Section 12.6 hereof or has not been drawn or obtained
for the Owners' benefit under any Contractor Security, all Losses that
Owner Persons shall have incurred or sustained by reason of any act that
entitles the Owners to indemnification under this Contract or any default
or omission of the Contractor in the performance of this Contract,
together with any sum or sums payable to the Developer (for the Owners'
account) under this Contract, shall be paid by the Contractor on or prior
to the earlier of:
(a) the date that is [REDACTED] after receipt of the certificate
referenced in Section 13.3 hereof; and
(b) the date the Final Payment is made.
13.2. DEDUCTION. Should the Contractor fail to make any payment required under
Section 13.1 hereof by the due date thereof, the Developer may then deduct
the amount of the requested payment from any moneys that are, or may
become, due to the Contractor or have been made available by it under any
Contractor Security. If the moneys so due or deposited shall be less than
the amount so deductible, the difference shall be treated as a debt by the
Contractor to the Owners (the collection of which to be carried out by the
Developer) and shall be paid by the Contractor to the Developer within
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[REDACTED] after the Contractor's receipt of the Developer's demand
therefor. If the Contractor fails to make such payment within such period,
then the amount of such deficiency may be recovered in any court of
competent jurisdiction.
13.3. CERTIFICATE. A certificate signed by the Developer stating the amount of
the Losses, costs, charges, expenses, damages or other amounts referred to
in this Section 13 shall be PRIMA FACIE evidence of the matter stated.
SECTION 14. CONTRACTOR SECURITY
14.1. GENERALLY. In addition to the Contractor's security provided by the
Retainage LC as set forth in Section 12.4(a), the performance of the
Contractor's obligations under this Contract shall also be secured by the
following:
(a) the Corporate Guarantee, which shall be delivered on or before April
15, 1999 and remain in effect until the Final Acceptance Date and
shall secure the Contractor's unconditional obligation to achieve
RFS Acceptance of each Outside Plant; and
(b) a performance and payment surety bond in substantially the form,
with such changes as the issuer thereof may require, of EXHIBIT 2
hereto (the "CONTRACTOR SURETY BOND") which shall be delivered on or
before August 1, 1999 and shall secure the performance of all of the
Contractor's obligations under this Contract.
14.2. FORM OF CONTRACTOR SURETY BOND. The Contractor Surety Bond shall:
(a) be issued and outstanding until the date on which the Developer
issues the Certificate of RFS Acceptance in respect of the later of
the two Outside Plants to achieve RFS Acceptance;
(b) be in an amount equal to [REDACTED]; and
(c) name the Developer, each Owner or their respective successors and
permitted assigns as beneficiaries thereof.
14.3. ISSUER REQUIREMENTS. The Contractor Surety Bond and all renewals,
extensions and replacements thereof shall be issued by a bonding or
insurance company acceptable to the Developer at the time of issuance. If
the financial condition of any such bonding or insurance company declines
to less than an A.M. Best rating of A, the Contractor shall, at its sole
cost and expense, within thirty (30) Days after any such decline in
rating, replace the issuer of the Contractor Surety Bond with an entity
acceptable to the Developer; PROVIDED that if the Contractor Surety Bond
is provided by more than one bonding or insurance company and each such
company is jointly and severally liable thereunder, the highest rating of
any one of such companies shall be controlling.
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SECTION 15. CONTRACT VARIATIONS
15.1. EQUITABLE RELIEF. The parties shall be entitled to equitable relief with
respect to the requirements of this Contract in the following
circumstances and in accordance with the following procedures (any such
equitable relief in accordance with this Section 15 shall be recorded by
means of a formal writing (a "CONTRACT VARIATION") agreed to between, and
executed by, the Parties in accordance with the procedure set forth
herein):
(a) ADJUSTMENT TO GUARANTEED RFS DATES. If the Contractor is, despite
the exercise of Prudent Practices and through no fault or omission
of any Contractor Person, delayed in its performance of the Work,
the Contractor may, to the extent that such delays result directly
from any Change Event or any change or addition to the general scope
of this Contract or change to the method or manner of performance of
the Work as instructed by the Developer on behalf of the Owners
(such instructions, "OWNER-REQUESTED VARIATIONS") or any combination
of Change Events or Owner-requested Variations, be entitled to an
adjustment to the applicable Guaranteed RFS Date(s). Notwithstanding
anything to the contrary set forth herein, the Contractor shall be
entitled to a Contract Variation executed and delivered in
accordance with this Section 15.1(a) with respect to the applicable
Guaranteed RFS Date only to the extent that its performance of the
Work is materially delayed or is likely to be materially delayed
(despite the Contractor's use of Prudent Practices in mitigation
thereof) by any Change Event or Owner-requested Variations (or
combination thereof).
(b) ADJUSTMENT TO FIXED FEE OR INCENTIVE FEES IN LIMITED CIRCUMSTANCES.
The Developer may from time to time issue written notices to the
Contractor directing additions to, revisions to or deletions from
the scope of Work under this Contract. The Contractor shall give
immediate effect to each such notice; PROVIDED, that such notice
shall in no way limit the Contractor's entitlement to Reimbursable
Costs in respect of Work performed by the Contractor in its due
prosecution of the Work prior to the Developer's notice of additions
to, deletions or reductions of the relevant item(s) of Work. The
Fixed Fee and Incentive Fees referred to in Sections 12.2 and
12.2(a) and (b) hereof shall be subject to adjustment in accordance
with this Section 15.1(b) by adjusting the Target Cost, and the
Incentive Fees referred to in Section 12.2(c) hereof shall be
subject to adjustment in accordance with this Section 15.1(b) by
adjusting the Total Completion Cost column in the table in such
Section 12.2(c), in each case only in the following circumstances:
(i) the addition or deletion of a POP or (ii) the addition of a new
point-to-point route (e.g., a proposed Hamburg to Hanover to Bremen
POP route) to the Detailed Cable Routing described in Table 2-B of
Appendix 2. In the case of an additional POP or point-to-point
route, the amount of the increase in the Target Cost shall be the
Reimbursable Costs incurred in the Work. If a POP is deleted, the
Target Cost will be decreased by the unexpended amount associated
with the deleted POP remaining in the then-current budget. The
Target Cost (or Total Completion Cost column in the table in Section
12.2(c)), as so adjusted, will be set forth in a Contract Variation.
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15.2. PROCEDURE FOR IMPLEMENTING CONTRACT VARIATIONS. In the event that a Party
wishes to claim any equitable relief hereunder on account of any Change
Event, such Party shall give the other Party written notice of its intent
to submit such claim (which notice shall state the basis of such claim and
the general nature of the relief requested) within [REDACTED] after it
becomes aware of such basis for equitable relief. The submitting Party
shall submit to the recipient its documented and substantiated claim for
such adjustment(s) as soon as practicable after giving such notice, but
not later than [REDACTED] after giving such notice, unless extended in
writing by the submitting Party. Such claim shall include an estimate of
the impact of such proposed relief on the Guaranteed RFS Dates, as
applicable, as supported by sufficient costing and description detail to
allow the recipient to make a reasonable determination as to such impact
and the desirability of such relief in light of available alternatives.
The recipient shall respond to the submitting Party's claim within
[REDACTED] after receipt. If the recipient agrees that the submitting
Party's claim should be implemented, the recipient shall issue a Contract
Variation incorporating such claim. If the recipient disagrees in any way
with the submitting Party's claim for the Contract Variation, the
recipient shall return the submitting Party's claim, marked to show the
recipient's modifications thereto. The original submitting Party shall
within [REDACTED] of receipt of such mark-up, either advise the original
recipient of its agreement to such modifications or request a meeting with
the original recipient to resolve any and all disagreements with the
modifications made by the original recipient. If the latter option is
taken, the Parties shall meet as soon as practicable to resolve in good
faith discussions any disagreements. In the event that the Parties are
unable to resolve any such dispute within [REDACTED] after commencement of
mutual discussions in respect thereof, such dispute shall be referred for
resolution, within [REDACTED] after such referral, by the Parties'
respective senior management personnel directly, or by the independent
technical expert ("INDEPENDENT EXPERT") whom they may agree to appoint.
All matters that the Parties may desire to refer to an Independent Expert
shall be governed by Independent Expert Procedures annexed as APPENDIX 11
hereto. The resolutions of all disagreements shall be reflected in the
Contract Variation.
15.3. EFFECT OF CONTRACT VARIATIONS. Each Contract Variation, to be effective,
shall be in writing and executed by the Contractor and the Developer. No
Contract Variation shall vitiate or invalidate this Contract. Subject to
the provisions of this Section 15, the Contractor comply with each such
Contract Variation.
15.4. PERFORMANCE PENDING RESOLUTION. If the Parties are unable to agree on
certain aspects of any Contract Variation, at the request of the
Developer, the Contractor shall continue to perform, pending resolution of
the relevant matter, this Contract as provisionally modified by such terms
of the relevant Contract Variation as to which the Parties have evidenced
their agreement in a writing signed by both Parties.
15.5. NO DELAY. In preparing any proposal for a Contract Variation, the
Contractor shall structure its claims for equitable relief such as to
envision completion, to the extent practicable, of the Work under this
Contract, as modified by the proposed Contract Variation, in accordance
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with the Milestone Schedule. In this respect, the Contractor shall
cooperate with the Developer to prepare all reasonable work-around plans,
alternate sources or any other means available in order to prevent delays.
SECTION 16. OWNER-CAUSED DELAYS
16.1 GENERALLY. The following events or circumstances, to the extent resulting
directly in any increased delay to the Contractor in its completion of the
Work in accordance with the Milestone Schedule and the other requirements
of this Contract, shall, upon the Developer's failure to effect a cure (or
any Owner's failure to effect such cure, the tender of which directly by
any Owner the Contractor hereby agrees to accept) within [REDACTED] after
the Contractor's Notice thereof, constitute "OWNER-CAUSED DELAY" for
purposes of this Contract:
(a) acts or omissions of Owner Persons or Vendors of Owner-Procured
Equipment (A) causing any casualty or damage to the Systems or any
Owner-Procured Equipment or Work, or (B) wrongfully interfering (by
inspection or otherwise, to the extent not otherwise contemplated
herein) with the provision of the Work;
(b) except to the extent that any relevant obligation of the Developer
or the Owners is governed by another express provision of this
Contract, the Developer's or any Owner Person's failure to furnish,
by the date set forth in the Milestone Schedule for the Contractor's
commencement of Work with respect thereto, any item of
Owner-Procured Equipment (including the Developer's or any Owner
Person's failure to furnish items of Owner-Procured Equipment that
are free from defects and deficiencies) or any information
(including the Developer's failure to timely provide accurate and
complete information) that it is required to provide hereunder,
which failure, in each case (A) relates to an item that is necessary
to the Contractor in order to complete the Work in accordance with
the Milestone Schedule and (B) continues (without the Developer's
furnishing thereof or accommodation therefor) for a period in excess
of [REDACTED] after the Contractor's Notice to the Developer
thereof;
(c) any Owner Person's unreasonable refusal to review or approve, or any
unreasonable delay in its review, approval, signature or delivery
of, any item of Work (including, without limitation, the
Wayleave-related documentation specified in Section 7 hereof)
complying with this Contract and Contract Documents, in each case,
within the time periods specified in this Contract for such review,
approval, signature or delivery;
(d) the failure by the Developer to make available to Contractor Persons
the Sites (including any such failure with respect to the POP Sites
to be made available in accordance with Section 8.2(a)) on a timely
basis, or any interruption (except for purposes of reasonable
inspection as envisioned by this Contract) in the availability to
the relevant Contractor Persons of any such Site caused by any Owner
Person (including by virtue of any Owner Person's commercial use or
operation of the Systems or any RFCS Portion thereof); or
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(e) the Developer's exercise of suspension rights pursuant to Section
22.1 hereof.
16.2. EFFECT. At such time as the Developer (or any Owner, as applicable) has
failed to cure any event or circumstance of Owner-Caused Delay within the
period specified in Section 16.1 hereof, the Contractor may be entitled to
a Contract Variation, and the procedures of Section 15 shall apply
thereto.
SECTION 17. GUARANTEED RFS DATE
17.1. GUARANTEED RFS DATE. The Contractor guarantees that RFS Acceptance for
each Outside Plant (or segment thereof) shall occur on or before the
Guaranteed RFS Date for such Outside Plant (or segment thereof), as each
such date may be extended in accordance with Sections 15 and 18 hereof.
17.2. [INTENTIONALLY OMITTED].
SECTION 18. FORCE MAJEURE
18.1. DEFINITION.
(a) INCLUDED EVENTS. An event or circumstance shall be a "FORCE MAJEURE
EVENT" if such event or circumstance:
(i) is beyond the Contractor's reasonable control;
(ii) is not the result of any breach by the Contractor of any
provision of this Contract;
(iii) was not caused by the negligent or careless act or omission of
any Contractor Person;
(iv) will result in a delay in the completion of any material part
of the Work despite the Contractor's exercise of all
commercially reasonable diligence and pursuit of alternative
measures of performance; and
(v) is of a general type or nature falling within one of the
following categories, provided as examples of Force Majeure
Events subject to relief hereunder:
(A) civil disturbance, war, invasion or act of foreign
enemies;
(B) civil uprising or rebellion, or broad-based disruption
in freight or distribution networks;
(C) strikes, lockouts, slowdowns and other labor disruptions
of any kind, except as excluded hereunder pursuant to
paragraph (b)(i) below;
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(D) willful, malicious or criminal acts of sabotage or
interference by individuals or pressure groups
(including, without limitation, by environmentalists),
or disruptive public demonstrations of such Persons,
directed against the System or Contractor Persons
(including their properties or assets) for the purpose
of halting or interrupting performance and completion of
the Work;
(E) fire, flood, epidemic, act of God, natural disaster and
Unusually Severe Weather Conditions (PROVIDED, that the
Contractor shall remain responsible for all weather
conditions that do not constitute Unusually Severe
Weather Conditions);
(F) acts or failures to act, or material and unexcused
delays in acting, of Governmental Authorities (including
Changes in Law and Wayleave or Permit Failures); and
(G) Unanticipated Site Conditions.
(b) EXCLUDED EVENTS. The following events are explicitly excluded from
the term Force Majeure Event and are solely the responsibility of
the Contractor:
(i) any strikes, labor disputes and lockouts involving solely and
exclusively the employees of (A) the Contractor, (B) any
Subcontractor or (C) any of their respective agents hereunder;
(ii) late delivery of equipment or materials (except to the extent
caused by a Force Majeure Event);
(iii) economic hardship;
(iv) default of Subcontractors (except to the extent caused by a
Force Majeure Event);
(v) events and conditions of which the Contractor is deemed
hereunder to have fully informed itself; and
(vi) all other events and acts failing to meet any of the criteria
set forth in Section 18.1(a) hereof for a Force Majeure Event.
18.2. MITIGATION. The Contractor shall use commercially reasonable efforts to
mitigate and minimize the effects of any Force Majeure Event and to resume
in full its performance under this Contract.
18.3. NOTICE. The Contractor shall advise the Developer's Representative in
reasonable detail of any Force Majeure Event within [REDACTED] from the
date of the occurrence thereof; PROVIDED that if the Contractor can
satisfactorily demonstrate to the Developer that the Contractor has been
unavoidably delayed in becoming aware of the occurrence of such Force
Majeure Event, such period and the time period set forth in Section 18.4
hereof shall commence from the date reasonably determined by the Developer
that the Contractor became aware, or should have become aware, of such
occurrence.
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18.4. APPLICATION. If the Contractor is directly delayed in the execution of the
Work by any Force Majeure Event, the Contractor shall have the right to
apply in writing to the Developer's Representative within [REDACTED] after
the occurrence of such Force Majeure Event for an extension of any
Guaranteed RFS Date or any date set forth in the Milestone Schedule, if
and to the extent any such date is affected by such Force Majeure Event.
Such application shall set forth a statement of all the facts on which the
Contractor bases such an application, including a detailed description of
work-around plans, alternate sources or any other means the Contractor
will utilize to make up for any such period of delay and to prevent any
further delay to the Work.
18.5. EXTENSION OF TIME. The extension of time, if any, to be allowed to the
Contractor pursuant to this Section 18 shall be set forth in a Contract
Variation duly executed and delivered in accordance with Section 15
hereof, and shall be for such periods as the Developer approves (which
approval shall not be unreasonably withheld) as necessary to remedy the
schedule effects of the Force Majeure Event, but shall in no event limit
either Party's rights under this Contract, including any Party's rights
with respect to matters arising prior to the occurrence of the Force
Majeure Event.
18.6. LIMITATION. Unless:
(a) an event is a Force Majeure Event as provided in Section 18.1
hereof;
(b) the Contractor notifies the Developer thereof within the time period
provided in Section 18.3 hereof;
(c) the Contractor applies for an extension of time in respect thereof
within the time period provided in Section 18.4 hereof; and
(d) the Developer approves an extension of time in respect thereof in
accordance with Section 18.5 hereof,
the Contractor shall not be entitled to, and shall not claim an extension
of time, for such event, except to the extent that (i) the Contractor,
despite its exercise of due diligence, did not know and was unaware of the
nature and extent of the relevant Force Majeure Event, and (ii) neither
the Developer nor any Owner was not substantially prejudiced by the
Contractor's failure to provide the notices within the time periods
referenced in items (b) and (c) above.
SECTIOM 19. PROJECT MANAGER AND THE DEVELOPER'S REPRESENTATIVE
19.1. PROJECT MANAGER. The Contractor shall designate in writing a project
manager (the "PROJECT MANAGER") to be responsible for the coordination and
monitoring of the Work on the Contractor's behalf, and shall provide the
Developer with a summary of such Project Manager's background and relevant
experience. The Project Manager shall act as the principal point of
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contact between the Contractor and the Developer, and shall have authority
to act and make decisions on behalf of, and be authorized to bind by
contract or otherwise, the Contractor. If the Project Manager shall resign
or at any time be unable to act, the Contractor shall immediately
designate a successor by Notice to the Developer.
19.2. THE DEVELOPER'S REPRESENTATIVE. The Developer shall designate in writing a
system manager (the "DEVELOPER'S REPRESENTATIVE") to be responsible for
coordination and monitoring of the Work on the Developer's behalf. The
Developer's Representative shall provide the interface with the Contractor
on all technical and contractual matters pertaining hereto, and shall have
authority to act and make decisions on behalf of, and be authorized to
bind by contract or otherwise, the Developer (and, accordingly, the
Owners). The Developer's Representative shall from time to time authorize
in writing Persons to carry out specific tasks on the Developer's behalf.
To the extent that the Developer desires to appoint a third-party (I.E.,
any Person other than an employee or Affiliate of the Developer or any
Owner) as the Developer's Representative, the Developer shall consult with
the Contractor as to such appointment, providing the Contractor with the
opportunity to make reasonable comments with respect thereto.
SECTION 20. INSPECTION RIGHTS
20.1. GENERALLY. At all times during which Work is being performed hereunder,
the Developer and its designees shall, upon reasonable prior notice and
within normal business hours, have full access to the Work. The Contractor
shall provide appropriate facilities for such access and for the purpose
of inspection and testing in accordance with the provisions of the
Technical Requirements. The Developer and its designees shall be allowed
full access to all plants, offices and Sites of the Contractor and its
Subcontractors to enable it to inspect the Work and to monitor progress.
The Developer and its designees shall have the right to establish resident
representative(s) at the Contractor's and its Subcontractors' plants and
at all Sites, and, at the Developer's or its designee's request, the
Contractor and its Subcontractors shall make available suitable office
space and facilities for such representative(s) and, to the extent such
office space and facilities are not otherwise specified in the Technical
Requirements as included in the Work, the Contractor may be entitled, to
the extent provided in Section 15 hereof, to Contract Variation in respect
thereof to the extent the provision of additional office space and
facilities impacts the Milestone Schedule. The Contractor shall include in
all of its Subcontracts such provisions as may be necessary to secure such
rights on behalf of the Developer or its designees. The Developer's and
its designee's inspection activities may include:
(a) an audit of the Contractor's and its Subcontractors' quality control
system and practices and their application to the Work, including to
the design, manufacture, transportation, installation and testing of
the Work, each Outside Plant, and all materials and components
thereof; and
(b) inspection of all parts of the Work to ensure compliance with the
Technical Requirements.
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20.2 COVERED WORK. If any portion of the Work is believed by the Developer to
have been covered contrary to the request of or to requirements
specifically expressed in this Contract, the Developer shall provide
Notice to the Contractor setting forth the basis for the Developer's
belief and the Contractor shall provide its written response within three
(3) Business Days after such Notice. Any disputes shall be settled by good
faith discussion amongst the Project Manager and the Developer's
Representative. If the Developer is able to substantiate its position, the
Work involved must, if required in writing by the Developer or its
designee, be uncovered for its observation and replaced, at the
Contractor's expense. If any other portion of the Work is covered and the
Developer or its designee had not specifically requested the opportunity
to inspect such Work prior to it being covered and it was not covered
contrary to requirements specifically expressed in this Contract, the
Developer or its designee may request the opportunity to inspect such Work
and it shall be uncovered by the Contractor. If such Work is found to be
in accordance with this Contract, the cost of uncovering and recovering
shall be charged to the Owners as a Reimbursable Cost. If such Work is
found not to be in accordance with this Contract, the Contractor shall pay
all costs of uncovering and recovering.
20.3. NO RELIEF. Except as provided by Section 20.1, no inspection, audit or
approval by or on behalf of the Developer or any other Owner Person in
respect of any aspect of the Work shall relieve the Contractor of any of
its responsibilities under this Contract. Notwithstanding the foregoing,
to the extent that the Contractor is required to interrupt performance of
any portion of the Work on account of the Developer's inspection of any
Work found in such inspection to be in compliance with all requirements of
this Contract, the Contractor shall be entitled to an extension of time
equal to the duration of such interruption, to the extent specified in
Section 15.1 hereof.
SECTION 21. DEFECTIVE WORK
21.1. GENERALLY. Without limiting or impairing the Contractor's obligations
pursuant to Section 32 hereof with respect to any Defects in the Work, if
at any time before the relevant RFS Date, any of the Contractor's Work is
found to contain Defects, or is otherwise not in accordance with the
Contract Documents, the Developer or its designee may reject such Work,
and the Owners shall have no liability with respect to payment therefor,
notwithstanding that:
(a) satisfaction may previously have been expressed;
(b) title to such Work may have passed to the Owners in accordance with
Section 36 hereof;
(c) such Work may previously have been accepted; or
(d) payment may have been made in respect of such Work.
21.2. EXISTENCE OF DEFECTS. A Defect shall be deemed to exist when actually
discovered or when it should have been apparent to a prudent contractor
performing the Work, after reasonable inspection or testing, that the
relevant Work is not in conformity with the requirements of the Contract
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or any Contract Document. Each occurrence of an alleged Defect shall be
subject to expedited review by the Parties as to whether a Defect
attributable to the Contractor or a deficiency attributable to a third
party. If the Contractor has reasonable grounds for disagreement with any
Developer determination as to the existence of a Defect attributed to the
Contractor, such dispute shall be immediately (but in no event more than
two (2) Business Days after the Developer's Notice of such determination)
referred to deliberation amongst the Parties' senior-management personnel
for resolution. If the senior-management personnel are unable to resolve
the dispute within five (5) Business Days after such referral for
resolution in accordance with the Independent Expert Procedures as set
forth in APPENDIX 11 hereto.
SECTION 22. SUSPENSION OF WORK BY THE DEVELOPER
22.1. GENERALLY. Should the Developer desire, in its sole discretion, to suspend
the whole or any part of the Work or suspend for a further period Work
already suspended pursuant to this Section 22, the Developer shall notify
the Contractor, indicating the period of the proposed suspension or
further suspension. If the Contractor believes that such suspension will
result in additional costs or delay for the Contractor, the Contractor
shall, within [REDACTED] after such Notice, furnish an itemized statement
to the Developer indicating (a) the extension of time to which the
Contractor believes it would be entitled if the suspension were
implemented, (b) the Contractor's estimate of the additional Reimbursable
Costs, if any, that would result from the proposed suspension and (c) the
Contractor's estimate as to additional terms of this Contract, if any,
which would be affected by the proposed suspension. Upon receipt of such
itemized statement (or if no such statement is received within the
stipulated [REDACTED], the Developer shall either confirm or cancel the
proposal to suspend or further suspend the Work or further question the
Contractor on the basis of such itemized statement. Promptly after the
Parties agree on any extension of time, they shall execute a Contract
Variation in respect thereof in accordance with Section 15 hereof.
In the event that the Developer shall, pursuant to this Section 22.1,
suspend the Work in its entirety for (i) a period of [REDACTED], or (ii)
periods totaling [REDACTED], such suspension shall, upon the expiry of
such [REDACTED] period, as applicable, constitute a Termination for
Convenience for all purposes hereof.
22.2. THE CONTRACTOR'S DUTIES UPON SUSPENSION. During any such suspension, the
Contractor shall:
(a) cease performance of the Work and place no further orders or
Subcontracts relating to the suspended Work;
(b) protect and care for all materials, equipment and supplies forming a
part of the Work or each Outside Plant, in transit to or from the
Sites or at storage areas for which it is responsible; and
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(c) give the Developer copies of all outstanding orders and contracts
for materials and services and take any action with respect to such
orders and contracts as the Developer may direct.
22.3. THE CONTRACTOR'S DUTIES AFTER SUSPENSION. Upon the cessation of such
suspension, the Contractor shall resume performance of the Work within a
reasonable period after being directed to do so by the Developer.
SECTION 23. TERMINATION FOR CONVENIENCE
23.1. TERMINATION. The Developer may, upon written Notice (a "NOTICE OF
TERMINATION FOR CONVENIENCE") to the Contractor at any time, terminate
this Contract or otherwise terminate the Contractor's employment hereunder
as to either the whole or part of the Work (a "TERMINATION FOR
CONVENIENCE"). A Termination for Convenience shall not nullify this
Contract but shall operate to terminate the Contractor's right to proceed
with the Work and to discharge the Owners from their obligations under
this Contract, except for the Owners' obligation to pay the Termination
Payment (Convenience). A Termination for Convenience shall not relieve the
Contractor from liability under applicable Law for damages for any failure
or omission to perform any portion of this Contract prior to such
termination or prejudice any legal rights of the Owner Person or the
Contractor, whether those rights arise under this Contract or otherwise.
23.2. TERMINATION DATE. A Termination for Convenience shall be effective, and
this Contract shall be terminated, when the Notice of Termination for
Convenience is delivered to the Contractor.
23.3. TERMINATION PAYMENT (CONVENIENCE).
(a) AMOUNT. In the case of a Termination for Convenience, the Owners
shall make a payment to the Contractor (the "TERMINATION PAYMENT
(CONVENIENCE)") equal to the sum of (i) Reimbursable Costs incurred
by the Contractor as of the Termination Date, (ii) the Fixed Fee and
any Incentive Fee payable in accordance with Section 12.2 hereof so
long as the Contractor has met the criteria for any such fee
pursuant to such Section 12.2, and (iii) the Contractor's reasonable
and necessary costs incurred in connection with the termination of
vendor orders and Subcontracts, demobilization from the Sites and
the performance of its duties upon termination as specified
hereunder
(b) TERMINATION CLAIM. The Contractor shall submit to the Developer a
written termination claim (the "TERMINATION CLAIM"). The Termination
Claim shall set forth a calculation of the Termination Payment
(Convenience) and all other relevant facts, and shall contain
supporting documentation in respect thereof. The Termination Claim
shall be submitted promptly, but, in any event, no later than
[REDACTED] from the effective date of termination of this Contract;
PROVIDED, however, that the Developer and the Contractor may agree
to such additional time as may be reasonably required to compile and
submit such Termination Claim and gather the supporting
documentation therefor.
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(c) REVIEW PERIOD. Within [REDACTED] after its receipt of the
Termination Claim (the "TERMINATION CLAIM REVIEW PERIOD"), the
Developer shall convey any objections or requests for additional
information it may have with respect to the determination of the
Termination Payment (Convenience). The Contractor shall provide such
information to the Developer as soon as practicable. If the
Developer objects to any portion of the Termination Claim, it shall
notify the Contractor in writing, not later than the end of the
Termination Claim Review Period, of each item it believes requires
adjustment and, for not more than [REDACTED](or such longer period
as the Parties may agree), the Parties shall attempt to resolve any
differences.
(d) ACCOUNTING FIRM. If the Parties are unable to so resolve such
differences within such time period, they shall, within [REDACTED],
jointly submit the items in dispute to a "Big Four" accounting firm
mutually agreed upon by the Contractor and the Developer for
resolution on an expedited basis with a request for a written report
thereon to be submitted within [REDACTED] from such submittal. If
the Parties cannot agree on the determination of the accountant for
the purposes hereof, the accountant shall be a "Big Four" accounting
firm designated by the mutual agreement of a "Big Four" accounting
firm designated by the Developer and a "Big Four" accounting firm
designated by the Contractor. Adjustments to the Termination Claim
by the accountant, if any, shall be:
(i) made in accordance with the criteria set forth in this Section
23.3;
(ii) set forth in its written report; and
(iii) final and binding on the Parties in the absence of manifest
error.
Judgment may be entered thereon in a court of competent
jurisdiction. The accountant shall have no authority to change or
alter the terms and conditions of this Contract. Such determination
by the accountant shall not relieve either Party from liability
under applicable Law for damages for breach of contract or prejudice
any legal right of the Parties, whether those rights arise under
this Contract or otherwise. The Contractor shall provide the
accountant with access, under confidentiality conditions, to all
books of account and records of the Contractor that relate to each
Outside Plant and are relevant to the determination of the
Termination Claim, based on the criteria set forth in this Section
23.3. The fees and expenses incurred in connection with any review
by the accountant pursuant to this Section 23.3(d) shall be borne
one-half by the Owners and one-half by the Contractor.
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SECTION 24. EVENTS OF DEFAULT AND REMEDIES
24.1. EVENTS OF DEFAULT AND REMEDIES. If at any time (any of the following, an
"EVENT OF DEFAULT"):
(a) the Contractor fails to (i) carry out engineering, fabrication,
supply, delivery, installation and testing of the Work on or with
respect to any Critical Path Item at the rate of progress required
by the Milestone Schedule, and (ii) prepare, implement and comply
with a Schedule Recovery Plan in respect of any such delayed or
incomplete Work, in each case, within the time periods and in
accordance with the provisions set forth in Section 5.2 hereof; or
(b) the Contractor commits any material breach of, or fails in any
material respect to comply with and observe, any provision of this
Contract; or
(c) the Contractor abandons the Work for a period in excess of
[REDACTED] or intimates without lawful cause or justification that
the Work will not or cannot be completed; or
(d) the Contractor shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by the Contractor
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of the Contractor or its debts
under Law relating to bankruptcy, insolvency or reorganization or
relief or the appointment of a receiver, trustee or other similar
official for the Contractor or for any substantial part of its
property or the Contractor shall take any corporate action to
authorize any of the actions set forth above in this Section
24.1(d); or
(e) an involuntary petition shall be filed or an action or proceeding
otherwise commenced against the Contractor seeking reorganization,
arrangement or readjustment of the Contractor's debts or for any
other relief under any bankruptcy or insolvency act or Law, now or
hereafter existing and remain undismissed or unvacated for a period
of [REDACTED]; or
(f) a receiver, assignee, liquidator, trustee or similar officer for the
Contractor or for all or any part of its property shall be appointed
involuntarily; or
(g) the Contractor shall file a certificate of dissolution under
applicable Law or shall be liquidated, dissolved or wound up or
shall commence or have commenced against it any action or proceeding
for dissolution, winding up or liquidation, or shall take any
corporate action in furtherance thereof; or
(h) the Contractor either:
(i) fails to make prompt payment of any undisputed invoice due to
any Subcontractor or otherwise for materials or labor; or
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(ii) repudiates or is in default with respect to any of its
obligations to a Subcontractor; or
(i) the Contractor fails, after being notified thereof by the Developer,
to promptly correct any Defective Work during performance of the
Work or within the Warranty Period; or
(j) any representation or warranty made by the Contractor herein or in
any certificate, financial statement or other document furnished to
any Owner Person by or on behalf of the Contractor shall prove to be
false or misleading in any material respect as of the time made,
confirmed or furnished;
then, upon the occurrence of any Event of Default referred to in
paragraph (a), (b), (i) or (j) of this Section 24.1, the Developer
may, by Notice in writing, advise the Contractor of such Event of
Default and the Contractor shall have [REDACTED] to correct such
Event of Default to the satisfaction of the Developer PROVIDED,
HOWEVER, that, if such Event of Default cannot be cured in such
[REDACTED] period through the diligent efforts of Contractor, but
can be cured in a longer period without there occurring any failure
to meet the Milestone Schedule, the Contractor shall have an
additional period, not to exceed [REDACTED], so long as it shall
commence the cure during such [REDACTED] period and diligently
pursue such cure. If the Contractor fails to correct any such Event
of Default to the satisfaction of the Developer within such
[REDACTED] (or subject to the conditions set forth in the previous
sentence, such longer period), or, upon the occurrence of any other
Event of Default, then the Developer on behalf of the Owners may,
upon written Notice (a "NOTICE OF EXERCISE OF REMEDIES") to the
Contractor, exercise any or all of the following rights and
remedies:
(A) exercise their rights under the Contractor Security;
(B) exercise their rights with respect to the withholding of
payments to the Contractor in accordance with Section
12.5 hereof;
(C) take the Work wholly or partly out of the control of the
Contractor or any other Person in whose control or
possession the Work or any part of it may be, and cause
to be completed the same in accordance with Section 25
hereof (a "TAKE OVER");
(D) terminate this Contract in accordance with Section 26
hereof (such event, a "TERMINATION FOR DEFAULT"; such
Notice of Exercise of Remedies, a "NOTICE OF TERMINATION
FOR DEFAULT"); or
(E) exercise any and all rights and remedies they may have
under law or equity, including seeking specific
performance and the recovery of damages, subject, in any
event, to the provisions of Section 28 hereof.
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The foregoing remedies are cumulative, and the Developer on behalf
of the Owners may elect one or more thereof without prejudice to any
other right or remedy the Owners may have, subject, however, to
Section 28 hereof. Notwithstanding any of the foregoing, Contractor
shall be entitled upon a Termination for Default to be paid its
Reimbursable Costs (and any applicable Fixed Fee and Incentive Fee
so long as the Contractor has met the criteria for such fee pursuant
to Section 12.2 hereof) for Work performed in accordance with this
Contract and the Contract Documents by the Contractor up to the
effective date of such termination, less any amount owing to the
Owners hereunder, the latter of which amounts may be applied by the
Owners to the payment and performance of any outstanding obligations
of the Contractor hereunder.
24.2. NO PREJUDICE. No action taken by the Developer under this Section 24 shall
prejudice any right of the Owners under Section 13 hereof.
24.3. NOTICE OF EXERCISE OF REMEDIES. Any Notice of Exercise of Remedies shall
be conclusive evidence of the matters stated therein for the purpose of
allowing the Developer on behalf of the Owners to implement the provisions
of this Section 24.
24.4. CONTRACTOR'S RIGHT TO SUSPEND WORK AND TERMINATE CONTRACT.
(a) SUSPENSION OF WORK BY THE CONTRACTOR. [REDACTED]
(b) TERMINATION BY THE CONTRACTOR. [REDACTED]
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(c) EFFECT OF CONTRACTOR TERMINATION. Any termination of this Contract
by the Contractor on account of any of the circumstances referenced
in the foregoing Section 24.4(b) hereof shall be treated hereunder
as a Termination for Convenience for purposes of the Owners'
obligation to make payment to the Contractor in the amounts and in
the manner specified in Section 24.3 hereof.
SECTION 25. TAKE OVER AND PAYMENTS TO THE DEVELOPER
25.1. REPLACEMENT CONTRACTORS. If the Developer on behalf of the Owners elects a
Take Over, the Owners may contract with and employ any Person or Persons
(each, a "REPLACEMENT CONTRACTOR") to further execute and complete the
Work or any portion thereof, and each Replacement Contractor may provide
such supplies and labor as may be necessary to enable that completion.
25.2. NO RIGHT OF COMPENSATION. In the event of a Take Over (whether or not
through a Replacement Contractor), the Contractor shall have no right to
any compensation arising from such action and the Owners may pay each
Replacement Contractor such amounts of money as may be agreed upon between
such Replacement Contractor and the Owners.
25.3. PAYMENTS TO THE OWNERS. If the Developer on behalf of the Owners elects a
Take Over, the Contractor shall, without prejudice to any other rights or
remedies of the Owners hereunder or under applicable Law with respect to
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the Event of Default (including recourse to the Contractor Security), be
liable to the Owners (subject, in any event, to the provisions of Section
28 hereof) as direct damages for an amount equal to:
(a) all costs (including the costs of redoing any portion of the Work
not reasonably usable in the completion of each Outside Plant) so
incurred by the Owners; MINUS
(b) the total amount paid to the Owners under the Contractor Security.
The Contractor shall refund to the Owners all amounts paid to the
Contractor for Work not reasonably usable in the completion of each
Outside Plant within [REDACTED] after written Notice that such Work has
been rejected by the Developer.
SECTION 26. TERMINATION FOR DEFAULT
26.1. EFFECT OF TERMINATION. A Termination for Default shall not nullify this
Contract but shall operate to terminate the Contractor's right to proceed
with the Work and to discharge the Owners from their obligations under
this Contract. A Termination for Default shall not relieve the Contractor
from liability under applicable Law for damages for any failure or
omission to perform any portion of this Contract prior to such termination
or prejudice any legal rights of the Owners or Contractor, whether those
rights arise under this Contract or otherwise, subject, in any event, to
the provisions of Section 28 hereof.
26.2. TERMINATION DATE. A Termination for Default shall be effective, and this
Contract shall be terminated, when the Notice of Termination for Default
is served upon the Contractor.
26.3. RIGHT TO TERMINATE. The Developer on behalf of the Owners may exercise
their right to terminate this Contract whether or not any of the Work
remains to be executed or whether or not the time limit for completion of
the Work has expired.
26.4. RIGHT TO COMPLETE THE WORK. On a Termination for Default, the Owners shall
be empowered to complete the Work in the same manner as provided for under
Section 25 hereof, as if the Work had been taken wholly out of the control
of the Contractor by the Owners and this Contract had not been terminated.
SECTION 27. DUTIES UPON TERMINATION
27.1. GENERALLY. Upon receipt of a Notice of Termination for Convenience or a
Notice of Termination for Default (each, a "NOTICE OF TERMINATION"),
unless otherwise directed by the Developer in such Notice, the Contractor
shall:
(a) stop work under this Contract on the date and to the extent
specified in the Notice of Termination;
(b) place no further orders or contracts for materials, services or
facilities except as may be necessary for completion of the portion
of the Work, if any, under this Contract that is not terminated;
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(c) unless otherwise directed by the Developer, use reasonable efforts
to terminate all orders and contracts and Subcontracts (other than
Subcontracts conditionally assigned to the Owners in accordance with
Section 33.5 hereof) to the extent that they relate to the
performance of Work terminated by the Notice of Termination;
(d) assign to the Owners (or at the Developer's direction, any
Replacement Contractor), in the manner, at the time and to the
extent directed by the Developer, all of the Contractor's right,
title and interest under such orders, contracts and Subcontracts,
whether or not terminated;
(e) use reasonable efforts to settle all outstanding liabilities and all
claims arising out of such termination of orders and contracts, with
the Developer's approval or ratification to the extent the Developer
so requires;
(f) transfer title to the Owners as provided for in Section 36 hereof
and deliver the following to the Developer in the manner, at the
time, at the place and to the extent (if any) directed by the
Developer:
(i) the fabricated or unfabricated parts, Work in process,
completed Work, supplies and all other items commenced, partly
executed, produced or completed as part of, or acquired in
connection with, the performance of the Work terminated by the
Notice of Termination; and
(ii) the completed or partially completed plans, drawings,
information, Permits and other property or items that, if this
Contract had not been terminated, would have been required to
be furnished to the Owners;
(g) in the case of any property or items referred to in Section 27.1(f)
hereof:
(i) use its best efforts in the case of an Event of Default or
reasonable efforts in the case of a Termination for
Convenience to use such property or items in the manufacture
of other projects that the Contractor has, or will have, under
contract for other customers; the amount received by
Contractor therefor shall be deducted from the Termination
Payment (Convenience) or paid in such other manner as the
Developer on behalf of the Owners may direct; and
(ii) use reasonable efforts to sell, in the manner, at the times,
to the extent and at the price or prices directed or
authorized by the Developer; the proceeds of any such sale
shall be deducted from the Termination Payment (Convenience)
or paid in such other manner as the Developer may direct;
(h) complete performance of such part of the Work as may not have been
terminated by the Notice of Termination;
(i) take such action as may be necessary, or which the Developer may
direct, for the protection and preservation of the property related
to this Contract that is in the Contractor's possession and in which
the Owners have or may acquire an interest;
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(j) grant to the Owners, any Replacement Contractor and each
Subcontractor a continuing right to use any and all patented or
proprietary information that the Developer deems necessary to
complete each Outside Plant, subject to reasonable proprietary
restrictions; and
(k) at the Developer's request and at the Contractor's expense:
(i) for Default, supply any proprietary components needed for the
completion and operation of each Outside Plant;
(ii) assist the Developer in preparing an inventory of all
equipment in use or in storage;
(iii) assign to the Owners or to any Replacement Contractor and make
available all issued Permits then held by the Contractor
pertaining to each Outside Plant; and
(iv) remove all such equipment, waste and rubbish as the Developer
may designate.
27.2. SUBCONTRACTOR CLAIMS. For a Notice of Termination for Default,
notwithstanding Section 27.1(e), the Owners shall not be liable to the
Contractor with respect to any claim that any Subcontractor may raise or
assert arising out of any termination of this Contract.
27.3. FUNDS HELD BY THE OWNERS. Without prejudice to Section 13 hereof, for a
Notice of Termination for Default:
(a) all sums of money that may remain in the hands of the Owners or the
Developer with respect to this Contract; and
(b) all funds made available under any Contractor Security or any other
security retained for the due fulfillment of this Contract,
at the election of the Developer may be withheld pending the final
determination of the rights and obligations of the Parties under this
Contract.
SECTION 28. LIMITATION OF LIABILITY
28.1. NO CONSEQUENTIAL DAMAGES. Except as otherwise specified herein, neither
Party (which shall include, for purposes of this Section 28, all
Subcontractors and Vendors) shall be liable, whether by contract, at law,
in tort or otherwise, for any indirect or consequential losses or any loss
of income or profit, loss of opportunity to do business, claims of
customers or the costs of, or associated with, the use of restoration
facilities or like items of indirect or consequential damage. Neither
Party shall make claims to the other for such indirect or consequential
loss and each Party hereby releases, subject to the other terms of this
Contract, the other from any such losses and shall take all steps
necessary to extend like releases to such other Party's Subcontractors or
Vendors, as applicable.
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28.2. OTHER LIMITATIONS. The total aggregate liability of the Contractor to all
Owner Persons under, arising out of or in connection with this Contract or
otherwise with respect to the Work shall not exceed an aggregate amount
(the "TOTAL LIABILITY CAP") equal to [REDACTED] of the Reimbursable Costs.
Notwithstanding any of the foregoing, the following shall not be included
in, or subject to, the Total Liability Cap, and shall not be taken into
account in establishing the Contractor's total aggregate liability
hereunder:
(a) Indemnifiable Losses, for which there shall be no limit; and
(b) the Contractor's unconditional obligations to achieve RFS Acceptance
of each Outside Plant.
28.3. SCOPE OF LIMITATIONS. With respect to matters falling within the Total
Liability Cap, the waivers and disclaimers of liability, releases from
liability, limitations and apportionments of liability and exclusive
remedy provisions expressed in this Contract shall apply even in the event
of the fault, negligence (in whole or in part), strict liability, breach
of contract, or otherwise of the Party released or whose liability is
waived, disclaimed, limited, apportioned or fixed by such exclusive remedy
provision, and shall extend to such Party's related or Affiliated entities
and its and their directors, officers, employees and agents.
28.4. WORK PROVIDED BY OTHERS. The Contractor shall have no liability for
services, materials or equipment furnished by Vendors. To the extent
practicable, the Owners shall procure that all indemnity, all releases and
all hold-harmless agreements contained in such Owner's contracts with
third parties engaged to perform services or supply materials for the
System, whereby such parties agree to indemnify, release and hold the
Owner harmless shall extend like protection to the Contractor.
28.5. LOSS, INJURY OR DAMAGE TO PERSONS, THE SYSTEM OR THE WORK. Except to the
extent constituting Indemnifiable Losses hereunder, (i) the Contractor's
liability for Loss of or damage to any elements of the System or the Work,
or for any injury to, or death or disease of, any Person, shall be limited
to those payments made on the Contractor's behalf by the insurers
affording the insurance described in Section 41 hereof, and (ii) the
Owners shall release the Contractor from any Loss, damage or expense in
excess of those payments as a result of Loss of or damage to other
property of the Owners or in the custody of the Owners (or as a result of
any injury to, or death or disease of, any Person).
28.6. TRANSFER OF OWNERSHIP. The Owners agree that any future recipient of any
interest in the Systems or the Outside Plant will be bound by such
releases and limitations of liability such that the total aggregate
liability of the Contractor to such Persons shall not exceed the limits of
liability set forth herein.
28.7. HAZARDOUS WASTE OR MATERIALS. Except to the extent constituting
Indemnifiable Losses hereunder, the Contractor shall have no liability for
or in respect of hazardous waste or materials that may be encountered in
carrying out the Work, and the Owners shall indemnify the Contractor
against any additional costs and any liabilities to third parties that the
Contractor may incur as a consequence of such waste or materials being
encountered.
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SECTION 29. THE CONTRACTOR'S ON-SITE DUTIES
29.1. REASONABLE PRECAUTIONS. The Contractor acknowledges that, until such time
as title to each Outside Plant has passed in its entirety to the Owners,
it shall remain solely responsible for the institution and maintenance of
all such usual and reasonable precautions for the protection of the Sites,
the Outside Plant and any Work, and for the prevention of danger or damage
to all persons or property on or near the Sites. Without limiting the
generality of the foregoing, the Contractor shall, as part of the Work,
ensure that each Site is constructed, secured, illuminated and maintained
in such manner as would a reasonably prudent owner of a facility analogous
to such Site.
29.2. WASTE DISPOSAL. The Contractor shall, as part of its Work hereunder,
manage and dispose of all waste materials in strict accordance with
applicable Codes and Standards, and shall, as part of its Work hereunder,
keep each Site free from debris and waste resulting from the performance
of the Work and the presence of the Contractor Persons at such Site. In
the event that any Contractor Person shall discover the presence of, or
cause the discharge of, any material of a hazardous nature on or from any
Site, the Contractor shall immediately notify the Developer, and shall
instruct all Contractor Persons to desist immediately from the Work until
further instruction from the Developer.
SECTION 30. PERFORMANCE TESTS
30.1. GENERALLY.
(a) THE CONTRACTOR'S OBLIGATION TO CONDUCT PERFORMANCE TESTS. The
Contractor shall conduct and repeat as necessary the Performance
Tests as required hereunder in connection with RFS Acceptance (and,
as applicable, Commercial Acceptance) and Final Acceptance, in
accordance with the Performance Test Standards and such supplemental
testing procedures, consistent with such Performance Test Standards,
prepared by the Contractor in accordance with normal industry
standards. The Contractor shall permit the Developer's
representatives to be present during the conduct of Performance
Tests and shall provide to the Developer reports and result data
based upon the conduct of such Performance Tests.
(b) SAFETY. If during any Performance Test, it is discovered that
testing cannot be conducted in a safe manner in accordance with
industry practice, such Performance Test shall be terminated and the
Contractor shall remedy the unsafe condition, whereupon such
Performance Test shall start over.
30.2. RIGHT OF WAIVER. The Developer may, but shall have no obligation to,
waive, defer or reduce any of the requirements relating to the achievement
of RFS Acceptance or Final Acceptance at any time by written Notice to the
Contractor; PROVIDED that the Developer's exercise of any rights hereunder
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shall apply only to such requirements as the Developer may specify and
shall in no event relieve the Contractor of any requirements, liability or
other obligations not so specified.
30.3. LONG-TERM OBLIGATIONS. Nothing in this Section 30, including the
Developer's approvals, nor the issuance of a Certificate of Commercial
Acceptance or a Certificate of RFS Acceptance, shall in any way modify or
alter the Contractor's obligations with respect to Warranties hereunder.
Neither the inspection, approval or payment, including the Final Payment,
under this Contract shall:
(a) be construed to be an acceptance of any Defective Work;
(b) be an admission of the Contractor's satisfactory performance of the
Work; or
(c) relieve the Contractor of any of its obligations under this
Contract.
30.4. OPERATING REVENUES. Any and all revenues generated by the operation of the
Outside Plants shall be solely for the account of the Owners.
SECTION 31. PLANT ACCEPTANCE
31.1. INITIAL PLANT COMMISSIONING REPORT. At such time as the Contractor
determines that it has met the requirements for a Certificate of RFS
Acceptance in respect of either Outside Plant (or segment thereof), it
shall submit to the Developer under cover of a Notice an initial plant
commissioning report (an "INITIAL PLANT COMMISSIONING Report") with
respect to such Outside Plant (or segment thereof) prepared in accordance
with the Testing and Acceptance Specifications referenced in Table 2-C to
the Network Description and Project Scope. Within thirty (30) Days after
its receipt of the relevant Initial Plant Commissioning Report, the
Developer shall:
(a) issue a Certificate of RFS Acceptance in accordance with Section
31.2 hereof; or
(b) not accept the relevant Outside Plant (or segment thereof) in its
existing condition and the terms and provisions of Section 31.5
hereof shall apply.
31.2. RFS ACCEPTANCE.
(a) GENERALLY. The Contractor shall, together with its submission of
Initial Plant Commissioning Report to the Developer in connection
with its application for RFS Acceptance of either Outside Plant (or
segment thereof), certify to the Developer that, as of the date set
forth in such certification:
(i) such Outside Plant (or segment thereof) (A) has been completed
in accordance with the Technical Requirements and any other
requirements of this Contract (except for Punch List Items, if
any), and (B) has passed, as of such certification date, all
Performance Tests as required by the Technical Requirements;
and
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(ii) all requirements of this Contract (except for Punch List
Items, if any) relating to such Outside Plant or segment
thereof (including all Technical Requirements) have been
fulfilled and all required documentation has been completed,
in each case other than those that do not, by the express
terms hereof, have to be fulfilled or completed on or prior to
the RFS Date; PROVIDED, that RFS Acceptance shall not be
deemed to include or require (A) completion of work by the
Vendors or other of the Owners' agents or contractors
hereunder, except to the extent necessary to allow the
Contractor to test each Outside Plant in accordance with the
Performance Test Standards (and to the extent that any such
necessity results in any delay or increased cost to the
Contractor in achieving RFS Acceptance, such event shall be
deemed a Owner-Caused Delay, and the Contractor shall be
entitled to equitable relief to the extent specified in
Section 15.1 hereof) or (B) the absence of minor defects that
do not materially affect the use or operation of the Outside
Plant and are included on a Punch List adopted by the Parties.
The Developer shall review the Contractor's submission within the
period specified in Section 31.1 hereof and, to the extent that the
Developer has neither requested additional information nor raised a
Dispute with respect to the Contractor's submission by written
Notice to the Contractor (which Notice shall articulate the reasons
for the Developer's determination that the Contractor's
certifications made in its application for RFS Acceptance are
erroneous or are inaccurately dated) prior to the expiration of such
period, shall issue a "CERTIFICATE OF RFS ACCEPTANCE" in accordance
with the Technical Requirements dated, and to be effective as of,
the date (the "RFS DATE") as of which the Contractor has certified,
by its Notice given pursuant to Section 31.1 hereof, that all
conditions for RFS Acceptance have been met. The following shall
occur on the RFS Date:
(A) each Outside Plant shall be deemed to be provisionally
accepted by the Owners; and
(B) title to any part of the relevant Outside Plant that has
not previously passed shall be transferred to the Owners
in accordance with Section 36.7 hereof and the risks
thereof and responsibility for routine maintenance
shall, subject to Section 31.2(b) hereof, pass to the
Owners.
(b) PUNCH LIST. The Certificate of RFS Acceptance may, in the
Developer's sole discretion, be unqualified or may have annexed to
it a Punch List, which shall be compiled by the Developer, of any
outstanding minor deficiencies or items to be completed by the
Contractor. The Contractor shall, as part of its Work hereunder and
as soon as practicable, remedy the deficiencies and complete the
Work indicated on all such listed items so as to ensure full
compliance with the requirements of this Contract.
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31.3. COMMERCIAL ACCEPTANCE. If at any time the Developer determines that, based
upon information supplied by the Contractor, any portion of the Outside
Plant is suitable to be put into commercial service (such portion, the
"RFCS PORTION"), then the Developer, at its option and without obligation
(except to the extent specified in clause (a) of this Section 31.3), shall
issue, with the consent (except as provided in such clause (a)) of the
Contractor (which consent shall not be unreasonably withheld or delayed),
to the Contractor a "CERTIFICATE OF COMMERCIAL ACCEPTANCE."
(a) RFCS SEGMENTS. If, based upon ODF-to-ODF Performance Test results
(as well as any other information and testing data that would
otherwise be required to demonstrate RFS Acceptance for either
Outside Plant on an overall basis) provided to it by the Contractor,
the Developer determines that any RFCS Segment meets the criteria
for RFS Acceptance as set forth in Section 32.1 hereof and is
suitable to be put into commercial service, then the Developer shall
issue to the Contractor, within fifteen (15) Days after receiving
from the Contractor all testing data and other information necessary
to make the foregoing determination, a Certificate of Commercial
Acceptance in respect of the relevant RFCS Segment. In the event
that the Developer is unable to issue a Certificate of Commercial
Acceptance for any RFCS Segment, it shall notify the Contractor
promptly (but, in any event, within the foregoing 15-Day period
after the Contractor's submission of the relevant data) with a
written Notice specifying in reasonable detail the reasons for its
inability to do so.
(b) EFFECT OF COMMERCIAL ACCEPTANCE. Upon the Commercial Acceptance Date
with respect to any RFCS Portion:
(i) the Owners shall be entitled to commence commercial service
over such RFCS Portion;
(ii) title to the RFCS Portion that has not previously passed shall
be transferred to the Owners in accordance with Section 36.7
hereof, and the responsibility for routine maintenance
thereof, pass to the Owners;
(iii) the risk for the RFCS Portion shall be vested in the Owners,
except that any risk attributable to the Outside Plant or part
of the Outside Plant that requires corrective action by the
Contractor shall remain the sole responsibility of the
Contractor;
(iv) the requirements of RFS Acceptance for such RFCS Portion shall
be deemed to have been met as of the date of the relevant
Certificate of Commercial Acceptance and, for purposes of the
Developer's assessment of RFS Acceptance for overall Outside
Plant of which such RFCS Portion is a part, such RFCS Portion
shall require no further testing or inspection in connection
with that RFS Acceptance process; and
(v) the Warranty Period shall commence in respect of such RFCS
Portion.
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(c) PUNCH LIST. The Certificate of Commercial Acceptance shall have as
an attachment a list of items requiring corrective action and items
still to be provided. Such corrective action shall be taken promptly
and such items completed by the Contractor as part of its Work
hereunder. When:
(i) the outstanding corrective action has been taken;
(ii) all outstanding items have been delivered and approved; and
(iii) the conditions described in Section 31.2 hereof have been
satisfied, the Developer shall issue a Certificate of
Commercial Acceptance. Upon such issuance, title to the
remainder of the Outside Plant shall be transferred to the
Owners in accordance with Section 36.7 hereof and the risk
with respect to such remainder of the Outside Plant shall pass
to the Owners and the provisions of Section 31.2(b) shall
apply.
(d) NO DIMINISHMENT OF THE CONTRACTOR'S OBLIGATIONS. The issuance of a
Certificate of Commercial Acceptance shall in no way relieve the
Contractor from its obligation to provide Outside Plants complying
with the technical and other requirements of this Contract and, in
particular, any deterioration or Defects in either Outside Plant
occurring or becoming known between the date of issuance of such
Certificate and the date of issuance of a Certificate of RFS
Acceptance shall be corrected at the sole expense of the Contractor,
except to the extent that such Defects are attributable to the
operation or maintenance (or lack thereof) of the RFCS Portion under
the control of the Owners.
(e) EQUITABLE RELIEF FOR INTERFERENCE WITH WORK. In the event that the
Owners' commencement of commercial operations on or with respect to
any RFCS Portion(s) obstructs, delays or otherwise interferes with
the Contractor's prosecution of the Work, such obstruction, delay or
interference shall be treated as an "Owner-Caused Delay" pursuant to
Section 16.1(e) hereof, entitling the Contractor to appropriate
adjustment to the Milestone Schedule or the Target Cost, determined
in accordance with Section 15.1 hereof.
31.4. DOCUMENTATION TO BE DELIVERED UPON RFS ACCEPTANCE OR COMMERCIAL
ACCEPTANCE. Within forty-five (45) Days after achieving each RFS Date and
any Commercial Acceptance Date, as applicable, the Contractor shall submit
to the Developer the following documents, in each case, relating to the
particular Outside Plant or RFCS Portion having achieved, respectively,
RFS Acceptance or Commercial Acceptance:
(a) one (1) hard copy and one (1) electronic copy of the "as built"
drawings for such Outside Plant or RFCS Portion; and
(b) test documentation, the operating manuals and serial numbers for the
equipment associated with such Outside Plant or RFCS Portion.
31.5. FAILURE TO ACHIEVE RFS ACCEPTANCE OR COMMERCIAL ACCEPTANCE. If neither a
Certificate of RFS Acceptance nor a Certificate of Commercial Acceptance
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is issued due to the existence of Defects with respect to either Outside
Plant or the Work, the Developer shall, without prejudice to any of its
other rights and remedies under this Contract, issue a list detailing such
Defects and advise the Contractor of a period of time in which such
Defects shall be remedied to the satisfaction of the Developer. The
Contractor shall issue an additional commissioning report similar in form
and substance to the Initial Plant Commissioning Report to the Developer
after all actions required to remedy such Defects have been taken by the
Contractor and such report shall be considered in accordance with the
provisions of Section 31.1 hereof.
31.6. FINAL ACCEPTANCE. The Developer shall issue to the Contractor a
"CERTIFICATE OF FINAL ACCEPTANCE" in respect of each Outside Plant within
ten (10) Days after the date on which all of the following conditions
have, in the Developer's judgment, been satisfied in full:
(a) the Developer has issued a Certificate of RFS Acceptance;
(b) the Warranty Period applicable to each component of the Outside
Plant has expired and there are no Warranty claims outstanding with
respect thereto;
(c) any and all items on all Punch Lists relating to the Outside Plant
have been completed; and
(d) the Developer has received the Certificate of Payment and Final
Release.
SECTION 32. WARRANTIES
32.1. GENERAL WARRANTIES. Notwithstanding any Outside Plant having been
provisionally accepted by the Owners and without prejudice to any other
warranty made by the Contractor hereunder, the Contractor warrants until
the expiration of the Warranty Period to the Owners that the Work and each
Outside Plant shall (each of the following, a "GENERAL WARRANTY"):
(a) be free from Defects in design (to the extent of the Contractor's
responsibility therefor, as limited as described in Section 4.2
hereof), materials, construction and workmanship;
(b) comply with all applicable requirements of Laws and Codes and
Standards;
(c) be fit for the particular use described in the Technical
Requirements; and
(d) meet the Network Description and Project Scope, the Performance
Parameters and all other requirements of this Contract.
32.2. NOTIFICATION OF BREACH OF WARRANTY. If any aspect of the Work has not been
performed in accordance with any General Warranty, the Contractor shall,
at its own expense, either repair (in accordance with Section 32.3 hereof)
or replace (in accordance with Section 32.4) all such Work; PROVIDED that:
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(a) the Developer has provided the Contractor with a written Notice
stating with reasonable specificity the basis for Developer's belief
that the relevant Work has not been performed to the requirements of
the applicable General Warranty; and
(b) such Notice has been given within a reasonable time after any
Owner's discovery of the facts or circumstances giving rise to such
Owner's belief and, except to the extent relating to any latent
Defect not reasonably discoverable by the Owners within the time
period available, is issued prior to the expiration of the Warranty
Period.
32.3. REPAIR GENERALLY. If at any time within the Warranty Period any Defect
occurs in either Outside Plant as a result of a failure of a General
Warranty, the Contractor shall, upon receiving appropriate Notice given in
accordance with Section 32.2 hereof, promptly repair or replace such part
or parts thereof to the satisfaction of the Developer on behalf of the
Owners without any charge to the Owners. The Contractor shall make every
reasonable effort to minimize the period of time that any Outside Plant is
out of service for repair and testing. For failures or any situations that
cause or risk an outage of any Outside Plant, the Contractor shall
initiate a corrective intervention immediately after receipt of Notice
from the Developer.
32.4. REPAIR OR REPLACEMENT. During the Warranty Period:
(a) the Contractor shall make an appropriate investigation, at its sole
cost and expense, of any items of Defective Work repaired or
replaced pursuant to this Section 32 to determine, to the reasonable
satisfaction of the Developer, the type of Defect and the cause of
failure of the defective item or items. The Contractor shall provide
a descriptive written report to the Developer on the results of the
investigation, the type of Defect found and, when appropriate, the
repair carried out on such defective item or items. The Contractor
shall also state whether the type of Defect and the "root cause" of
the failure are the result of a generic Defect occasioned by not
adhering to the Technical Requirements and whether such failure is
expected to occur elsewhere in the Outside Plant; PROVIDED that the
Contractor's determination shall not be conclusive for the purposes
of this Section 32. Additionally, whether or not having been
occasioned by a Defect, the Contractor may independently undertake
such investigations to determine whether a generic Defect may exist
and, if any generic Defect is identified, the Contractor shall, in
coordination with the Developer appropriately repair or replace all
affected elements of the Outside Plant; or
(b) the Developer may alternatively direct the Contractor to conduct an
investigation of suspected generic Defects wherein the Contractor
shall prepare a descriptive written report as provided for in
Section 32.4(a). If, as the result of any such investigation
conducted pursuant to this Section 32.4(b), all Work is found to be
free of any Defects for which the Contractor is responsible
hereunder, the Developer shall, on behalf of each Owner, reimburse
the Contractor for all costs incurred in the conduct of such
inspection and evaluation, which reimbursement shall include,
exclusively for purposes of this Section 32.4, compensation to the
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Contractor for Contractor Persons engaged and its equipment and
facilities utilized in such connection at each of their respective
rates customarily charged in similar projects.
32.5. REPAIR BY THE DEVELOPER. If upon the occurrence of any breach of a General
Warranty during the Warranty Period the Contractor has failed, after
proper Notice given by the Developer in accordance with Section 32.2
hereof, to (i) make prompt repair or replacement, or (ii) minimize Outside
Plant out-of-service time for testing and repair, the Developer may
arrange for the repair or replacement of any Defective Work and the
Contractor shall reimburse the Developer for the cost of repairs or
replacements; PROVIDED, the Developer satisfies its commitment to (i) give
the Contractor prompt Notice of any such repair undertaking, (ii)
coordinate its repair activities with those of the Contractor, and (iii)
comply with the Contractor's repair policies delivered to the Developer,
and the Contractor shall be permitted to have a representative present to
observe such repairs. Any repair by the Developer shall not in any way
diminish the Contractor's obligations under this Section 32.
32.6. REPAIRED OR REPLACEMENT PARTS. Each defective part repaired or replaced
pursuant to this Section 32 (a "REPLACEMENT ITEM") shall itself be subject
to the provisions of this Section, and shall be warranted from the date of
repair or replacement, as applicable, until a date two (2) years
thereafter; PROVIDED that the Warranty Period applicable to any
Replacement Item shall in no case exceed thirty-three (33) months from the
applicable RFS Date.
32.7. THE DEVELOPER'S EXPENSES. The Contractor shall pay to the Developer all
the expenses (if any) incurred by the Developer in testing or examining
any part of each Outside Plant for the purpose of or in connection with
this Section 32 or in or about or in connection with the correction,
replacement or repair of any part of such Outside Plant attributable to
the Contractor's breach of its General Warranty obligations.
32.8. SCOPE OF LIABILITY FOR DEFECTS. Except to the extent that the Developer or
any Owner may have a remedy pursuant to Section 39 hereof, the remedies
specified in this Section 32 are the Developer's and the Owners' sole and
exclusive remedies for Defects arising out of or in connection with the
Contractor's performance under this Contract. There are no standards of
performance, guarantees or warranties with respect to Defects other than
those expressed in this Section 32.
SECTION 33. ASSIGNMENT AND SUBCONTRACTING
33.1. GENERALLY. The Contractor shall not, without the prior written consent of
the Developer, assign this Contract or any part of the Work, or assign,
mortgage, charge or encumber any of the moneys due or becoming due under
this Contract, or any other benefit or obligation whatsoever arising, or
that may arise under this Contract. The Contractor shall not be relieved
of responsibility under this Contract for such parts of the Work as are
assigned or as may be subcontracted. To the extent that the Contractor
subcontracts portions of the Work to any of its Affiliates, the Contractor
guarantees and shall ensure such Affiliate's compliance with all
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requirements of this Contract and the Contract Documents, and the
Developer and the Owners agree to hold only the Contractor and, to the
extent provided for in the Corporate Guarantee, Bechtel Corporation liable
for any Affiliate's failure to so comply.
33.2. SUBCONTRACTS. From and after the execution date of this Contract, the
Contractor shall not enter into a contract with a Subcontractor that
requires payment in excess of DM 200,000 without the written approval of
the Developer. In addition, Contractor shall ensure that each Subcontract
shall contain:
(a) provisions allowing the Developers and its designees reasonable
access to all plants, offices and Sites in accordance with Section
19 hereof;
(b) provisions stating that the Subcontractor shall have no rights
against the Developer or any Owner and shall not create or assert
any Lien (equitable or otherwise) against the Developer, any Owner,
any Outside Plant or any of the Work;
(c) provisions designating the Developers and the Owners as third-party
beneficiaries and setting forth a conditional assignment of such
Subcontract to such Persons in accordance with Section 33.5 hereof;
and
(d) such other provisions of this Contract as prudently should be made
applicable to such Subcontract or Subcontractor in order to permit
the Contractor to fulfill its obligations hereunder or otherwise
give full effect to the provisions of this Contract.
33.3. EXISTING SUBCONTRACTS. The Contractor represents, warrants and covenants
that all Subcontracts entered into by the Contractor on or prior to the
date hereof contain, or shall be amended to contain, provisions addressing
the matters set forth in Section 33.2 hereof.
33.4. BREACH. If the Contractor commits any breach of this Section 33, any
assignment, mortgage, charge, encumbrance or Subcontract in contravention
of this Section 33 shall, as against the Developer or any Owner, be null
and void and of no force and effect, and may be ignored by such Owner
Persons. The Contractor shall protect, defend, indemnify and keep
indemnified the Developer and the Owners against all Losses suffered or
incurred by such Persons arising out of or related to such assignment,
mortgage, charge, encumbrance or Subcontract.
33.5. CONDITIONAL ASSIGNMENT. The Contractor shall make a conditional assignment
to the Developer for the benefit of the Owners of all of the Contractor's
Subcontracts and all Permits entered into, acquired or obtained, as the
case may be, in connection with the performance of this Contract or any
part of the Work. Upon a Termination for Default or Take Over, such
conditional assignment shall become fully effective and the Developer (and
the Owners, as applicable) shall acquire all benefits of such Subcontracts
and Permits (including prices and delivery dates, discounts, rebates and
refunds) except for those Subcontracts or Permits, if any, that relate
exclusively to the portion of the Work, if any, not Taken Over.
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33.6. NO OBLIGATIONS OF OWNER PERSONS TO SUBCONTRACTORS. No Subcontractor or any
of its employees, representatives or agents shall be deemed or construed
to be employees, representatives or agents of the Developer or any Owner.
No Subcontractor shall be deemed a third-party beneficiary of, or have any
interest in, this Contract.
SECTION 34. THE CONTRACTOR'S PERSONNEL
The Contractor shall employ, and shall ensure that its Subcontractors employ,
for Work to be performed in connection with this Contract only such persons who
are safety-conscious, suitably skilled and experienced, and the Contractor shall
agree to provide to the Developer, subject to the Developer's assumption of
appropriate confidentiality undertakings in respect thereof, such resumes and
other relevant biographical and employment data as of such date on file with the
Contractor for all such persons as the Developer may reasonably request. The
Developer, or its designee, may object to and direct the Contractor to remove
any person employed by the Contractor or any Subcontractor as to whom the
Developer may provide substantiation of a lack of safety-consciousness, suitable
skills or experience and such person shall be removed within a reasonable period
of time and shall not be employed again for any portion of the Work without the
prior approval of the Developer's Representative.
SECTION 35. THE DEVELOPER'S STAFF
35.1. GENERALLY. Where the Technical Requirements provide for stipulated Work to
be carried out by the Developer, such Work shall be carried out in the
manner and with the responsibilities as defined therein. Such
participation by any of the Developer's staff (or any other Person
designated by the Developer by contract or otherwise) in the Work shall
not be construed as relieving the Contractor of its responsibility for the
design, quality and performance of each Outside Plant.
35.2. LIMITATIONS. Where any of the Developer's staff (or any other Persons
designated by the Developer by contract or otherwise) participate in the
Work, they shall remain officers, partners, employees or agents and under
the administrative control of the Developer. The Contractor shall not be
liable for any negligent act or omission of such staff, agents or
designees, but if in giving instructions to be carried out by any such
Persons, or by omitting to give such instructions, the Contractor fails to
use proper skill and care, the Contractor shall be deemed to have been
negligent and shall be liable for the consequence of such negligence.
SECTION 36. TITLE
36.1. GENERALLY. The Contractor shall transfer title ("EIGENTUM") to the Cable
Links (and all portions thereof) in accordance with the German Law of
Property ("SACHENRECHT"). Such transfer of title shall be effected by the
Contractor in such manner as to realize that (i) Carrier 1 and MFN will
each acquire separate title ("ALLEINEIGENTUM") to one identical Cable Link
and (ii) Viatel will acquire separate title to (A) one
Contractor-completed Cable Link including Fiber Optic Cable pulling and
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(B) one Contractor-completed Cable Link without such Fiber Optic Cable
pulling. Each of Carrier 1, MFN and Viatel (or any assignee thereof as to
whom the Contractor has been notified in accordance with Section 2.3
hereof) is, for purposes of its right to receive title to Work items
hereunder, referred to in this Section 36 as a "DESIGNATED OWNER".
36.2. TITLE TO SUPPLIES AND WORK. When held or installed by the Contractor at
any Site, all physical items ("KORPERLICHE GEGENSTANDE") of supply,
equipment, materials and other Work (each, an "ITEM") intended for use in
each Cable Link shall be identified by the prominent display of notices
and by marking the Items, in accordance with the Storage and Marking
Procedures to be attached hereto as APPENDIX 8, as being the property of
each Designated Owner. The Contractor shall suitably annotate the relevant
books of inventory and installation, and shall allow the Developer access,
for and on behalf of the Designated Owners, to its premises and records in
order to check that such identification has been carried out.
36.3. TRANSFER OF TITLE. The Contractor shall transfer title ("EIGENTUM") to
each Item intended for use in each Cable Link to the Designated Owner
thereof upon submission to the Developer of the Contractor Invoice
(together with all documentation required under Section 12.5 hereof) for
the Reimbursement Invoice, specifying that such Item is payable by such
Designated Owner, subject, in any event, to any rights the Owners may have
under Section 12.5 hereof. For the purpose of this title transfer
("EIGENTUMSUBER-TRAGUNG"), the submission of the Contractor Invoice to the
Developer for payment by the Developer on behalf of each Designated Owner
constitutes the offer, and the payment thereof by the Developer on behalf
of such Designated Owner constitutes the acceptance, of the agreement
among the Contractor and such Designated Owner that the title to all Items
either (i) identified in such Contractor Invoice and supporting
documentation or (ii) specified in this Contract or any Contract Document
as included in the Milestone Event for which such Contractor Invoice is
paid or payable (the "TRANSFERRED PROPERTY"), shall pass to such
Designated Owner. The Contractor shall transfer direct possession
("UNMITTELBARER BESITZ") of each Item of Transferred Property, as
identified in accordance with the Storage and Marking Procedures, to each
Designated Owner upon the agreement referred to in the preceding sentence
relating thereto; PROVIDED, that if the Contractor is to retain, pursuant
to any provision of this Contract or any Contract Document, possession
("BESITZ", hereinafter "POSSESSION") of any Item of Transferred Property
(each, a "RETAINED ITEM") until any later date, the provisions of Section
36.5 hereof shall apply. The Contractor represents and warrants that each
Designated Owner shall acquire good and clear title to such Transferred
Property, free and clear of all Liens (other than Owner Liens).
36.4. REMOVAL OF LIENS. The Contractor shall secure the removal of any Lien
(other than Owner Liens) on the Work or any portion of each Cable Link or
Outside Plant within thirty (30) Days after obtaining notice thereof. If
any Lien (other than Owner Liens) is not discharged, satisfied or released
within such 30 Days or such earlier time as may be necessary in order for
any Owner to avoid being damaged thereby, the Developer may, upon Notice
to the Contractor of its intention to do so, apply any funds withheld or
moneys to become due to the Contractor hereunder to satisfy, discharge or
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secure the release (including by posting a bond) of such items. Any such
application by the Developer shall be deemed payment on behalf of the
Owners to the Contractor. Any additional expense incurred by the Developer
(or any Owner) as a result of the Contractor's breach of any provision of
this Section 36.4 shall be borne by the Contractor.
36.5. NO RELEASE OF THE CONTRACTOR; CONTRACTOR OBLIGATIONS IN LIEU OF TRANSFER
OF DIRECT POSSESSION. The transfer of title shall not absolve or release
the Contractor from any other obligation or liability under this Contract.
With respect to Retained Items, the Contractor and each of the Designated
Owners hereby agree that, in lieu of delivering direct Possession, the
Contractor shall diligently safeguard such Retained Items for each of the
Designated Owners ("BESITZMITTLUNGSVERHALTNIS", Secs. 868, 930 of the
German Civil Code [BGB]). To the extent that third parties (such as
Subcontractors or vendors) are in Possession of any Transferred Property
at the time of the transfer of title ("EIGENTUMSUBERTRAGUNG") or obtain
such Possession from the Contractor thereafter, the Contractor hereby
assigns to each Designated Owner any claim the Contractor may have for the
retrieval or reconveyance ("ABTRETUNG DES HERAUSGABEANSPRUCHS") of such
Transferred Property.
36.6. BAILMENT. The Contractor shall serve as bailee of any Retained Items and
shall remain liable to each Designated Owner (acting by and through the
Developer in the enforcement of such liability) and shall bear the risk of
loss or damage thereto, until the risk of loss thereof has passed to such
Designated Owner in accordance with Section 40 hereof. Notwithstanding the
foregoing, it shall be the individual responsibility of the appropriate
Designated Owner to take all action within its reasonable control to
prevent any third party in contravention of the Contractor's aforesaid
bailee rights to take direct Possession of any of the Designated Owner's
Items of Transferred Property while Work on such property is still
ongoing.
36.7. TITLE TO THE CABLE LINKS. To the extent title has not previously been
transferred to the appropriate Designated Owner pursuant to Section 36.3
hereof (other than Work being completed pursuant to Section 27.1(h)
hereof), then, upon:
(a) the issuance of a Certificate of RFS Acceptance or a Certificate of
Commercial Acceptance in accordance with Section 31 hereof; or
(b) termination, in whole or in part, of this Contract or the Contractor
pursuant to Sections 23 or 26 hereof,
Contractor shall be obligated to transfer absolute and exclusive right and
title to and interest in any and all parts of the Cable Links (the
"Remaining Parts"), as such parts shall be specifically identified as the
separate property reserved for each of the Designated Owners:
(i) in the relevant "as built" drawings, in the case of
Certificate of RFS Acceptance or a Certificate of Commercial
Acceptance, to be delivered to the Developer (for the benefit
of the Owners) within the time periods specified herein; or
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(ii) in the case of any termination pursuant to Sections 23 or 26
hereof, all such plans, specifications and inventories
otherwise required to be prepared for or delivered to the
Developer (for the benefit of the Owners) pursuant to Section
27.1 hereof;
to such Designated Owner upon the Developer's payment on behalf of the
Owners of the Final Payment (or, as applicable, any Termination Payment).
To the extent that Possession has not been previously transferred from
Contractor to the Designated Owners, Contractor shall also be obligated to
transfer direct Possession (UNMITTELBARER BESITZ) to the Remaining Parts
to the Designated Owners. For this purpose, the submission of the
Contractor's invoice (with the relevant supporting information) to the
Developer for such payments from the Developer on behalf of each
Designated Owner shall constitute the offer, and the payment thereof by
the Developer on behalf of such Designated Owner shall constitute the
acceptance, of the agreement among the Contractor and such Designated
Owner that the title to all remaining Cable Link portions shall pass to
such Designated Owner. The Contractor represents and warrants that each
Designated Owner shall acquire good and clear title thereto, free and
clear of all Liens (other than Owner Liens).
SECTION 37. REPRESENTATIONS AND WARRANTIES
37.1. CONTRACTOR'S REPRESENTATIONS AND WARRANTIES. The Contractor hereby
represents and warrants that:
(a) ORGANIZATION; POWER AND AUTHORITY. It is a limited liability company
duly organized and validly existing under the Laws of the United
Kingdom, and it or its relevant Affiliates are authorized to do
business in all jurisdictions where the Work is to be performed, and
it has all requisite legal power and authority to execute this
Contract and to perform the terms, conditions and provisions
thereof.
(b) AUTHORIZATION. The execution and delivery by the Contractor of this
Contract has been duly authorized by all requisite corporate action.
(c) ENFORCEABILITY. This Contract constitutes the legal, valid and
binding obligation of the Contractor, enforceable in accordance with
the terms thereof except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting creditors' rights generally and to the
extent that the remedies of specific performance, injunctive relief
and other forms of equitable relief are subject to equitable
defenses, the discretion of the court before which any proceeding
therefor may be brought, and the principles of equity in general.
(d) NO CONFLICT. Neither the execution, delivery or performance by the
Contractor of this Contract, nor the consummation of the
transactions contemplated thereby, will result in:
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(i) a violation of, or a conflict with, any provision of the
organizational documents of the Contractor;
(ii) a contravention or breach of, or a default under, any term or
provision of any material contract, agreement or instrument to
which the Contractor is a party or by which it or its property
may be bound, which contravention, breach or default could be
reasonably expected to have a material adverse effect on the
ability of the Contractor to perform its obligations under
this Contract to consummate the transactions contemplated by
this Contract; or
(iii) a violation by the Contractor of any Law.
(e) NO VIOLATION OF LAW. It is not in violation of any Law promulgated,
or judgment entered, by any governmental authority, which
violations, individually or in the aggregate, would adversely affect
it or its performance of any obligations hereunder.
(f) LITIGATION. There are no actions, suits or proceedings, now pending
or (to its best knowledge) threatened against it before any court or
administrative body or arbitral tribunal that might materially
adversely affect the ability of the Contractor or any Subcontractor
to perform its obligations hereunder.
(g) LICENSES. It will hold all national, provincial, local and other
Permits required to allow it to operate or conduct its business now
and as contemplated by this Contract.
(h) QUALIFICATIONS. It has:
(i) examined the Contract Documents thoroughly and has become
familiar with their terms;
(ii) full experience and proper qualifications to perform the Work
and to construct the Outside Plants; and
(iii) taken reasonable steps to ascertain the nature and location of
the Work, the general character and accessibility of the
Outside Plant build-out, the existence of above-ground
obstacles to construction, and other general and local
conditions (including labor, safety and environmental) that
might affect its performance of the Work; but the Contractor
has not carried out a detailed survey of the proposed route
and has not established whether unconditional Wayleaves will
be available for the whole of the proposed route; accordingly,
the Contractor does not warrant that the whole of the proposed
route will be suitable or feasible and does not warrant the
precise nature or scope of the work which will be required.
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37.2. THE DEVELOPER'S REPRESENTATIONS AND WARRANTIES. The Developer hereby
represents and warrants that:
(a) ORGANIZATION; POWER AND AUTHORITY. It is a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG duly organized and validly existing under the
laws of Germany, and is qualified to do business in Germany and in
all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary, and has all requisite legal
power and authority to execute this Contract and to perform the
terms, conditions and provisions thereof.
(b) AUTHORIZATION. The execution and delivery by the Developer of this
Contract has been duly authorized by all requisite corporate action.
(c) ENFORCEABILITY. This Contract constitutes the legal, valid and
binding obligation of the Developer, enforceable in accordance with
the terms hereof except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting creditors' rights generally and to the
extent that the remedies of specific performance, injunctive relief
and other forms of equitable relief are subject to equitable
defenses, the discretion of the court before which any proceeding
therefor may be brought, and the principles of equity in general.
(d) NO CONFLICT. Neither the execution, delivery or performance by the
Developer of this Contract, nor the consummation of the transactions
contemplated thereby, will result in:
(i) a violation of, or a conflict with, any provision of the
organizational documents of the Developer;
(ii) a contravention or breach of, or a default under, any term or
provision of any material contract, agreement or instrument to
which the Developer is a party or by which it or its property
may be bound, which contravention, breach or default could be
reasonably expected to have a material adverse effect on the
ability of the Developer to perform its obligations under this
Contract to consummate the transactions contemplated by this
Contract; or
(iii) a violation by the Developer of any Law.
(e) NO VIOLATION OF LAW. It is not in violation of any Law promulgated,
or judgment entered, by any governmental authority, which
violations, individually or in the aggregate, would adversely affect
it or its performance of any obligations hereunder.
(f) LITIGATION. There are no actions, suits or proceedings, now pending
or (to its best knowledge) threatened against it before any court or
administrative body or arbitral tribunal that might materially
adversely affect the ability of the Developer to perform its
obligations hereunder.
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(g) LICENSES. It will hold (either directly, through its Affiliates or
by contract) all national, provincial, local and other Permits
required to allow it to operate or conduct its business now and as
contemplated by this Contract.
37.3. REPRESENTATIONS AND WARRANTIES OF THE OWNERS. Each Owner hereby
individually represents and warrants to the Contractor that:
(a) FUNDING FOR THE CONTRACT. It has provided to the Developer an
irrevocable letter of credit for the benefit of the Developer which
permits the Developer to draw upon such letter of credit by
presentation of a sight draft to the issuing bank to obtain funds to
pay, among other things, the Owner's share of payments due to the
Contractor hereunder.
(b) ORGANIZATION; POWER AND AUTHORITY. It is a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG (or, in the case of Carrier 1, an OFFENE
HANDELSGESELLSCHAFT) duly organized and validly existing under the
laws of Germany, and is qualified to do business in Germany and in
all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary, and has all requisite legal
power and authority to execute this Contract and to perform the
terms, conditions and provisions thereof.
(c) AUTHORIZATION. Its execution and delivery of this Contract has been
duly authorized by all requisite corporate action.
(d) ENFORCEABILITY. This Contract constitutes its legal, valid and
binding obligation, enforceable in accordance with the terms hereof
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws
affecting creditors' rights generally and to the extent that the
remedies of specific performance, injunctive relief and other forms
of equitable relief are subject to equitable defenses, the
discretion of the court before which any proceeding therefor may be
brought, and the principles of equity in general.
(e) NO CONFLICT. Neither the execution, delivery or performance by the
Contractor of this Contract, nor the consummation of the
transactions contemplated thereby, will result in:
(i) a violation of, or a conflict with, any provision of the
organizational documents of such Owner;
(ii) a contravention or breach of, or a default under, any term or
provision of any material contract, agreement or instrument to
which such Owner is a party or by which it or its property may
be bound, which contravention, breach or default could be
reasonably expected to have a material adverse effect on the
ability of such Owner to perform its obligations under this
Contract to consummate the transactions contemplated by this
Contract; or
(iii) a violation by such Owner of any Law.
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(f) NO VIOLATION OF LAW. It is not in violation of any Law promulgated,
or judgment entered, by any governmental authority, which
violations, individually or in the aggregate, would adversely affect
it or its performance of any obligations hereunder.
(g) LITIGATION. There are no actions, suits or proceedings, now pending
or (to its best knowledge) threatened against it before any court or
administrative body or arbitral tribunal that might materially
adversely affect the ability of such Owner to perform its
obligations hereunder.
(h) LICENSES. It will hold (either directly, through its Affiliates or
by contract) all national, provincial, local and other Permits
required to allow it to operate or conduct its business now and as
contemplated by this Contract.
SECTION 38. DISPUTE RESOLUTION AND CONSENT TO JURISDICTION
38.1. MUTUAL DISCUSSIONS; MEDIATION.
(a) MUTUAL DISCUSSIONS. If a dispute or difference of any kind
whatsoever shall arise between the Parties in connection with,
relating to or arising out of this Contract, including the
interpretation, performance, non-performance or termination of this
Contract, the Parties shall attempt to settle such dispute in the
first instance by mutual discussions between the Project Manager and
the Developer's Representative.
(b) SENIOR MANAGEMENT REVIEW. If any dispute or difference has not been
resolved within a period of fifteen (15) Days of mutual discussions
conducted in accordance with the foregoing clause (a) of this
Section 38.1, or such longer time as is mutually agreed in writing,
the dispute or difference shall be submitted for resolution to
responsible senior management of each Party who are not directly
involved with this Contract or the Systems, who shall (i) meet in
person, (ii) allocate sufficient time and resources for thorough
consideration of all relevant matters and (iii) endeavor to resolve
the relevant dispute or difference within fifteen (15) Days of the
matter being referred to them.
(c) MEDIATION. In the event that any dispute or difference has not been
resolved within thirty (30) Days (unless the Parties mutually agree
to a longer period) of senior-management discussions carried out in
accordance with the preceding clause (b) of this Section 38.1, the
Parties shall endeavor to settle the same by non-binding mediation
under the Construction Industry Mediation Rules of the American
Arbitration Association prior to any litigation in respect thereof.
38.2. CONSENT TO JURISDICTION. The Parties hereto agree that, without limiting
the ability of either Party to appeal an order of any such court, the
United States District Court for the Southern District of New York and
state courts located in the State of New York shall have exclusive
jurisdiction to enforce the terms of this Contract and to decide any
claims or disputes that may arise or result from, or be connected with,
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this Contract and any superseding agreement, any breach or default
hereunder or thereunder, or the transactions contemplated herein or
therein. Any and all claims, actions, causes of action, suits or
proceedings relating to the foregoing shall be filed and maintained only
in such courts, and the Parties hereto hereby irrevocably consent and
submit to the jurisdiction of such courts. If an action, suit or
proceeding is instituted in the United States District Court for the
Southern District of New York or a state court located in the State of New
York, each Party agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that:
(a) it is not subject personally to the jurisdiction of such court;
(b) such action, suit or proceeding is brought in an inconvenient forum;
(c) the venue of such action, suit or proceeding is improper; or
(d) this Contract and any superseding agreement or the subject matter
hereof or thereof may not be enforced in or by such court.
Any and all service of process, and any other notice in any such action,
shall be given personally or by registered or certified mail, return
receipt requested, or by any other means of mail that requires a signed
receipt, postage prepaid, mailed to such a Party as herein provided. The
Parties agree to and submit to enforcement of interim judgments issued in
any such court.
SECTION 39. INDEMNIFICATION
39.1. CONTRACTOR TO INDEMNIFY. To the extent that any of the following Losses
are not recoverable by the relevant Owner Persons out of the proceeds of
insurance procured and maintained by the Contractor for the benefit of
such Owner Persons in connection with this Contract, the Contractor shall
be liable for, and shall indemnify, protect, defend and hold harmless each
Owner Person from and against, all Losses (each of the following, an
"INDEMNIFIABLE LOSS"), to the extent arising from:
(a) any injury to, or death or disease of, any person, or any damage to,
or loss of use of, any property or asset based upon, arising under
or otherwise related to the negligent act or omission of any
Contractor Person in connection with the performance of this
Contract; or
(b) any infringement or claimed infringement of intellectual property
rights to the extent provided in Section 11.1(b) hereof; or
(c) any act or omission of any Contractor Person that violates any Law
or any Tax requirement; or
(d) the discharge or presence of any environmentally hazardous
construction waste generated from the Contractor's Work, excluding
any such environmentally hazardous construction waste the sole
source of which was pre-existing environmental contamination at the
Site.
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39.2 OWNERS TO INDEMNIFY. To the extent that any of the following Losses are
not recoverable by the relevant Contractor Person out of the proceeds of
insurance procured and maintained by either of the Contractor or the
Owners (acting by and through the Developer in the procurement and
maintenance thereof) in connection with this Contract, each Owner shall
(to the pro rata extent of its ownership interest in the Outside Plants)
be liable for, and shall indemnify, protect, defend and hold harmless each
Contractor Person from and against, all Losses to the extent arising from:
(a) any infringement or claimed infringement of intellectual property
rights as described in Section 11.1(a) hereof; or
(b) any act or omission of any Owner Person that violates any Law.
39.3 CONDITIONS TO EFFECT INDEMNIFICATION. Each Party's obligations with
respect to indemnification as set forth in Sections 11.1(a), 11.1(b), 28.5
and 39.1 and 39.2 shall be subject to the conditions that (a) the
indemnitee provides the indemnitor reasonably prompt Notice of any claim
or suit brought; (b) the indemnitee cooperates in the defense of any such
claim or suit; and (c) the indemnitor has the sole control of the defense
and settlement to the extent of the indemnitor's liability for any such
claim or suit, provided that the indemnitor shall confirm in writing its
obligation to indemnify the indemnitee with respect to all cost and
expenses with respect to such claim or suit. The above referenced
indemnification provisions shall only apply to occurrences during the
performance of the Work and neither Party shall have any obligation to
indemnify against any claim or suit occurring after the expiration of a
period of two (2) years after the Final Acceptance Date.
SECTION 40. RISK OF LOSS
40.1. GENERALLY. Notwithstanding that title in whole or in part to the Work may
have passed to any Owner pursuant to Section 36 hereof, the Contractor
shall retain the risk of loss and remain and be responsible to each
affected Owner (acting by and through the Developer in the enforcement
thereof) to make good for Loss or damage to the Outside Plants or Work
(including the Owner Procured Equipment as described in APPENDIX 3 but
specifically excluding the Nortel switching equipment identified in the
second paragraph of Section 3.1 of APPENDIX 2, subject to the proviso
below) arising from any cause (other than the negligent or willful acts or
omissions of Owner Persons) whatsoever from the date hereof until (i) the
RFS Date, or (ii) the issuance of a Certificate of Commercial Acceptance
(but only to the extent that such supplies or Work constitute part of the
RFCS Portion), whichever is earlier, in accordance with Section 31 hereof;
PROVIDED, that in the case of such Nortel switching equipment, any
insurance proceeds received by the Contractor relating thereto shall be
used to repair or replace such Nortel switching equipment or shall be
delivered to the Developer, at the Developer's option.
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40.2. PAYMENTS TO THE OWNERS. Where the Contractor has not, either in accordance
with the terms of this Contract or otherwise, without cost or expense to
the affected Owner, corrected any damage to any Outside Plant or any
portion thereof with respect to which it retains the risk of loss, the
Contractor shall pay to the Developer, for the benefit of such Owner,
compensation equal to the expenses reasonably incurred by or on behalf of
such Owner of correcting such damage or other loss. This Section 40 is
without prejudice to the obligations of the Contractor under any other
provision of this Contract.
SECTION 41. INSURANCE
41.1. TYPES OF INSURANCE. The Contractor shall, at its own expense, provide
insurance to the reasonable satisfaction of the Developer until the RFS
Date or Final Acceptance Date, as applicable, of the types and in the
coverage amounts specified in APPENDIX 6 hereto, and the costs of doing so
shall be Reimbursable Costs hereunder.
41.2. NOTICE OF CANCELLATION. All of the insurance coverages shall provide that,
prior to any cancellation or material change thereto initiated by the
insurers, a thirty (30) Day written Notice shall be forwarded to the
Developer.
41.3. COPIES. The Contractor shall furnish the Developer with certificates of
insurance (as accompanied by appropriate documentation to establish the
inclusion in each relevant policy of all terms and conditions as are
required hereunder or in any Contract Document for inclusion therein) to
verify that the Contractor has complied with the insurance requirements
under this Contract.
41.4. FAILURE TO MAINTAIN INSURANCE. If the Contractor fails to effect or keep
in force any of the insurance required by this Section 41, the Developer
may, without prejudice to any other rights it or any Owner may have under
this Contract, effect and keep in force any such insurance and pay the
premium due or take out new insurance satisfactory to the Developer.
41.5. COMPLIANCE WITH POLICIES. The Contractor shall comply with all terms,
conditions and guaranties contained in all policies relating to the
insurance required by this Section 41 and shall make all reasonable
efforts so that its insurance brokers and insurers give the Developer such
information in respect thereto as the Developer may reasonably request.
41.6. CLAIM INFORMATION. The Contractor shall notify the insurers promptly and
shall supply all necessary information concerning any occurrence that may
give rise to a claim under the above insurance policies in order to
expedite the processing of the claim.
41.7. REMEDY OF LOSS OR DAMAGE. Following a loss or damage, the Contractor shall
remedy any such loss or damage with due diligence and dispatch and shall
not wait for any insurance proceeds to effect the repairs.
41.8. INSOLVENCY OF INSURERS. The insolvency, liquidation, bankruptcy or failure
of any insurer providing insurance for the Contractor or any
Subcontractor, or failure of any such insurer to pay claims accruing,
shall not be considered a waiver of, nor shall it excuse the Contractor
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from complying with, any of the provisions of this Contract.
SECTION 42. DOCUMENTS, INFORMATION AND CONFIDENTIALITY
42.1. GENERALLY. All drawings, diagrams, specifications and any other
information to be provided by the Contractor to the Developer under this
Contract shall be supplied by the Contractor in accordance with the
specified procedures and schedules set forth in the Technical Requirements
(including the Network Description and Project Scope). The Contractor
shall be solely responsible for any delay resulting from failure on its
part to provide such drawings, diagrams, specifications or other
information to the Developer within the times required.
42.2. THE CONTRACTOR TO RETAIN DRAWINGS. All drawings and documents held by the
Contractor at the RFS Date shall be retained by the Contractor during the
Warranty Period to enable the Contractor to supply any replacement parts
or extensions to any Outside Plant if these shall subsequently be
required. At the Developer's request, the Contractor shall provide the
Developer with access to all such documents.
42.3. CONFIDENTIALITY.
(a) GENERALLY. All drawings, diagrams, specifications or other
information supplied in connection with this Contract by or on
behalf of either Party (such disclosing Party or person acting on
its behalf, the "DISCLOSING PARTY") to the other Party (such
recipient Party, together with its directors, officers, employees,
agents or subcontractors or any of their respective directors,
officers, employees, agents or subcontractors, the "RECIPIENTS")
that are marked or designated by the Disclosing Party as being
confidential and proprietary shall be used solely in assisting the
Recipients in performance of this Contract and shall not, at any
time earlier than the third (3rd) anniversary of the latest RFS Date
hereunder be disclosed by such Recipients to any third party without
the prior written consent of the Disclosing Party, except as
expressly permitted under clause (b) of this Section 42.3. Each
Party hereto shall ensure that each potential Recipient under its
control or acting on its behalf in connection with this Contract is
subject to appropriate confidentiality undertakings with respect to
all information disclosed hereunder.
(b) Notwithstanding the absence of the Disclosing Party's prior written
consent, any Recipient may disclose information furnished hereunder:
(i) as necessary for the performance of this Contract (and then
only under conditions of confidentiality as set forth herein);
(ii) as required by Law or pursuant to court order;
(iii) if it is or becomes generally available to the public by
publication or otherwise, other than by disclosure in
violation of this Section 42;
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(iv) if it was within any Recipient's possession prior to being
furnished to a Recipient by or on behalf of the Disclosing
Party;
(v) if it becomes available to the Recipient on a non-confidential
basis; or
(vi) if it was independently developed by the Recipient without
reference to the information provided by or on behalf of the
Disclosing Party.
To the extent practicable, any Recipient shall give reasonable
advance Notice to the Disclosing Party prior to any disclosure
pursuant to Section 42.3(b)(ii) hereof.
(c) TITLE TO INTELLECTUAL PROPERTY. The copyright and all other forms of
intellectual property in all drawings, specifications and data
issued by either Party in connection with this Contract shall remain
the property of that Party; PROVIDED that any drawings,
specifications and data relating specifically to the Outside Plants
(as distinguished from the Contractor's standard products and
services) provided by or on behalf of any Contractor Person to the
Developer for the benefit of the Owners shall become the property of
each such Owner (in proportion to its respective ownership interest
in the Outside Plants) and the Contractor hereby so assigns to each
Owner all of its right, title and interest, that now exists or may
arise in the future, in and to such drawings, specifications and
data. The Developer and each of the Owners shall have the right to
use and reproduce all drawings, diagrams and specifications and
other information provided by or on behalf of the Contractor for its
own use in connection with the operation, marketing and maintenance
of the Outside Plants and interconnection with other systems, but
not for other commercial purposes.
SECTION 43. PUBLICITY
No publicity relating to this Contract or the Work shall be published in any
newspaper, magazine, journal or any other written, oral or visual medium without
the prior written approval of the Developer's Representative.
SECTION 44. CORRUPT GIFTS AND THE PAYMENT OF COMMISSIONS
44.1. GIFTS, ETC. THE CONTRACTOR:
(a) represents and warrants that no Contractor Person has; and
(b) covenants that no Contractor Person shall,
offer or give or agree to give to any Owner Person any gift, commission,
rebate or consideration of any kind as an inducement or reward for doing,
influencing or carrying out any act in relation to the obtaining or
execution of this Contract or for showing any favor or disfavor to any
Person in relation to this Contract.
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44.2. PAYMENTS. The Contractor covenants that neither it, nor any other
Contractor Person, shall, directly or indirectly:
(a) offer, pay, promise to pay or authorize the payment of any money, or
offer, give, promise to give or authorize the giving of anything of
value to any foreign (non-U.S.) government official or any foreign
political party, official thereof or candidate for political office
for purposes of influencing any act or decision of such government
official or political party, official or candidate, or inducing such
government official or political party, official or candidate to use
its or its influence with the government or instrumentality thereof
to influence any act or decision of such government or
instrumentality;
(b) offer, pay, promise to pay or authorize the payment of any money, or
offer, give, promise to give or authorize the giving of anything of
value to any Person while knowing or having a reason to know that
all or a portion of such money or thing of value will be offered or
given to any such government official or any such political party,
official thereof or candidate for political office for purposes of
influencing any act or decision of such government official or
political party, official or candidate, or inducing such government
official or political party, official or candidate to use its or its
influence with respect to any act or decision of such government or
instrumentality;
(c) use fictitious, inflated, duplicate, anonymous, inadequate,
unrecorded or otherwise false accounts, transfers, records, reports,
documents or bookkeeping entries for the purpose of (i) concealing,
mislabeling, misstating, omitting or otherwise falsifying the
existence, source or application of funds for the uses proscribed by
Section 44.2(a) or 44.2(b) hereof, (ii) excluding them from the
Developer's or any Owner's usual system of financial accountability
or (iii) obtaining approval by any Owner Person of any activities
proscribed by Section 44.2(a) or 44.2(b) hereof.
44.3. FOREIGN CORRUPT PRACTICES ACT. The Contractor acknowledges that the
prohibitions set forth in Section 44.2 hereof conform to the requirements
of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and shall
apply to all activities of each Contractor Person, notwithstanding the
fact that such activities may be permitted by the standards or customs of
countries other than the United States.
44.4. PERMITTED ACTIVITIES. Section 44.2 hereof does not prohibit:
(a) the normal extension of those common courtesies and social amenities
(including meals, holiday gifts and tips of nominal amounts)
consistent with ethical business practices that are offered and
received on a basis of friendship or hospitality, and without the
expectation of anything in return, and are of too little value,
duration or frequency to give even the appearance of impropriety;
PROVIDED that the cost thereof is properly identified and disclosed
on the books of the Developer or relevant Owner;
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(b) the payment of commissions or fees to responsible and qualified
consultants, agents, marketing representatives, attorneys and others
for necessary and legitimate services actually performed; PROVIDED
that the amount paid is reasonably related to the value of such
services or the benefits resulting therefrom;
(c) payments to Persons whose duties are essentially ministerial or
clerical, which are not intended to influence the misuse of official
position, but rather are intended to encourage the lawful use of
official position to expedite a matter or to act with respect to
matters not involving any discretion; or
(d) any payment to a government official, employee or agency that is
specifically required by Law, regulation or decree equally
applicable to all similarly situated companies.
44.5. MATERIALITY. Breach of this Section 44 may render the Contractor, its
Subcontractors and agents liable to punishment by Law, and any such breach
shall constitute an Event of Default.
SECTION 45. NOTICES
45.1. METHODS AND EFFECTIVENESS. All notices, requests, consents and other
communications hereunder (each, a "NOTICE") shall be in writing and shall
be delivered by one or more of the following methods:
<TABLE>
<S> <C>
===================================================================
METHOD DATE OF EFFECTIVENESS
===================================================================
Personal delivery Date delivered
===================================================================
Facsimile with return confirmation Date sent if received
of transmission during normal business
hours, otherwise the next
Business Day
===================================================================
Nationally recognized overnight Business Day after the date
courier service sent if within the same
country, otherwise the date
delivered
===================================================================
Firstclass certified mail, postage Fifth Day after the date sent
prepaid and return receipt requested
===================================================================
</TABLE>
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45.2. ADDRESSES. Unless otherwise notified in writing, for the purposes of this
Section 46, the addresses and facsimile numbers of the Parties are:
(a) THE CONTRACTOR. If to the Contractor, at the following addresses:
Bechtel Limited c/o Bechtel Overseas Corporation
c/o Pipeline Engineering GmbH
Kallenbergstrasse 5
D-45141 Essen
GERMANY
Attention: Mr. Allan L. Aldridge, Project Manager
Facsimile: +49-201-320-5309
WITH A COPY TO:
Bechtel Limited
P.O. Box 739
London W6 8DP
UNITED KINGDOM
Attention: Mr. William W. West, Project Director
Copy: Mr. George B. Baber, General Manager
Facsimile: +44-181-846-4938
AND AN ADDITIONAL COPY TO:
Bechtel Corporation
50 Beale Street
San Francisco, CA 94105
Attention: General Counsel
Facsimile: +1-415-768-1777
(b) THE DEVELOPER. If to the Developer, at the following address:
ViCaMe Infrastructure Development GmbH
c/o Viatel U.K.
Parnell House
25 Wilton Road
London SW1V 1EJ
UNITED KINGDOM
Attention: Mr. John Langmaid, Project Manager
Facsimile: +44-171-828-1907
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AND A COPY TO:
Viatel, Inc.
685 Third Avenue
New York, New York 10017
UNITED STATES OF AMERICA
Attention: General Counsel
Facsimile: +1-212-350-9250
(c) THE OWNERS. Notwithstanding Section 2.1(b) hereof, in the event that
notice must be given pursuant to this Contract to any Owner or
Owners, such notice shall be provided as follows:
(i) VIATEL. If to Viatel, at the addresses for the Developer
specified above in paragraph (b).
(ii) MFN. If to MFN, at the following address:
Metromedia Fiber Network, Inc.
Zeil 5
60308 Frankfurt Main
GERMANY
Facsimile: +1-49-69-297-24200
WITH A COPY TO:
Metromedia Fiber Network, Inc.
One North Lexington Avenue
White Plains, New York 10601
Attention: President
Facsimile: +1-914-421-6777
AND AN ADDITIONAL COPY TO:
Metromedia Fiber Network, Inc.
One Meadowlands Plaza
East Rutherford, New Jersey 07073-2137
Attention: General Counsel
(iii) CARRIER 1. If to Carrier 1, at the following address:
Carrier 1 Fiber Network GmbH & Co. oHG
Lyoner Stra(beta)e 15
60528 Frankfurt am Main
Germany
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WITH A COPY TO:
Carrier 1 Fiber Network GmbH & Co. oHG
Militarstrasse 36
CH-8004 Zurich
SWITZERLAND
Attention: President
Facsimile: +41-1-297-2601
AND AN ADDITIONAL COPY TO:
Providence Equity Partners Inc.
901 Fleet Center
50 Kennedy Plaza
Providence, Rhode Island 02903
Attention: Managing Director
Facsimile: +1-401-751-1790
or to such other place and with such other copies as either Party may
designate as to itself by written Notice to the other Party.
45.3. ENGLISH LANGUAGE. Except where otherwise provided, all documents relating
to this Contract and all communications between the Parties shall be in
the English language.
SECTION 46. NO CONFLICTS
The Contractor represents and warrants that it has not, nor will it hereafter
enter into, any contract with any customer, and has not, and will not, take or
omit any action, in either case that could jeopardize its ability to perform its
obligations under this Contract.
SECTION 47. MISCELLANEOUS
47.1. HEADINGS. For the purposes of interpretation, the headings of the Sections
hereof shall not be deemed to form part of this Contract.
47.2. GOVERNING LAW. THIS CONTRACT SHALL IN ALL RESPECTS BE CONSTRUED AND
GOVERNED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED
STATES, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN
SUCH STATE (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW), BUT, TO THE FULLEST EXTENT PERMITTED BY LAW, EXCLUDING
ALL OTHER CHOICE-OF-LAW AND CONFLICTS-OF-LAW RULES.
47.3. SEVERABILITY. If any provision of this Contract shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Contract, but rather the entire Contract
shall be construed as if not containing the particular invalid or
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<PAGE>
unenforceable provision or provisions, and rights and obligations of all
Parties shall be construed and enforced accordingly.
47.4. INTEGRATION. This Contract supersedes all prior oral or written
understandings between the Parties and, constitutes the entire agreement
with respect to the subject matter of this Contract.
47.5. AMENDMENTS AND WAIVERS.
(a) AMENDMENTS. This Contract and any of its provisions may be amended,
supplemented or otherwise modified by another agreement in writing
signed by a duly authorized person on behalf of each Party.
(b) WAIVERS. Any provision of this Contract may be waived if, and only
if, such waiver is in writing and signed by the Party against whom
the waiver is to be enforced. No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as
waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any right, power or privilege.
47.6. FURTHER ASSURANCES. The Contractor shall provide any and all such
cooperation and assistance as the Developer may reasonably request in
connection with the implementation of this Contract and the engineering,
procurement and construction of the Outside Plants. Specifically, the
Contractor shall promptly provide any technical, engineering, financial or
other information that the Developer is entitled to under this Contract,
whenever requested by the Developer, including in connection with any
requests by, filings to, or regulatory requirements of, Governmental
Authorities.
47.7. COUNTERPARTS. This Contract may be executed in one or more counterparts,
each of which when so executed shall be deemed to be an original. Such
counterparts together shall constitute but one Contract.
47.8. SUCCESSORS AND ASSIGNS. This Contract shall be binding upon, and is solely
for the benefit of, each Party, its successors and permitted assignees.
The Developer or any Owner may assign its interest in this Contract
without the consent of the Contractor to any Affiliate or group of
Affiliates, and such assignment shall be effective immediately upon the
Developer's provision of Notice thereof to the Contractor in accordance
with Section 2.3(a) hereof. The Contractor may not assign its interests in
this Contract without the written consent of the Developer.
47.9. NO THIRD PARTY BENEFICIARIES. Unless otherwise expressly stipulated
herein, nothing in this Contract is intended to confer upon any Person
other than each Party, its successors and permitted assignees any rights
or remedies of any nature whatsoever under or by reason of this Contract.
47.10.UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF
GOODS. The Parties agree that the United Nations Convention on Contracts
for the International Sale of Goods shall not apply to this Contract.
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47.11.REMEDIES CUMULATIVE. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by Law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have duly executed this Contract as of the
date first set forth above.
BECHTEL LIMITED
By /s/ George Edwin Conniff, Jr.
____________________________________
Name: George Edwin Conniff, Jr.
Title: President
VICAME INFRASTRUCTURE DEVELOPMENT GmbH
By /s/ Sheldon M. Goldman
____________________________________
Name: Sheldon M. Goldman
Title: Managing Director
VIATEL GERMAN ASSET GmbH
By /s/ Sheldon M. Goldman
____________________________________
Name: Sheldon M. Goldman
Title: Managing Director
METROMEDIA FIBER NETWORK GmbH
By /s/ Richard E. Nohe
____________________________________
Name: Richard E. Nohe
Title: Managing Director
CARRIER 1 FIBER NETWORK GmbH & Co. OHG
By/s/ Edward Gross
____________________________________
Name: Edward Gross
Title: Managing Director
77
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EXECUTION COPY
ADDENDUM
TO
AMENDED AND RESTATED
ENGINEERING, PROCUREMENT
AND CONSTRUCTION CONTRACT
(OUTSIDE PLANT WORK)
DATED AS OF NOVEMBER 15, 1999,
EFFECTIVE AS OF FEBRUARY 19, 1999
BETWEEN
BECHTEL LIMITED AS CONTRACTOR
AND
VICAME INFRASTRUCTURE DEVELOPMENT GMBH AS DEVELOPER
and
VIATEL GERMAN ASSET GMBH AS OWNER
AND
METROMEDIA FIBER NETWORK GMBH AS OWNER
AND
CARRIER 1 FIBER NETWORK GMBH & CO. OHG AS OWNER
---------------------------------------
GERMAN NETWORK DEVELOPMENT PROJECT
GND No. 1 and GND No. 2
<PAGE>
ADDENDUM TO AMENDED AND RESTATED ENGINEERING, PROCUREMENT AND CONSTRUCTION
CONTRACT (OUTSIDE PLANT WORK), dated as of November 15, 1999, effective as of
February 19, 1999, among and between BECHTEL LIMITED, a United Kingdom limited
liability company (the "CONTRACTOR"); and VICAME INFRASTRUCTURE DEVELOPMENT
GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of
Germany (the "DEVELOPER"); and VIATEL GERMAN ASSET GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany ("VIATEL"); and
METROMEDIA FIBER NETWORK GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany ("MFN"); and CARRIER 1 FIBER NETWORK GmbH & Co. OHG,
an OFFENE HANDELSGESELLSCHAFT organized under the laws of Germany ("CARRIER 1"),
with each of Viatel, MFN and Carrier 1 acting as an Owner hereunder, and
hereinafter individually referred to as an "OWNER" or, collectively, as the
"OWNERS".
W I T N E S S E T H :
WHEREAS, the parties have entered into the Amended and Restated
Engineering, Procurement and Construction Contract (Outside Plant Work), dated
as of November 15, 1999, effective as of February 19, 1999 (the "AMENDED EPC
CONTRACT"); and
WHEREAS, the parties desire to adopt this Addendum to the Amended EPC
Contract to clarify certain matters.
NOW, THEREFORE, the parties, in consideration of the mutual undertakings
herein expressed, covenant and agree with each other as follows:
1. ADDENDUM TO THE AMENDED EPC CONTRACT. The Amended EPC Contract shall be
and hereby is amended as follows:
1.1 Section 9.2 of the Amended EPC Contract shall be and is hereby
deleted in its entirety and the following language shall be and is
substituted therefor:
"9.2 ACCESS TO RECORDS. The Contractor shall, during the period in
which Contractor is required to compile and maintain books, records,
vouchers and accounts pursuant to Section 9.1 hereof, give each Owner
Person access to all documentation and records required to be kept,
obtained and maintained pursuant to Section 9.1 hereof; PROVIDED, HOWEVER,
that with respect to all such books, vouchers, documentation and records
created prior to the execution date of this Contract (the "PRE-CONTRACT
EXECUTION PERIOD"), the Contractor shall provide all such material to the
Owner Persons to the extent and in the form it exists and to provide it in
a format the Developer or such Owner Person may reasonably request, to the
extent to which it has not previously been delivered. The Contractor shall
not destroy any such documentation or records without affording the
Developer an opportunity to review or copy the same. At the Developer's
request, prior to Final Acceptance, copies of all documentation and records
required to be kept, obtained and maintained pursuant to Section 9.1 hereof
shall be delivered to the Developer (subject to any confidentiality
obligations under Section 42 hereof).
<PAGE>
Notwithstanding any of the foregoing, with respect to the Pre-Contract
Execution Period, the Contractor shall be relieved of any obligation to
provide any Owner Person with access to or copies of documentation of the
nature set forth in Section 9.1 hereof that were not in existence during
the Pre-Contract Execution Period. To the extent that such documentation
was in existence during the Pre-Contract Execution Period and in
Contractor's possession, the provisions of the first paragraph of Section
9.1 hereof shall apply to such documentation."
1.2 The definition of "Warranty Period" contained in Exhibit 1 to the Amended
EPC Contract shall be and is hereby deleted in its entirety and the
following language shall be and is substituted therefor:
"WARRANTY PERIOD" [REDACTED]
2. REFERENCE TO AND EFFECT ON THE AMENDED EPC CONTRACT. Each reference in
the Amended EPC Contract to "the Contract," "this Contract," "hereunder,"
"hereof," "herein" or words of like import shall mean and be a reference to the
Amended EPC Contract as amended hereby. The Amended EPC Contract, as amended
hereby, shall remain in full force and effect.
3. COUNTERPARTS. This Addendum may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
[remainder of page intentionally blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Addendum as
of the date first set forth above.
BECHTEL LIMITED
By: /s/ George Edwin Conniff, Jr.
______________________________
Name: George Edwin Conniff, Jr.
Title: President
VICAME INFRASTRUCTURE DEVELOPMENT GmbH VIATEL GERMAN ASSET GmbH
By: /s/ Sheldon M. Goldman By: /s/ Sheldon M. Goldman
_________________________________ ______________________________
Name: Sheldon M. Goldman Name: Sheldon M. Goldman
Title: Managing Director Title: Managing Director
METROMEDIA FIBER NETWORK GmbH CARRIER 1 FIBER NETWORK
GmbH & Co. OHG
By: /s/ Richard E. Nohe By: /s/ Edward Gross
_________________________________ ______________________________
Name: Richard E. Nohe Name: Edward Gross
Title: Managing Director Title: Managing Director
3
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EXHIBIT 1
DEFINED TERMS
"AFFILIATE" of any Person means any other Person that, directly or
indirectly through one or more intermediaries, controls the first Person, or any
other Person that is controlled by or under common control with the first
Person. For the purposes of this definition, the term "CONTROL" shall be defined
as direct or beneficial ownership of greater than fifty percent (50%) of the
equity interests or greater than fifty percent (50%) of the voting control of an
entity.
"ALTERNATIVE WAYLEAVE" has the meaning ascribed thereto in Section 7.3 of
the Contract.
"BUSINESS DAY" means any Day, other than a Saturday, Sunday or national
statutory holiday in any of Germany, the United Kingdom or the United States.
"CABLE LINK" means each of (A) the two (2) subducts to be fully completed
by the Contractor and (B) two (2) additional subducts to be completed by the
Contractor without Fiber Optic Cable pulling, in each case, along the Scheduled
Route as part of the Outside Plant, together with all materials, equipment and
supply (including, without limitation, the Fiber Optic Cable as supplied by the
Developer) to be annexed to, installed within or integrated into such subduct in
accordance with the terms and conditions of this Contract and the Contract
Documents.
"CARRIER 1" has the meaning ascribed thereto in the preamble to the
Contract.
"CERTIFICATE OF COMMERCIAL ACCEPTANCE" has the meaning ascribed thereto in
Section 31.3 of the Contract.
"CERTIFICATE OF FINAL ACCEPTANCE" has the meaning ascribed thereto in Section
31.6 of the Contract.
"CERTIFICATE OF PAYMENT AND FINAL RELEASE" means the certificate delivered
by the Contractor to the Developer in the form of Exhibit 3 to the Contract.
"CERTIFICATE OF RFS ACCEPTANCE" has the meaning ascribed thereto in
Section 31.2 of the Contract.
"CHANGE EVENT" means any of the following: (a) a Regulatory Change; (b) a
Wayleave or Permit Failure; (c) Owner-Caused Delay; (d) the Contractor's
implementation of (i) any work-around plan approved by the Developer in respect
of: Force Majeure Events or (ii) Alternative Wayleaves; (e) the Contractor's
exercise of suspension rights pursuant to Section 24.4(a) of the Contract; (f)
to the extent specified in Section 20.3 of the Contract, delays sustained by the
Contractor in connection with the Developer's unwarranted exercise of inspection
rights hereunder; (g) Unanticipated Site Conditions; and (h) any other grounds
specifically referred to in the other provisions of this Contract that expressly
entitle the Contractor to equitable relief pursuant to Section 15.1 of the
Contract.
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"CODES AND STANDARDS" means the regulations, codes, standards,
specifications, interpretations and other applicable requirements of any
industrial association or professional discipline pertaining to or relating to
any Outside Plant and the Work.
"COMMERCIAL ACCEPTANCE DATE" means the date on which the Developer issues
the Certificate of Commercial Acceptance in respect of any RFCS Portion.
"CONTRACT" means Sections 1 through 47 of the Amended and Restated
Engineering, Procurement and Construction Contract (Outside Plant Work), dated
as of November 15, 1999, effective as of February 19, 1999, among the
Contractor, the Developer and the Owners, including all Exhibits and Appendices
thereto.
"CONTRACT DOCUMENTS" means the items listed in Section 3.2 of the Contract.
"CONTRACT VARIATION" has the meaning ascribed thereto in Section 15 of the
Contract.
"CONTRACTOR" has the meaning ascribed thereto in the preamble to the
Contract.
"CONTRACTOR INVOICE" means an invoice (a) prepared in form and substance
satisfactory to the Developer, (b) naming each of the Owners as several obligors
to the extent of the respective payments (and corresponding line items for Value
Added Tax) specified thereon for such Owners and (c) submitted by the Contractor
to the Developer in accordance with Section 12.5 of the Contract.
"CONTRACTOR PERMITS" has the meaning ascribed thereto in Section 6.3(a) of
the Contract.
"CONTRACTOR PERSON" means (a) the Contractor, (b) any Subcontractor or (c)
any subsidiary, Affiliate, agent, representative, director, manager, officer,
employee (including the Project Manager), transferee, successor or assign of the
Contractor or any Subcontractor.
"CONTRACTOR SECURITY" means any of all of the Contractor Surety Bond, the
Corporate Guarantee or the Retainage LC.
"CONTRACTOR SURETY BOND" has the meaning ascribed thereto in Section 14.1
of the Contract.
"CORPORATE GUARANTEE" means the corporate guarantee in favor of the Owners
from Bechtel Corporation, a Nevada corporation, securing the payment and
performance obligations of the Contractor hereunder, to be delivered in
accordance with Section 14.1(a) of the Contract in the form set forth in Exhibit
6 hereto.
"CRITICAL PATH ITEM" means each item of Work identified as such in the
Milestone Schedule.
"DAY" means the 24-hour period beginning and ending at 00.00 hours Central
European Time.
"DEFECTIVE WORK" means any portion of the Work that contains Defects.
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<PAGE>
"DEFECTS" means:
(a) when used with respect to structures, materials and supplies
provided by the Contractor as part of the Work, such items
that are not:
(i) of good quality or free from improper workmanship and
deficiencies; and
(ii) free from errors or omissions in design or manufacture
in light of the Technical Requirements; and
(b) when used with respect to the Work (including any and all
design, engineering, startup activities, materials, equipment,
tools, supplies, installation or quality-control activities)
or any portion thereof:
(i) it is not in accordance with the Contract Documents,
including, without limitation, the Technical
Requirements;
(ii) it is not provided in a workmanlike manner or is of
improper or inferior workmanship; and
(iii) it would, in the Developer's determination based on the
results of the Contractor's inspection and testing
activities (including, without limitation, the
Performance Tests), adversely affect the ability of
either Outside Plant to meet any of the Technical
Requirements over the applicable Warranty Period.
"DESIGNATED OWNER" has the meaning ascribed thereto in Section 36.1 of the
Contract.
"DEUTSCHE MARK" or "DM" means the lawful currency of Germany.
"DEVELOPER" has the meaning ascribed thereto in the preamble to the
Contract.
"DEVELOPER'S REPRESENTATIVE" has the meaning ascribed thereto in Section
19.2 of the Contract.
"DISCLOSING PARTY" has the meaning ascribed thereto in Section 42.3 of the
Contract.
"EURO" means the single currency of the European Monetary Union adopted by
the Member States thereof to be effective as of January 1, 1999.
"EVENT OF DEFAULT" has the meaning ascribed thereto in Section 24.1 of the
Contract.
"FIBER OPTIC CABLE" means the fiber optic cable, as specifically described
in Appendices 2 and 3 to the Contract, to be procured by each Owner at its own
cost and expense, and to be made available by the Developer for installation by
the Contractor, as part of the Work, along the Scheduled Route.
"FINAL ACCEPTANCE" means the issuance of the Certificate of Final
Acceptance.
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<PAGE>
"FINAL ACCEPTANCE DATE" means the date on which Final Acceptance of each
Outside Plant occurs.
"FINAL PAYMENT" has the meaning ascribed thereto in Section 12.3(c) of the
Contract.
"FIXED FEE" has the meaning ascribed thereto in Section 12.2 of the
Contract.
"FIXED PRICE CONTRACT" has the meaning ascribed thereto in the preamble of
the Contract.
"FORCE MAJEURE EVENT" has the meaning ascribed thereto in Section 18.1 of
the Contract.
"GENERAL WARRANTY" has the meaning ascribed thereto in Section 32.1 of the
Contract.
"GERMANY" means the Federal Republic of Germany, and includes all
political or territorial subdivisions thereof.
"GND NO. 1 OUTSIDE PLANT" means the Outside Plant for the GND No. 1
System.
"GND NO. 1 SYSTEM" means the fiber-optic telecommunications link, as more
precisely described in the Network Description and Project Scope, beginning in
Essen, Germany, and running south along the Scheduled Route in the direction of
and terminating in Karlsruhe, Germany.
"GND NO. 2 OUTSIDE PLANT" means the Outside Plant for the GND No. 2
System.
"GND NO. 2 SYSTEM" means the fiber-optic telecommunications link, as more
precisely described in the Network Description and Project Scope, beginning in
Essen, Germany, and running clockwise along the Scheduled Route connecting
certain major population centers and terminating in Karlsruhe, Germany.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTEED RFS DATE" means, [REDACTED]
4
<PAGE>
"INCENTIVE FEE" has the meaning ascribed thereto in Section 12.2 of the
Contract.
"INDEMNIFIABLE LOSS" has the meaning ascribed thereto in Section 39.1 of
the Contract.
"INDEPENDENT EXPERT" has the meaning ascribed thereto in Section 15.2 of
the Contract.
"INITIAL PLANT COMMISSIONING REPORT" has the meaning ascribed thereto in
Section 31.1 of the Contract.
"LAW" means any federal, state, provincial, local or other constitution,
charter, act, statute, law, ordinance, code, rule, regulation, order,
proclamation, specified standard or objective criteria, Permit, other approval
or other legislative or administrative action of any Governmental Authority,
including:
(a) a final decree, judgment or order of a court; and
(b) any building code applicable to either Outside Plant.
"LIEN" means any mortgage, pledge, lien, deed of trust, claim, charge,
security interest, attachment or encumbrance of any kind, or any other similar
type of preferential arrangement, including materialmen's, laborers',
mechanics', Subcontractors' and vendors' liens, and including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof.
"LIEN RELEASE" means the lien release executed and delivered by the
Contractor in the form of EXHIBIT 4 hereto, which shall contain:
(a) a waiver and release of any and all Liens arising from or
relating to such portions of the Work to which any Contractor
Invoice relates; and
(b) a certification to the Developer for the benefit of the Owners
that the Outside Plants and Work are free from Liens.
5
<PAGE>
"LOSSES" means all damages, obligations, debts, deficiencies, demands,
judgments, causes of action, costs, charges, fines, penalties, claims, actions,
proceedings, liabilities, losses, demands, suits, prosecutions or expenses
(including reasonable attorney's fees, disbursements, costs, expenses and other
charges).
"MFN" has the meaning ascribed thereto in the preamble to the Contract.
"MILESTONE EVENT" means any and all events for which an Activity
Description and commencement and completion dates are provided in the Milestone
Schedule.
"MILESTONE SCHEDULE" means APPENDIX 4 to the Contract.
"NETWORK DESCRIPTION AND PROJECT SCOPE" means APPENDIX 2 to the Contract.
"NOTICE" has the meaning ascribed thereto in Section 45.1 of the Contract.
"NOTICE OF EXERCISE OF REMEDIES" has the meaning ascribed thereto in
Section 24.1 of
the Contract.
"NOTICE OF TERMINATION" has the meaning ascribed thereto in Section 27.1
of the Contract.
"NOTICE OF TERMINATION FOR CONVENIENCE" has the meaning ascribed thereto
in Section 23.1 of the Contract.
"NOTICE OF TERMINATION FOR DEFAULT" has the meaning ascribed thereto in
Section 24.1 of the Contract.
"ODF" means each Optical Distribution Frame of a type and in the
configuration specified in APPENDIX 2 to the Contract.
"OUTSIDE PLANT" means the whole of the Fiber Optic Cable link, on an
ODF-to-ODF basis (but excluding the Owner-Procured Equipment), along the
Scheduled Route (together with all equipment, materials and supplies used or
installed by the Contractor in the assembly, installation and interfacing of
such Fiber Optic Cable in accordance with the Technical Requirements), as more
particularly described in the Network Description and Project Scope.
"OWNER-CAUSED DELAY" has the meaning ascribed thereto in Section 16.1 of
the Contract.
"OWNER DEFAULT" has the meaning ascribed thereto in Section 24.4 of the
Contract.
"OWNER ESCROW" has the meaning set forth in Section 12.3(f).
"OWNER ESCROW AGREEMENT" means the Undertaking and Pledge and Security
Agreement, dated as of February 19, 1999, entered into among and between the
Developer, the Contractor, each Owner and the collateral agent signing as a
party thereto in substantially the form of Exhibit 7 hereto, with such revisions
that the collateral agent may reasonably require as a condition to its execution
thereof.
"OWNER LIEN" means any Lien created directly by the Developer or any
Owner.
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"OWNER PERMITS" has the meaning ascribed thereto in Section 6.3(b) of the
Contract.
"OWNER PERSON" means:
(a) the Developer, the Developer's Representative, QA/QC
Contractor, and the Vendors;
(b) anyone else acting on behalf of the Developer or any Owner in
connection with the Contract; and
(c) the successors, assigns, employees, agents, officers,
directors and Affiliates of any of the foregoing.
"OWNER-PROCURED EQUIPMENT" has the meaning ascribed thereto in Section 8.1
of the Contract.
"OWNER-REQUESTED VARIATIONS" has the meaning ascribed thereto in Section
15.1(a) of the Contract.
"OWNER SPECIFICATIONS" has the meaning ascribed thereto in Section 8.2(b)
of the Contract.
"PARTIES" means the Developer, the Contractor and the Owners.
"PERFORMANCE PARAMETERS" means all such performance criteria and
acceptable test-result data for the Outside Plants and the components thereof as
set in Appendices 2 and 7 to the Contract.
"PERFORMANCE TEST STANDARDS" means APPENDIX 7 to the Contract.
"PERFORMANCE TESTS" means the Outside Plant tests conducted in accordance
with the Technical Requirements.
"PERMITS" means all:
(a) permits, "no objections", permissions-in-principle,
authorizations, consents, registrations, certificates,
licenses, orders, work authorizations/visas, permissions for
the operation of field equipment (including vehicles,
machinery and communications equipment and facilities) and
similar authorizations; and
(b) consents, licenses, waivers, privileges, acknowledgements,
agreements, concessions, approvals from and all other filings
with and applications submitted to, any Governmental Authority
or any other Person,
but not including Wayleaves, Telecom Licenses or any of the foregoing which
relate to the POPs.
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"PERSON" means an individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or Governmental
Authority.
"POP SITE" means, as described in the greater detail in the Network
Description and Project Scope, each physical location of any facility designed
to house termination and switching equipment for the Systems.
"PRE-CONTRACT EXECUTION PERIOD" has the meaning ascribed thereto in
Section 9.2 of the Contract.
"PROJECT MANAGER" has the meaning ascribed thereto in Section 19.1 of the
Contract.
"PRUDENT PRACTICES" means: (a) in respect of any Work constituting
engineering or construction-management work, those practices, methods,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by professional firms regularly
performing engineering and construction-management services in Germany for
facilities of the type and size similar to the System, and (b) in respect of any
Work constituting procurement or contract-administration services, those
practices, methods, equipment, specifications and standards of safety and
performance, as the same may change from time to time, as are commonly used by
professional firms regularly performing engineering and construction services in
Germany for facilities of the type and size similar to the System, which, in
each case, in the exercise of reasonable judgment and in the light of the facts
known at the time the decision was made, are considered professional, safe and
prudent practice in connection with the supervision of design, construction,
installation and use of equipment, facilities and improvements, with
commensurate standards of safety, performance, dependability, efficiency and
economy.
"PUBLIC CONTRACT" means any instrument or document relating to any Public
Wayleave setting forth negotiated terms and conditions differing from, or
supplemental to, the statutory terms and conditions applicable to Public Forms.
"PUBLIC FORM" means any standard-form application, instrument or other
document issued or utilized by, or required for submission to, any Governmental
Authority in Germany that does not contain or require any negotiated provision
or other special term or condition not otherwise set forth in applicable Laws
and Codes and Standards of Germany.
"PUBLIC NOTICE" means, in relation to any Wayleave, Permit or Site
requirement or condition, any statement, report, comment or other indication by
or attributable to any Governmental Authority, regardless of the means of
communication or publication thereof, of which the Contractor knows or is aware.
"PUBLIC WAYLEAVE" means any Wayleave along the Scheduled Route that is (i)
subject to official grant by any appropriate Governmental Authority in Germany,
and (ii) available to the general public upon uniform terms and conditions (or,
in the case of Public Contracts, upon substantially uniform terms and
conditions, subject to limited negotiation of certain provisions) as expressly
set forth in applicable Laws and Codes and Standards of Germany.
8
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"PUNCH LIST" means the list prepared by the Developer identifying items of
the Work that are incomplete or that contain Defects.
"PUNCH LIST RESERVE" means an amount in cash equal to two hundred percent
(200%) of the cost of completing or correcting all items identified on the Punch
Lists prepared in connection with Commercial Acceptance or RFS Acceptance.
"QA/QC CONTRACTOR" means the representative nominated by the Developer to
facilitate the quality assurance/quality control program for the Outside Plants.
"RECIPIENT" has the meaning ascribed thereto in Section 2.3 of the
Contract.
"REGULATORY CHANGE" means:
(a) the adoption, enactment or application to either Party, the
Work or any Outside Plant of any Law (including any Tax) or
Codes and Standards of or in the United Kingdom, Germany, the
European Union or the United States not existing or applicable
to such Party or Outside Plant on the date of the Contract; or
(b) any change in any Law (including any Tax) or Codes and
Standards of or in the United Kingdom, Germany, the European
Union or the United States or in the application thereof by a
Governmental Authority after the date of the Contract,
but not including any Law or Codes and Standards or application thereof in
existence on the date of the Contract that, by its terms, becomes or will become
effective and applicable to either Party or any Outside Plant after the date of
the Contract.
"REIMBURSABLE COSTS" shall mean those costs specified in APPENDIX 1 to the
Contract, together with the Subcontractor Costs.
"REIMBURSEMENT INVOICE" has the meaning ascribed thereto in Section
12.5(a) of the Contract.
"REPEATERS" means the Owner-Procured Equipment of a type and in the
configuration specified in the Network Description and Project Scope that is
necessary to amplify the signal transmitted through the Fiber Optic Cable along
the Scheduled Route.
"REPEATER FACILITIES" means any and all equipment, materials and
facilities (other than the Repeaters) to be furnished by the Contractor, as
described in, and meeting the requirements of, the Network Description and
Project Scope.
"REPEATER SITE" means each physical location (including applicable fencing
and parking areas) for any Repeaters or Repeater Facilities, as described in,
and meeting the requirements of, the Network Description and Project Scope.
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"REPLACEMENT CONTRACTOR" has the meaning ascribed thereto in Section 25.1
of the Contract.
"REPLACEMENT ITEM" has the meaning ascribed thereto in Section 32.6 of the
Contract.
"RETAINAGE LC" means letter of credit delivered by the Contractor to the
Developer pursuant to Section 12.3(a) of the Contract, which shall be
substantially in the form of Exhibit 5 hereto.
"RFCS PORTION" has the meaning ascribed thereto in Section 31.3 of the
Contract.
"RFCS SEGMENT" means each segment contained in the GND No. 2 Outside
Plant, as described further in Section 12.2(b) of the Contract.
"RFS ACCEPTANCE" means the issuance by the Developer of the Certificate of
RFS Acceptance.
"RFS DATE" means, in respect of each Outside Plant (or segment thereof),
the date on which RFS Acceptance of such Outside Plant (or segment thereof)
occurs, as determined in accordance with Section 31.2 of the Contract.
"SCHEDULED ROUTE" means the Fiber Optic Cable route for each of the
Systems, as more precisely identified in APPENDIX 2 of the Contract, as such
route may be subject to change from time to time in accordance with and subject
to the provisions of the Contract (including, without limitation, Section 15
thereof).
"SCHEDULE RECOVERY PLAN" has the meaning ascribed thereto in Section 5.2
of the Contract.
"SITE" means any location or locations at which any Contractor Person is
at any time performing, or, as reflected in the Technical Requirements, is
required to perform, the Work hereunder.
"STORAGE AND MARKING PROCEDURES" means APPENDIX 8 to the Contract.
"SUBCONTRACT" means any contract, or the conclusion of any contract,
between the Contractor and any Subcontractor, or between any Subcontractor and
any other Person, relating to the Work or any supply to be provided by such
Subcontractor in respect of the Outside Plants.
"SUBCONTRACTOR" means any contractor (other than the Contractor), vendor
or supplier that contracts to perform services or provide supplies to the
Contractor constituting part of the Work.
"SUBCONTRACTOR COST" means any payment actually disbursed pursuant to any
Subcontract to any Subcontractor.
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"SUBCONTRACTOR COST VERIFICATION" means the certification executed by the
Contractor representing and confirming to the Owners that (i) either (a) the
Contractor has, in fact, paid to the relevant Subcontractor(s) the full amount
of Subcontractor Costs as to which such Subcontractor Cost Verification relates
or (b) the Contractor will pay to the relevant Subcontractor(s) when such
payment is due and (ii) to the best of the Contractor's knowledge and based on
its full inspection as required hereunder, the relevant Subcontractor Supplies
and Subcontractor Services are in accordance with the Technical Requirements and
have been completed and delivered to the extent required under the relevant
Subcontract for payment in respect thereof.
"SUBCONTRACTOR SUPPLIES" means any and all materials, plant, machinery,
equipment, hardware and other items provided by any Subcontractor pursuant to a
Subcontract.
"SUBCONTRACTOR SERVICES" means any and all services to be provided by any
Subcontractor pursuant to a Subcontract.
"SYSTEM" means each of the GND No. 1 System and the GND No. 2 System.
"TAKE OVER" has the meaning ascribed thereto in Section 24.1 of the
Contract.
"TARGET COST" means DM [REDACTED], being the Total Completion Cost
estimate agreed by the Parties as of the execution date of the Contract, which
amount shall be fixed throughout the term of the Contract except as otherwise
set forth in Section 15.1(b) of the Contract.
"TAXES" means all taxes and duties of any type, including sales-of-goods
taxes, value added taxes, customs duties or other levies and duties applicable
to the performance of the Work hereunder, but excluding taxes, duties or other
charges levied upon or attributable to the Parties' respective properties or
incomes.
"TECHNICAL REQUIREMENTS" means the following documents:
(a) each of Appendices 1 through 11 to the Contract, and all of
such Appendices collectively;
(b) the Vendor Specifications; and
(c) the Owner Specifications.
"TELECOM LICENSE" means any license or similar authorization of any
Governmental Authority that a Person must hold in order to act as the owner or
operator of telecommunications facilities in a relevant jurisdiction.
"TERMINATION CLAIM" has the meaning ascribed thereto in Section 23.3 of
the Contract.
"TERMINATION CLAIM REVIEW PERIOD" has the meaning ascribed thereto in
Section 23.3 of the Contract.
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"TERMINATION FOR CONVENIENCE" has the meaning ascribed thereto in Section
23.1 of the Contract.
"TERMINATION FOR DEFAULT" has the meaning ascribed thereto in Section 24.1
of the Contract.
"TERMINATION PAYMENT (CONVENIENCE)" has the meaning ascribed thereto in
Section 23.3 of the Contract.
"TOTAL COMPLETION COST" means the total amount of the Reimbursable Costs
paid or payable to the Contractor pursuant to the Contract.
"TOTAL LIABILITY CAP" has the meaning ascribed thereto in Section 28.3 of
the Contract.
"TRANSFERRED PROPERTY" has the meaning ascribed thereto in Section 36.3 of
the Contract.
"UNANTICIPATED SITE CONDITION" means any physical condition of an
environmental, geological or other material nature (whether natural or man-made)
occurring or existing on, above or below the surface of any Site, excluding,
however, any condition:
(a) disclosed or referenced in (i) any Owner Specification or
other Owner-or Developer-provided Notice, recommendation or
technical information supplied in written format to the
Contractor prior to the effective date of the Contract, or
(ii) any Law, Public Notice or Codes and Standards existing
and effective as of the effective date of the Contract as to
which a prudent contractor performing work identical to the
Work would have informed itself; or
(b) that is otherwise of a type that, given the scope of Work
under this Contract and the Contract Documents (including the
limitations on Site examination and investigative duties
referenced in the preceding clause (a) of this definition), a
prudent contractor performing work identical to that described
in the Network Description and Project Scope would have
undertaken, prior to execution of a contract identical to the
Contract, to independently gather, examine or verify
information with respect thereto; or
(c) resulting directly from the willful or negligent act or
omission of any Contractor Person.
"UNITED STATES" means the United States of America.
"UNUSUALLY SEVERE WEATHER CONDITIONS" means weather conditions occurring
at any Site that are materially more severe than would reasonably be
anticipated, based upon the weather pattern records for the most recent 10-year
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period maintained by appropriate Governmental Authorities in Germany for the
time of year and geographical location at issue, by a prudent contractor
conducting work similar to the Work.
"VALUE ADDED TAX" means any value added tax applicable to or assessable in
respect of the Work or any portion thereof by any Governmental Authority in
Germany.
"VENDOR" means each supplier of Owner-Procured Equipment identified in
APPENDIX 3 to the Contract.
"VENDOR SPECIFICATIONS" means the detailed specifications and related
technical documentation, as identified by title or other relevant description in
APPENDIX 2 to the Contract, prepared by each Vendor in respect of items of
Owner-Procured Equipment, which specifications and documentation shall be
provided by the Developer to the Contractor prior to the Contractor's scheduled
commencement of any Work upon or involving any such items of Owner-Procured
Equipment.
"VIATEL" has the meaning ascribed thereto in the preamble to the Contract.
"WARRANTY" means any General Warranty.
"WARRANTY PERIOD" means, [REDACTED]
"WAYLEAVE" means any right-of-way, easement, license, Permit (excluding
construction Permits), franchise, crossing, joint-use arrangement or other
access right (but excluding leases of existing transmission capacity or fiber
optic cable from other telecommunications service providers) that may be
identified by the Contractor to the Developer, and entered into by or on behalf
of the Owners, in connection with the construction, maintenance, operation and
ownership of the Outside Plants along the Scheduled Route.
"WAYLEAVE CRITERIA" means Table A of APPENDIX 5 to the Contract.
"WAYLEAVE OR PERMIT FAILURE" means any refusal, delay or conditional
mandate by any Governmental Authority in Germany with respect any application by
the Contractor, duly submitted in full compliance with all applicable Laws,
Codes and Standards and the Wayleave Criteria, for any Public Wayleave or
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Permit, which refusal, delay or mandate (i) is contrary to, or inconsistent
with, applicable Law or Codes and Standards, (ii) imposes conditions
supplemental to, or more onerous than, the express terms of such Laws or Codes
and Standards, or (iii) represents an arbitrary or capricious act or omission by
any relevant Governmental Authority in the conduct of its official duties.
"WORK" has the meaning ascribed thereto in Section 4.1 of the Contract.
"WORK RELEASE CERTIFICATE" means, in respect of each item of Work tendered
to the Developer, each certificate issued by the Contractor's quality assurance
staff in accordance with Section 3.2.8 of the Network Description and Project
Scope.
<PAGE>
EXHIBIT 2
FORM OF CONTRACTOR SURETY BOND
CONTRACTOR SURETY BOND
DM [REDACTED] Performance Bond No. _____
[Date]
KNOW ALL MEN BY THESE PRESENTS: that BECHTEL LIMITED, a United
Kingdom limited liability company, as contractor (hereinafter called
"Contractor"), and _______________ [INSERT FULL NAME AND ADDRESS OF LEGAL TITLE
OF SURETY], as surety (hereinafter called "Surety"), are held and firmly bound
unto Viatel German Asset GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany, Metromedia Fiber Network GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany, Carrier 1 Fiber
Network GmbH & Co. OHG, an OFFENE HANDELSGESELLSCHAFT organized under the laws
of Germany, as obligees (collectively, hereinafter called "Owners"), in the
amount of [REDACTED] (the "Bonded Amount"), for the payment whereof Contractor
and Surety bind themselves, their heirs, executors, administrators, successors
and assigns, jointly and severally, firmly by these presents.
WHEREAS, pursuant to the Engineering, Procurement and Construction
Contract (Outside Plant), dated February 19, 1999 (the "Contract"), between and
among Contractor, Owners and ViCaMe Infrastructure Development GmbH, a
GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of Germany
("ViCaMe"), which Contract is by reference made a part hereof, Contractor has
agreed to plan, supply, install, assemble and test the Outside Plants (as more
particularly described in the Contract, the "Outside Plants"); capitalized terms
not defined herein being used as defined in the Contract;
WHEREAS, pursuant to Section 15.1(b) of the Contract, Contractor is
required to secure its obligations under the Contract by obtaining a performance
and surety bond from a bonding or insurance company meeting the requirements of
Section 15.3 of the Contract, and this Performance Bond is the "Contractor
Surety Bond" referred to in Section 15.2;
NOW, THEREFORE, at the request and for the account of Contractor,
Surety hereby irrevocably undertakes as follows:
(a) Suretyshall perform Contractor's payment obligations under the
Contract, up to a maximum aggregate amount equal to the Bonded
Amount, upon presentation to Surety during regular business hours at
Surety's offices at _____, New York, of an original manually signed
certificate issued by ViCaMe containing the following:
(A) The Performance Bond Number appearing above;
(B) Either one of the following statements:
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(a) "The Contractor has failed properly and fully to
perform its obligations under the Contract."; or
(b) "The Owners have received notice that the
Expiration Date shall not be extended;
(C) The amount Contractor is obligated to pay pursuant to
the Contract; and
(D) Payment instructions.
(b) Suretywill pay the amount stated in such certificate, up to maximum
amount equal to the Bonded Amount, by wire transfer of immediately
available funds within five (5) Business Days of ViCaMe's
presentation of such certificate to Surety in accordance with the
terms and conditions contained herein. For purposes of this
Performance Bond, a "Business Day" shall mean a day on which
commercial banks are not required or authorized to close in New York
and which is not a Saturday or Sunday.
(c) This Performance Bond is effective immediately and expires at the
close of business at our office in [ ] specified in the preamble
hereto upon the first (1st) anniversary (the "Expiry Date") of the
date first shown above, but it is a condition of this Performance
Bond that it will be automatically extended for a period of six (6)
months from the Expiry Date and from each 6-month period thereafter
(such date, as extended, the "Expiration Date"), without any
amendment, unless a written Notice to the contrary is provided, at
least thirty (30) Days prior to the Expiration Date, to the Owners
by registered mail, certified mail, or overnight courier to the
above-listed address, and failure to extend the Expiration Date will
permit the Owners to receive the Bonded Amount.
(d) This Performance Bond cannot be cancelled for failure to pay the
premium or commission payable to Surety or be terminated
unilaterally by Surety.
(e) This Performance Bond shall be governed by and construed in
accordance with the laws of the State of New York.
(f) This Performance Bond may not be assigned without the prior written
consent of Surety.
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Signed and sealed this ___ day of ______, 1999.
BECHTEL LIMITED
Principal
----------------------------------------
Name:
Title:
Witness:
- - ---------------------------------
[NAME OF SURETY]
Surety
----------------------------------------
Name:
Title:
Witness:
- - ---------------------------------
<PAGE>
EXHIBIT 3
FORM OF CERTIFICATE AND PAYMENT AND FINAL RELEASE
CERTIFICATE OF PAYMENT AND FINAL RELEASE
Dated _____________
GERMAN NETWORK DEVELOPMENT PROJECT
GND No. 1 System
and
GND No. 2 System
Reference is made to the Engineering, Procurement and Construction
Contract (Outside Plant Work), dated February 19, 1999 (as amended, supplemented
or otherwise modified from time to time, the "EPC CONTRACT"), among and between
BECHTEL LIMITED, a United Kingdom limited liability company, as contractor (the
"CONTRACTOR"), ViCaMe Infrastructure Development GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany (the "DEVELOPER"), and
each of the following entities (or such successor or replacement entities
introduced in accordance with the provisions of Section 2.3(a) of the EPC
Contract), acting severally but not jointly as an Owner (each, an "OWNER" and,
collectively, the "OWNERS") thereunder: VIATEL GERMAN ASSET GmbH, a GESELLSCHAFT
MIT BESCHRANKTER HAFTUNG organized under the laws of Germany; METROMEDIA FIBER
NETWORK GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws
of Germany; and CARRIER 1 FIBER NETWORK GmbH & Co. OHG, an OFFENE
HANDELSGESELLSCHAFT organized under the laws of Germany. Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in the
EPC Contract.
1. RELEASE AND WAIVER. In consideration of, and subject to, the Final
Payment, the Contractor hereby and forever releases, waives, and
discharges:
1.1. any rights, Liens or other claims that the Contractor has or may
have against the Developer or any Owner (including any shareholder,
Affiliate, successor or assign of any of them) arising out of or
relating to the Outside Plants or any Work, including any materials,
equipment or supplies forming a part of, or furnished in connection
with, the Work; and
1.2. any other legal or equitable claim or right that the Contractor may
have against any Owner Person in any manner arising out of or
relating to the Outside Plants or the Work.
2. CERTIFICATIONS. The Contractor certifies for the benefit of the Developer
and the Owners that:
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2.1. acceptance of the Final Payment by the Contractor shall represent
the Contractor's complete satisfaction with the final compensation
for all claims and the Work;
2.2. there are no expected or known Liens arising out of or in connection
with the performance by the Contractor or any Subcontractor of the
Work;
2.3. all Taxes and insurance premiums for which the Contractor is
responsible under the EPC Contract that have accrued to date in
connection with the Work have been fully paid and discharged.
IN WITNESS WHEREOF, the Contractor has executed this Certificate of
Payment and Final Release as of _______________, 19___.
BECHTEL LIMITED
By___________________________________
Name:
Title:
<PAGE>
EXHIBIT 4
FORM OF LIEN RELEASE
LIEN RELEASE
Dated _____________
GERMAN NETWORK DEVELOPMENT PROJECT
GND No. 1 System
and
GND No. 2 System
Reference is made to the Engineering, Procurement and Construction
Contract (Outside Plant Work), dated February 19, 1999 (as amended, supplemented
or otherwise modified from time to time, the "EPC CONTRACT"), among and between
BECHTEL LIMITED, a United Kingdom limited liability company (the "CONTRACTOR"),
VICAME INFRASTRUCTURE DEVELOPMENT GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG
organized under the laws of Germany (the "Developer"), and each of the following
entities (or such successor or replacement entities introduced in accordance
with the provisions of Section 2.3(a) of the EPC Contract), acting severally but
not jointly as an Owner (each, an "OWNER") thereunder: VIATEL GERMAN ASSET GmbH,
a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of Germany;
METROMEDIA FIBER NETWORK GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany; CARRIER 1 FIBER NETWORK GmbH & Co. OHG, an OFFENE
HANDELSGESELLSCHAFT organized under the laws of Germany. Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in the
EPC Contract.
1. RELEASE AND WAIVER. In consideration of, and subject to, the Developer's
payment, on behalf of each Owner to the extent of such Owner's respective
ownership interest in the Outside Plants, for the Work described in the
Contractor Invoice, dated as of the date hereof (the "CURRENT CONTRACTOR
INVOICE"), the Contractor hereby and forever releases, waives, and
discharges any rights, Liens or other claims (other than claims arising in
connection with dispute resolution that are subject to mutual discussions
in accordance with Section 39 of the EPC Contract) that the Contractor has
or may have against the Developer or any Owner (including any shareholder,
Affiliate, successor or assign of any of them) arising out of or relating
to the Outside Plants or such Work or any other Work heretofore performed
or delivered (collectively, the "WORK-TO-DATE"), including any materials,
equipment or supplies forming a part of, or furnished in connection with,
any Work-to-Date.
2. CERTIFICATIONS. The Contractor certifies that:
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2.1. there are no expected or known Liens on the Outside Plants or the
Work arising out of or in connection with the performance by the
Contractor or any Subcontractor of the Work-to-Date; and
2.2. all Taxes (excluding any income taxes) and insurance premiums for
which the Contractor is responsible under the EPC Contract that have
accrued to date in connection with the Work-to-Date have been fully
paid and discharged.
IN WITNESS WHEREOF, the Contractor has executed this Lien Release as of
this ___ day of _______________________, _____.
BECHTEL LIMITED
By___________________________________
Name:
Title:
<PAGE>
EXHIBIT 5
FORM OF RETAINAGE LC
IRREVOCABLE LETTER OF CREDIT
Letter of Credit No.__________________
ViCaMe Infrastructure Development GmbH
c/o Viatel U.K.
Parnell House
25 Wilton Road
London SW1V 1EJ
United Kingdom
Attention: Derek Foxwell
Ladies and Gentlemen:
(g) STATE AMOUNT. We, [___________] (the "Bank"), at the request of and
for the account of Bechtel Limited, a United Kingdom limited
liability company, and for the benefit of Viatel German Asset GmbH,
a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of
Germany, Metromedia Fiber Network GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany, Carrier 1
Fiber Network GmbH & Co., OHG, an OFFENE HANDELSGESELLSCHAFT
organized under the laws of Germany (collectively, the "Owners"),
hereby establish in your favor as the agent, for the Owners an
irrevocable credit whereby you are authorized to draw on the Bank,
Irrevocable Letter of Credit No._____, available by draft(s) at
sight, an aggregate amount not exceeding [REDACTED] (the "Initial
Stated Amount") until we receive a written notice signed by you in
the form of Annex E, and thereafter, the lesser of (a) [REDACTED]
and (b) the difference between the Initial Stated Amount and the
aggregate amount you have drawn under this Letter of Credit.
(h) TERM. This Letter of Credit is effective immediately and expires at
the close of banking business at our office in [ ] designated in or
pursuant to Paragraph 3 hereof on [insert date] (the "Expiry Date"),
but it is a condition of this Letter of Credit that it will be
automatically extended for a period of 364 days from the Expiry Date
and from each 364 days thereafter (such date, as extended, the
"Expiration Date"), without any amendment, unless at least thirty
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(30) days prior to the Expiration Date, a written notice, in the
form of Annex D, is provided to you by registered mail, certified
mail, or overnight courier to the above-listed address.
(i) DRAWING DOCUMENTATION. The Bank irrevocably authorizes you to draw
on the Bank under this Letter of Credit by presentation of your
sight draft in the form of Annex A accompanied by a drawing
certificate in the form of either Annex B or Annex C hereto,
appropriately completed and, in each case, signed by your authorized
signatory. Presentation of drafts and drawing certificates shall be
made at [insert address], Attention: [ ] or such other address as
which may be designated by us by written notice delivered to you.
Presentation of drafts and drawing Certificates may also be made by
facsimile transmission to [ ] (or such other number as may be
notified to you in writing).
(j) DRAWING PROCEDURES. The Bank hereby agrees with you that all drafts
drawn under and in compliance with the terms of this Letter of
Credit will be duly honored upon due presentation to the Bank as
specified in Paragraph 3, if presented on or before the Expiration
Date. If a sight draft and accompanying drawing certificate are in
compliance with the terms of this Letter of Credit and are received
by [specify time and place] time on a Business Day, payment will be
made on the next Business Day, by wire transfer of immediately
available funds to the account specified in the drawing certificate.
If such sight draft and accompanying drawing certificate are
received after [specify] time on a Business Day, payment will be
made in immediately available funds before 11:00 a.m. on the second
succeeding Business Day following the date of receipt. Payment is to
be made in Deutsche Marks or if Deutsche Marks are no longer
available, in Euros from the Bank's own funds. Only you may make a
drawing under this Letter of Credit. As used in this Letter of
Credit, the term "Business Day" means any day other than a Saturday
or Sunday or a day in which banking institutions in [specify place]
are authorized or required by law or executive order to close.
(k) AVAILABLE AMOUNT. Multiple drawings may be made under this Letter of
Credit; provided, that each drawing honored by the Bank hereunder
shall pro tanto reduce the then applicable amount available for
drawing thereafter.
(l) GOVERNING LAW. This Letter of Credit, except as otherwise expressly
stated herein, is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (the "UCP"). As to matters not governed
by the UCP, this Letter of Credit shall be deemed to be a contract
made under the laws of the State of New York and shall be governed
by the internal laws of the State of New York.
(m) INTEGRATION. The Letter of Credit (including Annexes attached
hereto) sets forth in full the Bank's undertaking, and such
undertaking shall not in any way be modified, amended, amplified or
limited by reference to any other document, instrument or agreement
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referred to herein (or in the Annexes attached hereto), and any such
reference shall not be deemed to incorporate herein any such
document, instrument or agreement.
[ISSUING BANK]
By: ---------------------------
Name:
Title:
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Annex A
SIGHT DRAFT
Irrevocable Transferable Letter of Credit No._______________
Date:____________
For VALUE RECEIVED
At sight pay to the order of ______________, the sum of [Deutsche
Marks ____] [Euro ______] drawn under [Issuing Bank] Irrevocable
Transferable Letter of Credit
No.: ________.
ViCaMe Infrastructure Development GmbH
-----------------------------------------
Authorized Signatory
To:
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Annex B
Irrevocable Transferable Letter of Credit No. ________
CERTIFICATE FOR DRAWING FOR PAYMENT
To: [Issuing Bank]
[Address]
Attention:
The undersigned, ViCaMe Infrastructure Development GmbH, hereby
certifies to [Issuing Bank] (the "Bank") with respect to Irrevocable Letter of
Credit No. _________, dated February ___, 1999 (the "Letter of Credit")
established by the Bank in favor of the undersigned at the request of and for
the account of and for the benefit of Bechtel Limited, a United Kingdom limited
liability company (the "Contractor") that:
Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed thereto in the Engineering, Procurement and Construction
Contract (Outside Plant), dated February 19, 1999 (the "EPC Contract"), among
and between Bechtel Limited, a United Kingdom limited liability company (the
"Contractor"), ViCaMe Infrastructure Development GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany (the "Developer"),
Viatel German Asset GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany, Metromedia Fiber Network GmbH, a GESELLSCHAFT MIT
BESCHRANKTER HAFTUNG organized under the laws of Germany, and Carrier 1 Fiber
Network GmbH & Co. OHG, an OFFENE HANDELSGESELLSCHAFT organized under the laws
of Germany (collectively, the "Owners").
The Contractor has failed properly and fully to perform its
obligations under the EPC Contract.
Written notice has been given to Contractor pursuant to the notice
provisions of the EPC ___ days prior to the date of this certificate.
The undersigned is making a demand for payment under the Letter of
Credit in the amount of $________.
The amount of the draft accompanying this Certificate does not
exceed the amount available under the Letter of Credit.
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Payment of the amount demanded shall be made by wire transfer to the
following account: ____________________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate as of the ______ day of __________, _______.
ViCaMe Infrastructure Development GmbH
By: _____________________________________
Authorized Signatory
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Annex C
Irrevocable Transferable Letter of Credit No. ________
CERTIFICATE AS TO NOTIFICATION OF NON-RENEWAL OF LETTER OF CREDIT
To: [Issuing Bank]
[Address]
Attention:
The undersigned, ViCaMe Infrastructure Development GmbH, hereby
certifies to [Issuing Bank] (the "Bank") with respect to the Irrevocable Letter
of Credit No. _________, dated February ___, 1999 (the "Letter of Credit")
established by the Bank in favor of the undersigned at the request of and for
the account of and for the benefit of Bechtel Limited, a United Kingdom limited
liability company, that:
1. The undersigned is in receipt of a notice, dated _________, from
the Bank notifying us that the Letter of Credit expires in 30 days or less.
2. Payment of the amount demanded shall be made by wire transfer to
the following account: ________________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate as of the ___ day of ____, ___.
ViCaMe Infrastructure Development GmbH
By: __________________________________________
Authorized Signatory
<PAGE>
Annex D
NOTICE OF EXPIRATION OF LETTER OF CREDIT
Irrevocable Transferable Letter of Credit No. __________
[Date]
To: ViCaMe Infrastructure Development GmbH
[Address]
Attention:
Ladies and Gentlemen:
Reference is made to Irrevocable Letter of Credit No. ____ (the
"Letter of Credit") dated February ___, 1999, issued by us in your favor.
This constitutes our thirty days' advance written notice to you that
the Letter of Credit is scheduled to expire on _______________ and has not been
extended.
Very truly yours,
[ISSUING BANK]
By ___________________________
Name:
Title:
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Annex E
Irrevocable Letter of Credit No. _________
NOTIFICATION AS TO REDUCTION OF
STATED AMOUNT OF LETTER OF CREDIT
To: [Issuing Bank]
[Address]
Attention:
The undersigned, ViCaMe Infrastructure Development GmbH hereby
notifies [Issuing Bank] (the "Bank") with respect to Irrevocable Letter of
Credit No. _____, dated February ___, 1999 (the "Letter of Credit") established
by the Bank in favor of the undersigned at the request and for the account of
Bechtel Limited, a United Kingdom limited liability company (the "Contractor"),
that the first anniversary of the RFS Date for the second Outside Plant
delivered by Contractor has occurred.
Very truly yours,
ViCaMe Infrastructure Development GmbH
By:_________________________________
Authorized Signatory
<PAGE>
EXHIBIT 6
FORM OF CORPORATE GUARANTEE
CORPORATE GUARANTEE
GUARANTEE, dated as of February ___, 1999 (this "GUARANTEE"), made by
BECHTEL CORPORATION, a corporation organized under the laws of the State of
Nevada, U.S.A. (the "GUARANTOR"), in favor of Viatel German Asset GmbH, a
GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of Germany,
Metromedia Fiber Network GmbH, a GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized
under the laws of Germany, and Carrier 1 Fiber Network GmbH & Co. OHG, an OFFENE
HANDELSGESELLSCHAFT organized under the laws of Germany (collectively, the
"OWNERS").
W I T N E S S E T H :
WHEREAS, Bechtel Limited, a United Kingdom limited liability company (the
"CONTRACTOR"), the Owners and ViCaMe Infrastructure Development GmbH, a
GESELLSCHAFT MIT BESCHRANKTER HAFTUNG organized under the laws of Germany (the
"DEVELOPER"), are parties to the Engineering, Procurement and Construction
Contract (Outside Plant Work), dated as February 19, 1999, (as amended,
restated, supplemented or otherwise modified from time to time, the "EPC
CONTRACT"); and
WHEREAS, the Guarantor will derive substantial direct and indirect benefit
from the Contractor's role under the EPC Contract; and
WHEREAS, the Owners have agreed to enter into the EPC Contract only if
this Guarantee is executed by the Guarantor and delivered to the Owners on or
before April 15, 1999;
NOW, THEREFORE, in order to induce the Owners to enter into the EPC
Contract and to consummate the transactions contemplated thereby, and for other
good and valuable consideration, receipt of which is hereby acknowledged, the
Guarantor hereby agrees as follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein that are not
defined herein shall have the meanings set forth in the EPC Contract. In
addition, as used herein, the following terms shall have the following meanings:
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended.
"CONTRACTOR" shall have the meaning ascribed thereto in the preamble
hereof.
"EPC CONTRACT" shall have the meaning ascribed thereto in the
recitals hereto.
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"GUARANTEED OBLIGATIONS" shall mean all obligations of the
Contractor which relate to the achievement of RFS Acceptance (as that term
is defined in the EPC Contract).
"GUARANTEE" shall have the meaning ascribed thereto in the preamble
hereof.
"GUARANTOR" shall have the meaning ascribed thereto in the preamble
hereof.
"OWNERS" shall have the meaning ascribed thereto in the recitals
hereto.
"RELEVANT AGREEMENTS" shall mean this Guarantee and the EPC
Contract.
SECTION 2. GUARANTEE TERMS. (a) GUARANTEE. The Guarantor hereby
acknowledges receipt of each of the Relevant Agreements, and the Guarantor
hereby irrevocably and unconditionally, under any and all circumstances,
guarantees to the Owners and its successors, transferees and assigns the due and
punctual payment and performance by the Contractor in accordance with the terms
and provisions of the EPC Contract of all of the Guaranteed Obligations.
(b) OBLIGATIONS ABSOLUTE. The obligations of the Guarantor hereunder shall
be direct and primary obligations of the Guarantor, shall be absolute,
unconditional and irrevocable and shall constitute a guarantee of performance
and discharge and not merely of collection. Such obligations shall not be
subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense for any reason
whatsoever, and the Guarantor shall have no right to terminate this Guarantee or
to be released, relieved or discharged from its obligations hereunder for any
reason whatsoever (whether or not the Guarantor or the Contractor shall have any
knowledge or notice thereof), including, without limitation:
(i) Any (A) amendment, modification, addition, deletion or
supplement to or other change in any Relevant Agreement or any other
instrument or agreement applicable to any of the parties to any Relevant
Agreement, (B) assignment, sublease or transfer of any thereof or of any
interest therein or (C) furnishing or acceptance of security or a
guarantee, or any release, substitution or variation of any security or
guarantee, for the obligations of the Contractor or any other party to any
Relevant Agreement;
(ii) Any failure, omission or delay on the part of the Contractor,
the Developer or the Owners to perform or comply with any term of any
Relevant Agreement;
(iii) Any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or in respect of any Relevant
Agreement or any obligation or liability of the Contractor or the Owners,
or any exercise or non-exercise of any right, remedy, power or privilege
under or in respect of any such instrument or agreement or any such
obligation or liability;
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(iv) Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect
to the Guarantor, the Contractor or the Owners or any other Person or any
of their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(v) Any discharge, termination, cancellation, frustration,
irregularity, invalidity, unenforceability, illegality or impossibility of
performance, in whole or in part, of any Relevant Agreement;
(vi) Any dissolution, merger or consolidation (whether permitted or
otherwise) of the Contractor or the Guarantor into or with any other
Person or any sale, lease or transfer of any of the assets of the
Contractor or the Guarantor to any other Person;
(vii) Any change in the ownership of the Contractor;
(viii) Any payment by the Guarantor to the Contractor or the Owners
pursuant to an agreement other than this Guarantee; or
(ix) Any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, that might otherwise constitute a
legal or equitable defense or discharge of the liabilities of a guarantor
or surety or that might otherwise limit recourse against the Guarantor.
(c) WAIVERS BY THE GUARANTOR. To the extent permitted by applicable law,
the Guarantor hereby unconditionally waives and agrees to waive at any future
time any and all rights that the Guarantor may have or that now or at any time
hereafter may be conferred upon it, by applicable law or otherwise, to
terminate, cancel, quit or surrender this Guarantee. Without limiting the
generality of the foregoing, it is agreed that, at any time or from time to
time, the occurrence or existence of any one or more of the following shall not
release, relieve or discharge the Guarantor from liability hereunder, and the
Guarantor hereby unconditionally waives and agrees to waive, to the extent
permitted by applicable law:
(i) Notice of any of the matters referred to in Section 2(b)
hereof;
(ii) All notices that may be required by applicable law or
otherwise, now or hereafter in effect, to preserve intact any rights
against the Guarantor including, without limitation, any demand,
presentment and protest, proof of notice of nonpayment under any Relevant
Agreement, and notice of any default or failure on the part of the
Contractor to perform and comply with any covenant, agreement, term or
condition of the EPC Contract;
(iii) The enforcement, assertion or exercise against the Contractor
of any right, power, privilege or remedy conferred in any Relevant
Agreement or otherwise;
(iv) Any requirement of diligence on the part of any Person;
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(v) Any requirement to proceed against the Contractor prior to
proceeding against the Guarantor or any other guarantee or to utilize or
exhaust any remedies;
(vi) Acceptance of this Guarantee by the Owners; or
(vii) Any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing, that might otherwise constitute a
legal or equitable discharge, release or defense of a guarantor or surety,
or that might otherwise limit recourse against the Guarantor.
The Guarantor hereby agrees that a separate action may be brought against it
whether or not an action is commenced against the Contractor with respect to any
of the Guaranteed Obligations. It is the intention hereof that the Guarantor
shall remain liable as principal until the full performance of the Guaranteed
Obligations.
(d) REINSTATEMENT OF GUARANTEE. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by the recipient thereof upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Contractor, or
upon or as a result of the appointment of a custodian, receiver, intervenor or
conservator of, or trustee or similar officer for, the Contractor or any
substantial part of its property, or upon any settlement or compromise of any
claim effected by the Owners in connection with any such insolvency, bankruptcy,
dissolution, liquidation or reorganization with any claimant (including, without
limitation, the Contractor) or otherwise, all as though such payments had not
been made. If any event specified in the immediately preceding sentence shall
occur, and such occurrence shall prevent, delay or otherwise affect the right of
the Owners to receive any payment in respect of any Guaranteed Obligation, the
Guarantor agrees that, for purposes of this Guarantee and its obligations
hereunder and notwithstanding the occurrence of any of the foregoing events, the
Guarantor shall forthwith pay any such Guaranteed Obligation at such times and
in such amounts as are specified in the EPC Contract.
(e) NO SUBROGATION. Notwithstanding anything to the contrary in this
Guarantee, the Guarantor hereby irrevocably waives all rights that may have
arisen in connection with this Guarantee to be subrogated to any of the rights
(whether contractual, under the Bankruptcy Code (including Section 509 thereof),
under common law or otherwise) of the Owners against the Contractor or against
any collateral security or guarantee held by the Owners for the performance of
the Guaranteed Obligations. So long as the Guaranteed Obligations remain
outstanding, if any amount shall be paid by or on behalf of the Contractor to
the Guarantor on account of any of the rights waived in this Section 2(e), such
amount shall be held by the Guarantor in trust, segregated from other funds of
the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned
over to the Owners in the exact form received by the Guarantor (duly indorsed by
the Guarantor to the Owners, if required), to be applied against the Guaranteed
Obligations in such order as the Owners may determine. The provisions of this
Section 2(e) shall survive the term of this Guarantee and the payment in full of
the Guaranteed Obligations.
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(f) LIMITATIONS. Notwithstanding the foregoing or any other provision of
this Guarantee:
(i) The Guarantor's obligations hereunder shall be excused or
reduced to the extent that the Contractor's obligations under the
Guaranteed Obligations are excused or reduced, whether pursuant to the
terms of the EPC Contract, or under law, except those available at law
relating to the lack of validity or enforceability of the obligation of
the Contractor under or with respect to the EPC Contract; and
(ii) Without limiting the generality of the foregoing, the Guarantor
shall be entitled to all defenses, set-offs, recoupments and deductions
available to the Contractor under the EPC Contract. In addition, any
indemnity or release given by the Owners in favor of the Contractor in the
EPC Contract shall inure to the benefit of the Guarantor and any provision
of the EPC Contract which limits the liability of the Contractor connected
with any event shall constitute and be deemed an aggregate limit on the
cumulative liabilities of Contractor and Guarantor relating to such event.
(iii) Payment or performance of any of the Guaranteed Obligations or
other obligations, duties, liabilities, covenants or agreements under the
EPC Contract or other acts which toll any statute of limitations
applicable to the Guaranteed Obligations or the liability of the
Contractor under the EPC Contract, shall also toll the statute of
limitations applicable to the Guarantor's liability under this Guarantee.
SECTION 3. RIGHTS OF THIRD PARTIES. This Guarantee shall not be construed
to create any right in any Person other than the Owners or to be a contract in
whole or in part for the benefit of any Person other than the Owners.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents
and warrants to the Owners as follows:
(a) ORGANIZATION; POWER AND AUTHORITY. The Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada and is qualified to do business in the United States and
has all requisite legal power and authority to execute this Guarantee and
to perform the terms, conditions and provisions hereof.
(b) AUTHORIZATION. The execution and delivery by the Guarantor of this
Guarantee have been duly authorized by all requisite corporate action.
(c) ENFORCEABILITY. This Guarantee constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and to the extent that
the remedies of specific performance, injunctive relief and other forms of
equitable relief are subject to equitable defenses, the discretion of the
court before which any proceeding therefor may be brought, and the
principles of equity in general.
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(d) NO CONFLICT. Neither the execution, delivery or performance by the
Guarantor of this Guarantee, nor the consummation of the transactions
contemplated thereby, will result in:
(i) A violation of, or a conflict with, any provision of the
organizational documents of the Guarantor;
(ii) A contravention or breach of, or a default under, any term or
provision of any material contract, agreement or instrument to which
the Guarantor is a party or by which it or its property may be
bound, which contravention, breach or default could be reasonably
expected to have a material adverse effect on the ability of the
Guarantor to perform its obligations under this Guarantee to
consummate the transactions contemplated by this Guarantee; or
(iii) A violation by the Guarantor of any Law.
(e) NO VIOLATION OF LAW. The Guarantor is not in violation of any Law
promulgated, or judgment entered, by any Governmental Authority, which
violations, individually or in the aggregate, would adversely affect it or
its performance of any obligations under this Guarantee.
(f) LITIGATION. There are no actions, suits or proceedings, now pending or
(to its best knowledge) threatened against the Guarantor before any court
or administrative body or arbitral tribunal that might materially
adversely affect the ability of the Guarantor to perform its obligations
under this Guarantee.
SECTION 5. ASSIGNMENT. (a) GENERALLY. The Guarantor may not assign its
rights and obligations under this Guarantee, directly or indirectly, whether by
pledge, assignment, sale of assets or the sale or merger (statutory or
otherwise), without the prior written consent of the Owners. The Guarantor
acknowledges and agrees that, without the consent of the Guarantor, the Owners
may assign this Guarantee or its rights or obligations thereunder to any
subsidiary or affiliate of the Owners. With the exception described in the
previous sentence, neither party may assign its rights or delegate its duties
without the written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
SECTION 6. DISPUTE RESOLUTION. The Guarantor shall be bound by the dispute
resolution procedures set forth in Article 39 of the EPC Contract and agrees to
participate in such procedures if requested by the Owners.
SECTION 7. MISCELLANEOUS. (a) REMEDIES NONEXCLUSIVE. All remedies provided
in this Guarantee shall be deemed cumulative and not in lieu of, or exclusive
of, each other or of any other remedy available to the Owners at law or in
equity, and the exercise of any remedy, or the existence herein of other
remedies, shall not prevent the exercise of any other remedy.
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(b) NOTICES. All notices to be given herein shall be effective upon
receipt and shall be in writing and delivered by hand, internationally
recognized overnight courier service, first class mail (postage prepaid),
telegram, telecopy or other similar means (followed with a confirmation by mail)
to the Guarantor or the Owners, as the case may be, at the following address or
such other address as may hereafter be designated, in writing, by the respective
Person in accordance with this Section 7(b):
(i) IF TO THE OWNERS:
ViCaMe Infrastructure Development GmbH
c/o Viatel U.K.
Parnell House
25 Wilton Road
London SW1V 1EJ
UNITED KINGDOM
Attention: Mr. Derek Foxwell,
Project Manager
Telecopy: +44-171-828-1907
(ii) IF TO THE GUARANTOR:
Bechtel Corporation
7485 New Horizon Way
Suite 200
Frederick, MD 21703-8388
Attention: G. Conniff, Senior Vice President
Telecopy: +1-301-695-3262
WITH A COPY TO:
Bechtel Corporation
50 Beale Street
San Francisco, CA 94105
Attention: General Counsel
Telecopy: +1-415-768-1777
(c) NONWAIVER. The Owners shall not be deemed to have waived any right
under this Guarantee unless the Owners shall have delivered to the Guarantor a
written waiver signed by the Owners. No failure or successive failure by the
Owners to enforce any covenant or agreement, and no waiver or successive waivers
by the Owners of any condition of this Guarantee, shall operate as a discharge
of such covenant, agreement or condition, or render the same invalid, or impair
the Owner's right to enforce the same in the event of any subsequent breach or
breaches by the Guarantor.
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(d) SEVERABILITY. If any of the terms, covenants or conditions hereof or
the application of any such term, covenant or condition shall be held invalid as
to the Guarantor or the Owners or circumstance by any court or arbitrator having
jurisdiction, the remainder of such terms, covenants or conditions shall not be
affected thereby, shall remain in full force and effect and shall continue to be
valid and enforceable in any other jurisdiction, and the Guarantor and the
Owners shall negotiate in good faith to substitute a term or condition in this
Guarantee to replace the one held invalid.
(e) ENTIRE AGREEMENT. This Guarantee constitutes the entire agreement and
contains all of the understandings and agreements of whatsoever kind and nature
existing between the Guarantor and the Owners with respect to the subject matter
hereof and the rights, interests, understandings, agreements and obligations of
the Guarantor and the Owners relating thereto, and supersedes all prior written
or oral agreements, commitments, representations, communications and
understandings between the Guarantor and the Owners.
(f) AMENDMENT. No amendment, waiver or consent relating to this Guarantee
shall be effective unless it is in writing and signed by the Owners.
(g) BENEFITS OF GUARANTEE. All of the terms and provisions of this
Guarantee shall be binding upon and inure to the benefit of the Guarantor and
the Owners and their respective successors and permitted assigns. This Guarantee
is for the sole benefit of the Owners and is not for the benefit of any other
third person.
(h) DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Guarantee.
(i) RULES OF CONSTRUCTION. In the interpretation of this Guarantee, unless
the context otherwise requires:
(i) The singular includes the plural and vice versa and, in particular
(but without limiting the generality of the foregoing), any word or
expression defined in the singular has the corresponding meaning used in
the plural and vice versa;
(ii) The term "or" is not exclusive;
(iii) The term "including" shall mean "including, without limitation";
(iv) Any reference to any gender includes the other gender;
(v) Any reference to any agreement, instrument, contract or other document
(A) shall include all appendices, exhibits and schedules thereto and (B)
shall be a reference to such agreement, instrument, contract or other
document as amended, supplemented, modified, suspended, restated or
novated from time to time;
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(vi) Any reference to any law shall include all statutory and
administrative provisions consolidating, amending or replacing such law,
and shall include all rules and regulations promulgated thereunder;
(vii) Any reference to "writing" includes printing, typing, lithography
and other means of reproducing words in a visible form;
(viii) Any reference to any Person includes its permitted successors and
assigns;
(ix) Unless otherwise specified, a reference to a Section is to the
Section of this Guarantee;
(x) Unless otherwise specified, any right may be exercised at any time and
from time to time;
(xi) All obligations under this Guarantee are continuing obligations
throughout the term hereof; and
(xii) The fact that counsel to the Owners shall have drafted this
Guarantee shall not affect the interpretation of any provision of this
Guarantee in a manner adverse to the Owners or otherwise prejudice or
impair the rights of the Owners.
(j) GOVERNING LAW, ETC. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD FOR
PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANY OTHER JURISDICTION) AND SHALL BE ENFORCED IN NEW YORK, NEW YORK, UNITED
STATES. PROCESS IN ANY ACTION OR PROCEEDING HEREUNDER MAY BE SERVED ON THE
GUARANTOR ANYWHERE IN THE WORLD, WHETHER WITHIN OR OUTSIDE THE STATE OF NEW
YORK, BY FIRST CLASS, CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, OR BY ANY OTHER METHOD ALLOWED BY LAW. IN THE EVENT OF ANY
LITIGATION WITH RESPECT TO THIS GUARANTEE OR ANY INSTRUMENT OR DOCUMENT EXECUTED
AND DELIVERED IN CONNECTION HEREWITH, THE GUARANTOR WAIVES THE RIGHT TO A TRIAL
BY JURY.
(k) LANGUAGE. The official text of this Guarantee shall be in English,
regardless of any translation that may be made for the convenience of the
Guarantor or the Owners. All definitive documents, notices, waivers and all
other communication, written or otherwise, between the Guarantor and the Owners
in connection with this Guarantee shall be in English.
(l) TERM. This Guarantee and all guarantees, covenants and agreements of
the Guarantor contained herein shall terminate and be discharged on the date on
which all of the Guaranteed Obligations shall be paid or otherwise discharged in
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full; PROVIDED that this Guarantee shall continue to be effective or reinstated,
as the case may be, to the extent provided in Section 2(d) hereof, but provided
always that this Guarantee shall not survive the expiration of Warranty Period
(as that term is defined in the Contract.)
(m) FURTHER ASSURANCES. The Guarantor hereby agrees to execute and deliver
all such instruments and take all such action as the Owners may from time to
time reasonably request in order to effectuate fully the purposes of this
Guarantee.
(n) RELIANCE PRESUMED. The Guarantor waives notice of reliance upon this
Guarantee by the Owners. Each of the Guaranteed Obligations (now or hereafter in
effect) shall be deemed conclusively to have been created, contracted or
incurred in reliance upon this Guarantee.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed and delivered as of the day and year first above written.
BECHTEL CORPORATION
By:___________________________
Name:
Title:
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EXHIBIT 7
FORM OF OWNER ESCROW AGREEMENT
================================================================================
UNDERTAKING AND PLEDGE AND SECURITY AGREEMENT
Dated as of February 19, 1999
between
VICAME INFRASTRUCTURE DEVELOPMENT GMBH,
Developer,
VIATEL GERMAN ASSET GMBH
Owner,
METROMEDIA FIBER NETWORK GMBH
Owner,
CARRIER 1 FIBER NETWORK GMBH & CO. OHG
Owner,
BECHTEL LIMITED,
Contractor,
and
THE CHASE MANHATTAN BANK,
Collateral Agent
GERMAN NETWORK DEVELOPMENT PROJECT
GND No. 1
and
GND No. 2
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
SCHEDULE I - Required Amounts
EXHIBIT A - Form of Certificate for Withdrawal by Owners
EXHIBIT B - Form of Certificate for Withdrawal by Contractor
<PAGE>
UNDERTAKING AND PLEDGE AND SECURITY AGREEMENT
UNDERTAKING AND PLEDGE AND SECURITY AGREEMENT dated as of February 19, 1999
(this "AGREEMENT") among VIATEL GERMAN ASSET GmbH, a Gesellschaft mit
beschrankter Haftung organized under the laws of Germany, METROMEDIA FIBER
NETWORK GmbH, a Gesellschaft mit beschrankter Haftung organized under the laws
of Germany, CARRIER 1 FIBER NETWORK GmbH & Co. oHG, an offene
Handelsgessellschaft (collectively, hereinafter called "OWNERS") and VICAME
INFRASTRUCTURE DEVELOPMENT GmbH, a Gesellschaft mit beschrankter Haftung
organized under the laws of Germany ("DEVELOPER"), BECHTEL LIMITED, a United
Kingdom limited liability company ("CONTRACTOR"), and THE CHASE MANHATTAN BANK,
a New York banking institution ("COLLATERAL AGENT").
R E C I T A L S :
WHEREAS, pursuant to that certain Engineering, Procurement and Construction
Contract (Outside Plant Work) dated February 19, 1999, among Contractor,
Developer, and the Owners (the "CONTRACT") and the transactions contemplated
thereby, the Contractor will provide certain services necessary for the design,
engineering, procurement, construction, installation and testing of the Outside
Plant for the Systems on a fixed-price, date certain basis;
WHEREAS, in order to induce the Contractor to enter into the transactions
contemplated by the Contract, the Owners have agreed, in accordance with and
subject to the terms and conditions hereof, to deposit certain amounts from time
to time with the Collateral Agent in the amounts set forth herein in order to
secure the Owner Payment Obligations.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
Except as may be otherwise provided herein, capitalized terms used herein
have the respective meanings defined below, for all purposes hereof (such
definitions to be equally applicable to both the singular and plural forms of
the terms defined) or assigned thereto in or by reference to Exhibit 1 to the
Contract. Any agreement referred to in such Exhibit 1 means such agreement as
amended, supplemented and modified from time to time in accordance with the
applicable provisions thereof and of the other Contract Documents. Unless
otherwise specified, Section references are to Sections of this Agreement.
Unless the context otherwise requires, the terms "adverse claim," "entitlement
holder," "entitlement order," "financial asset," "good faith," "investment
property," "securities account," "securities intermediary" and "security
entitlement," whenever used in this Agreement, shall have the meanings ascribed
to such terms in the NYUCC.
"AGREEMENT" shall have the meaning set forth for such term in the preamble
hereto.
<PAGE>
"BUSINESS DAY" shall mean a day on which banks are not authorized or
required to be closed under applicable law in New York, New York but shall, in
any case, exclude a Saturday or a Sunday.
"COLLATERAL" has the meaning specified in Section 3.2.
"COLLATERAL ACCOUNT" has the meaning specified in Section 3.1(a).
"COLLATERAL AGENT" has the meaning specified in the preamble hereto.
"CONTRACT " has the meaning specified in the first WHEREAS clause hereof.
"CONTRACT DEFAULT" shall mean the failure of the Owners, or the Developer
on behalf of the Owners, as the case may be, to pay any Owner Payment
Obligations.
"CONTRACTOR" has the meaning specified in the preamble hereto.
"DEFAULT" shall mean a Contract Default or an Undertaking Default.
"DEPOSIT DATE" shall mean each of the dates specified in Schedule I hereto.
"DEPOSIT DATE PERIOD" shall mean, with respect to each Deposit Date, the
period from and including the date of such Deposit Date, to, but excluding, the
date of the immediately succeeding Deposit Date.
"DEVELOPER" has the meaning specified in the preamble hereto.
"DM" means German Deutsche Marks.
"EURO" shall mean the common European currency.
"EVENT OF DEFAULT" has the meaning specified in Section 25.1 of the
Contract.
"FAIR MARKET VALUE" shall mean, with respect to any Permitted Investments,
the market bid price of such Permitted Investments, as determined on public
exchange or any readily identifiable market and with deduction for the cost, if
any, incurred in sale, liquidation or transfer of such Permitted Investments.
"INDEMNIFIED PARTIES" shall have the meaning specified in Section 4.6.
"NOTICE OF EXERCISE OF REMEDIES" means the written notice given by the
Owners to the Contractor under Section 25.1 of the Contract.
"NY-UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York, as amended from time to time.
"OWNER PAYMENT OBLIGATIONS" shall mean all payment obligations of the
Owners from time to time to the Contractor under the Contract.
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<PAGE>
"PARTY" and "PARTIES" has the meaning specified in Section 6.7.
"PAYMENT ACCOUNT" means Contractor's account at Citibank, N.A., London,
Swift Code CITIGB2L, Account No. 3162613, Reference: JOB 24221, Attention: Ms.K.
Maycock, telephone: 44 171 500 2386, facsimile: 44 171 500 5550 or such other
account as Contractor may from time to time designate in writing to Developer
(on behalf of the Owners) and Collateral Agent.
"PERMITTED INVESTMENTS" means DM or Euro denominated (i) certificates of
deposit and time and other interest bearing deposits (having a maturity of one
(1) year or less) in banks which are rated at least A or higher by a nationally
recognized rating agency, (ii) short-term debt securities issued by or entitled
to the full faith and credit of any European nation participating in the Euro
which has a credit rating at least A or higher by a nationally recognized rating
agency or any of its respective agencies or instrumentalities which is rated at
least A or higher by a nationally recognized rating agency, (iii) commercial
paper (having a maturity of one (1) year or less) which is rated at least P-2 by
Moody's Investors Services A2 by Standard & Poor's Corporation, and (iv) any
mutual fund the portfolio of which is limited to the debt securities described
in clause (ii) above.
"PROPERTY" shall mean any money, securities, commodities, assets, holdings,
investment property, financial assets, security entitlements or any other
property of any kind or nature whatsoever, real or personal, tangible or
intangible, or any interest in any of the foregoing.
"REQUIRED AMOUNT" shall mean, as of any Deposit Date, the amount set forth
opposite such Deposit Date under the column with the heading "Required Amount"
on Schedule I hereto, as such Schedule is adjusted from time to time pursuant to
Section 3.14.
"SECURED OBLIGATIONS" has the meaning specified in Section 3.2.
"TERMINATION DATE" has the meaning specified in Section 2.3.
"TERMINATION NOTICE" has the meaning specified in Section 3.4.
"UNDERTAKING DEFAULT" shall mean the failure of the Owners to pay any
amount or make any deposit when required hereunder.
SECTION 2. UNDERTAKING
2.1 UNDERTAKING. With respect to each Deposit Date, the Owners shall, on
such Deposit Date deposit into the Collateral Account in immediately available
funds, such amounts as are required to cause the Fair Market Value of the
Permitted Investments (and other Collateral, if any, credited to the Collateral
Account as to which Contractor has a perfected security interest) to be no less
than the Required Amount set forth opposite such Deposit Date in SCHEDULE I
hereto. Immediately upon the making of any such payment, the Owners shall give
written notice thereof to the Contractor and the Collateral Agent via facsimile
and overnight courier in the manner set forth in Section 6.1. The Owners
understand and agree that such undertaking obligations are absolute and
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unconditional and shall be terminated only in the manner set forth in Section
2.3, and shall be suspended only in the manner set forth in Section 2.4.
2.2 PAYMENT. Any amount which is to be deposited pursuant to Section 2.1 on
day which is not a Business Day shall be deposited on the next succeeding
Business Day.
2.3 TERMINATION OF UNDERTAKING. This Agreement, and the obligation,
covenants and agreements of the Owners hereunder, shall remain in full force and
effect until the earlier to occur of the following events: (i) the payment in
full of all Owner Payment Obligations, (ii) the receipt by the Collateral Agent
of a Notice of Exercise of Remedies and (iii) the date upon which all amounts on
deposit in the Collateral Account have been transferred by the Collateral Agent
to the Contractor or the Owners, as the case may be, pursuant to and in
accordance with, the terms of this Agreement (such earliest date, the
"TERMINATION DATE").
2.4 SUSPENSION OF ADDITIONAL DEPOSITS. The obligation of the Owners to make
additional deposits into the Collateral Account, as set forth in Section 2.1,
shall be suspended during such time, but only so long as, an Event of Default
has occurred and is continuing. Such obligation to make additional deposits
shall resume immediately, without any formal act or notice, as soon as such
Event of Default shall no longer be continuing. The Developer shall notify the
Collateral Agent promptly of any suspension, or resumption, as the case may be,
of making additional deposits into the Collateral Account.
SECTION 3. COLLATERAL SECURITY
3.1 COLLATERAL ACCOUNT.
(a) COLLATERAL ACCOUNT. The Owners shall establish and maintain at the
principal New York office of the Collateral Agent, for account of the Owners, an
account designated the "Viatel German Asset-GmbH, Metromedia Fiber Network GmbH
i.G., and Carrier 1 Fiber Network GmbH & Co. oHG, Account; Bechtel Limited, as
secured party" (the "COLLATERAL ACCOUNT"). Contractor shall have exclusive
dominion and control over the Collateral Account. For purposes of this
Agreement, the parties confirm and agree as follows:
(i) Collateral Agent confirms that The Chase Manhattan Bank Frankfurt
has established a collateral security account for the account of The Chase
Manhattan Bank London, account number 6231400604, attention Stuart Poyser,
and titled as provided above.
(ii) Collateral Agent agrees that the Collateral Account is a
"securities account" within the meaning of Section 8501 of the NYUCC.
(iii) Collateral Agent confirms that it is a "securities intermediary"
as defined in Section 8102(a)(14) of the NY-UCC and a "Securities
Intermediary" as defined in Book-Entry Regulations.
(iv) Collateral Agent agrees to treat the other parties hereto as
entitled to exercise the rights that comprise any financial asset credited
to or carried in the Collateral Account.
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(v) Upon the delivery or transfer of any Collateral to Collateral
Agent, Collateral Agent shall indicate by book entry that such Collateral
has been credited to the Collateral Account or accept such Collateral for
credit to the Collateral Account, as appropriate.
(vi) The parties hereto agree that each item of Property credited to
or carried in the Collateral Account shall be treated as a financial asset
under Articles 8 and 9 of the NYUCC.
(vii) Each party hereto agrees that the "securities intermediary's
jurisdiction" of Collateral Agent is the State of New York and that New
York law shall be the local law of the "securities intermediary's
jurisdiction" for purposes of Section 9103(6) of the NYUCC.
(viii) If at any time Collateral Agent shall receive an entitlement
order given by Contractor and relating to the Collateral Account or any
financial asset credited thereto or carried therein or any other
Collateral, the Owners hereby agree that Collateral Agent may, and
Collateral Agent agrees that it shall, comply with such entitlement order
without further consent of the Owners or any other Person.
(ix) Each of the Owners agree that it shall have no right to demand
any withdrawal of Collateral from the Collateral Account (except as
expressly set forth in Section 3.5(a)) or to give any entitlement order
with respect to any Collateral credited or required to be credited to the
Collateral Account. Collateral Agent agrees that it shall take all
entitlement orders with respect to the Collateral Account or any financial
asset credited thereto or required to be credited thereto solely from
Contractor and that it will not transfer or release any Collateral to the
Owners or any other Person, except in accordance with an entitlement order
from Contractor.
(x) Collateral Agent represents, warrants and agrees that it does not
currently hold, and during the existence of this Agreement shall not hold,
any "adverse interest", by way of security, setoff or otherwise, in (A) the
Collateral Account or in any financial asset credited thereto or carried
therein, or (B) in other Collateral, and hereby waives and releases any
such interest which it may have in any of the foregoing. Without prejudice
to the preceding sentence in the event that Collateral Agent has or
subsequently obtains by agreement, operation of law or otherwise a security
interest in the Collateral Account or any security entitlement credited
thereto or carried therein, Collateral Agent hereby agrees that such
security interest shall be subordinate to the security interest granted
herein to the Contractor. The financial assets and other items credited to
or carried in the Collateral Account will not be subject to deduction,
setoff, banker's Lien, or any other right in favor of any Person other than
Contractor.
(xi) Except for the claims and interests of Contractor and of the
Owners in the Collateral Account, Collateral Agent represents and warrants
that it does not know of any claim to, or interest in, the Collateral
Account or in any financial asset credited thereto or carried therein.
Collateral Agent will not (A) permit any of its creditors to obtain
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"control" (as such term is defined in Articles 8 and 9 of the NYUCC ) over
the Collateral Account or any financial asset credited thereto or carried
therein, or (B) enter into any agreement, arrangement or understanding with
any other Person relating to any part of the Collateral Account and the
financial assets credited or to be credited thereto or to be carried
therein pursuant to which it has agreed to comply with entitlement orders
of such Person. If any Person asserts any Lien or adverse claim against the
Collateral Account or any financial asset credited thereto or carried
therein, and Collateral Agent has actual notice of such Lien or adverse
claim, Collateral Agent shall promptly notify Contractor and the Developer
(on behalf of the Owners) thereof.
(xii) Collateral Agent shall promptly send copies of all statements,
confirmations and other correspondence concerning the Collateral Account or
any financial asset credited thereto or carried therein simultaneously to
Contractor and Developer (on behalf of the Owners) at the address set forth
in Section 6.1.
(xiii) By this Agreement the parties hereto intend and agree that
Contractor has obtained "control" (within the meaning of Section 8106(d) of
the NY-UCC) of the Collateral Account, the financial assets credited or
required to be credited to the Collateral Account and any other Collateral.
(xiv) Collateral Agent confirms and agrees that the first priority
security interest of Contractor with respect to the Collateral is and will
remain reflected in its books and records.
(xv) By this Agreement the parties hereto intend and agree, and
Collateral Agent confirms, that Contractor is the "entitlement holder"
(within the meaning of Section 8102(a)(7) of the NY-UCC) of the Collateral
Account and all financial assets held by Collateral Agent hereunder as the
securities intermediary.
(b) NOTICE OF SECURITY INTEREST. Collateral Agent (i) acknowledges
Contractor's security interest in the Collateral Account and the other
Collateral granted by the Owners pursuant to Section 3.2, (ii) shall record the
pledge of the Collateral Account and the other Collateral made hereby on its
books and (iii) agrees to execute and deliver such acknowledgments as is
customary in its business or as Contractor may reasonably request.
3.2. COLLATERAL; PLEDGE; NO LIENS; TITLE
(a) PLEDGE. As collateral security for the prompt payment when due of all
amounts from time to time payable by the Owners to Contractor under Section 2
and 3.12 of this Agreement and of all Owner Payment Obligations (collectively,
the "SECURED OBLIGATIONS"), the Owners hereby pledge, hypothecate, assign,
transfer, set over and deliver unto Contractor, and grant to Contractor, a first
priority security interest in, Lien upon and right of set off against the
following (collectively, the "COLLATERAL"):
(i) the Collateral Account, including any credit or other balances of
account credited thereto or carried therein or other amounts otherwise
transferred thereto;
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(ii) all investment property, cash, Permitted Investments and other
instruments or amounts or other Property deposited or required to be
deposited from time to time in, or credited to or required to be credited
from time to time to, the Collateral Account and held or to be held by
Collateral Agent hereunder and all income therefrom;
(iii) the Owners' securities entitlement with respect to the financial
assets credited or required to be credited from time to time to the
Collateral Account;
(iv) all rights, claims and causes of action, if any, that the Owners
may have against any Person in respect of the foregoing; and
(v) all proceeds of any or all of the foregoing.
TO HAVE AND TO HOLD the Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto Contractor, its successors and assigns, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.
(b) LIENS, ETC. The Owners agree not to withdraw (except as expressly
provided for pursuant to Section 3.5(a)), liquidate, sell, convey, endorse,
negotiate, or in any way dispose of, or create, incur, or permit to exist any
pledge, mortgage, Lien, charge, encumbrance or security interest whatsoever, or
cause any of the foregoing to occur in or with respect to, any of the
Collateral, any interest therein or any cash or other property held and
maintained in or credited to the Collateral Account. The Owners agree at their
own expense, to defend Contractor's security interest in and to the Collateral
against the claims of any Person and to ensure that Contractor has at all times
a first priority perfected Lien on and security interest in the Collateral,
subject to no prior or equal Lien whatsoever.
(c) TITLE. The Owners hereby represent and warrant to Contractor that the
Owners have good title to the Collateral and the cash or other property held and
maintained in or credited to the Collateral Account, free and clear of all
Liens, other than the Lien created hereby, and that this Agreement grants to
Contractor a first priority perfected Lien on and security interest in the
Collateral, subject to no prior or equal Lien whatsoever.
3.3. INVESTMENTS.
(a) GENERALLY. The Owners and Contractor agree that all funds deposited
into the Collateral Account shall be invested and reinvested, and Contractor
hereby instructs Collateral Agent to so invest and reinvest such funds in
Permitted Investments. All earnings on such investment or reinvestment shall be
paid to the Collateral Account as part of the Collateral. Contractor and
Collateral Agent shall have no liability for any losses or liabilities incurred
as a result of such investments (excluding losses resulting from the gross
negligence or willful misconduct of Contractor or Collateral Agent).
(b) INVESTMENT OF COLLATERAL. All interest, dividends and distributions of
property on or in respect of the Collateral, whether constituting scheduled or
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unscheduled payments and whether received in exchange for the Collateral or any
part thereof or as a result of any merger, consolidation, acquisition or other
exchange of assets or on the liquidation, whether voluntary or involuntary, of
any issuer of the Collateral, or otherwise, and all amounts received pursuant to
Section 3.7, shall constitute Collateral hereunder, shall be promptly credited
to the Collateral Account and shall be applied to the prompt purchase of
Permitted Investments. Contractor hereby instructs Collateral Agent to invest in
such Permitted Investments as shall be directed by Developer (on behalf of the
Owners) from time to time until such time that Contractor otherwise instructs
Collateral Agent. Contractor shall not instruct Collateral Agent to not act upon
Developer's direction (on behalf of the Owners) in connection with investing in
Permitted Investments so long as no Default has occurred and is continuing.
3.4 TERMINATION OF COLLATERAL ACCOUNT. At the request of Developer (on
behalf of the Owners) given to Contractor on or after the Termination Date,
Contractor shall deliver prompt written notice of such termination to Collateral
Agent (a "TERMINATION NOTICE"), whereupon the Collateral shall be released from
the Lien of this Agreement, and Collateral Agent shall promptly deliver to
Developer (on behalf of the Owners) or its designee each of the certificates
evidencing the Collateral, as well as any other instruments or documents
delivered to Contractor pursuant to this Agreement.
3.5 RELEASE OF COLLATERAL
(a) PERIODIC RELEASE. If at any time during any Deposit Date Period the
Fair Market Value of the Permitted Investments (and other Collateral, if any
credited to the Collateral Account as to which the Contractor has a perfected
security interest) is greater than the Required Amount set forth opposite the
Deposit Date for such Deposit Date Period, as set forth in SCHEDULE I hereto,
and the Collateral Agent has not received a notice that a Default has occurred
and is continuing, then, upon delivery of a certificate in the form of EXHIBIT A
executed by a person whose authority to execute such certificate for the
Developer (on behalf of the Owners) is evidenced by an extract from the
Handelsregister, the Contractor hereby instructs the Collateral Agent to
transfer the amount of such excess to the account identified in such certificate
within two Business Days and shall sell any such Permitted Investments as may be
required in order to make such transfer. The Collateral Agent shall send written
notice of such transfer via facsimile and overnight courier to the Contractor
and the Developer immediately upon such transfer.
(b) PAYMENT AMOUNT. If at any time the Collateral Agent receives a
certificate in the form of EXHIBIT B executed by a person purporting to be a
duly authorized signatory of the Contractor, it shall transfer the amount stated
in such certificate as being due and owing, to the Payment Account within two
Business Days and shall sell any such Permitted Investments as may be required
in order to make such transfer. The Collateral Agent shall send written notice
of such transfer via facsimile and overnight courier to the Contractor and the
Developer immediately upon such transfer.
3.6 REMEDIES.
(a) SECURED OBLIGATIONS. Upon the occurrence of a Default, Contractor may
take any action permitted herein with respect to the Collateral.
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(b) REMEDIES. If a Default shall have occurred and be continuing,
Contractor may from time to time:
(i) sell, assign, transfer, endorse and deliver the whole or, from
time to time, any part of the Collateral at public or private sale or on
any securities exchange, for cash, upon credit or for other property, for
immediate or future delivery, and for such price or prices and on such
terms as Contractor in its reasonable discretion shall deem appropriate;
and (ii) instead of exercising its remedy under clause (i) of this Section
3.6(b), have any or all of the Collateral registered in its name or that of
its nominee and/or any cash or other property, transferred to it. To
effectuate the foregoing, Contractor may notify Collateral Agent in writing
that Contractor wishes to register or transfer the Collateral and or such
cash or other property to Contractor, whereupon Collateral Agent shall
cause the same to be so registered or transferred without the consent of
the Owners or any other Person. Whether or not the Collateral shall have
been registered in the name of Contractor or its nominee or such cash or
other property shall have been transferred to Contractor, Contractor or its
nominee shall have the right to exercise sole dominion and control over the
Collateral, such cash and such other property, to liquidate the Collateral
and to receive all proceeds thereof, to receive all such cash or other
property and to exercise all voting rights, if any, as to all of the
Collateral, all other rights and all conversion, exchanged, subscription or
other rights, privileges or options pertaining thereto as if it were the
absolute owner thereof, including, without limitation, the right to
exchange or redeem any or all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
the issuer thereof, or upon the exercise by the issuer thereof of any
right, privilege, or option pertaining to any of the Collateral, and, in
connection therewith, to deliver any of the Collateral to any committee,
depository, transfer agent, registrar or other designated agency upon such
terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Contractor shall have no
duty to exercise any of the aforesaid rights, privileges or options and
shall not be responsible for any failure to do so or any delay in so doing;
and
(iii) exercise any and all of the rights and remedies with respect to
all or any part of the Collateral of a secured party under the NYUCC and or
under other applicable law;
provided, however, that nothing herein shall be deemed to allow the
Contractor to sell or foreclose upon any portion of the Collateral that is
in excess of the Secured Obligations.
(c) SALES TO PURCHASERS UNDER SECURITIES ACT OF 1933. Contractor shall be
authorized at any sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account in compliance with, and
otherwise satisfy the requirements of, the Securities Act of 1933, as amended,
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and upon consummation of any such sale, Contractor shall have the right to
assign, transfer, endorse and deliver to the purchaser or purchasers thereof the
Collateral so sold.
(d) PRIVATE SALES. The Owners hereby acknowledge and agree that a public
sale of the Collateral might require the filing of registration statements with
the Securities and Exchange Commission and various state securities authorities.
Accordingly, the Owners hereby expressly (i) authorize any sale of Collateral
under this Agreement to be made in such a manner as to avoid the foregoing
registration requirements, and (ii) acknowledge that such sales may be made in
one or more privately negotiated transactions without public offer which may
result in a lower overall sales price for the Collateral than could be obtained
in a public offering of the Collateral. Each such purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on the part
of Owners, and the Owners hereby waive (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which the Owners now have or may at
any time in the future have under any law now existing or hereafter enacted.
(e) NOTICE AND CONDUCT OF SALES. The Owners acknowledge and agree that the
Collateral is of a type customarily sold on a recognized market and,
accordingly, to the extent permitted by law, the Owners expressly waive any
notice by Contractor or any other Person of sale or other disposition of the
Collateral and all other rights or remedies of the Owners or formalities
prescribed by law relative to sale or disposition of the Collateral or exercise
of any other right or remedy of Contractor, and to the extent any such notice is
required and cannot be waived, the Owners agree that if such notice is given in
the manner provided in Section 6.1 at least one day before the time of sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy any
requirement for the giving of such notice. At any sale, the Collateral, or
portion thereof to be sold, may be sold in one lot as an entirety or in separate
parcels, as Contractor may in its sole and absolute discretion determine.
Contractor shall not be obligated to make any sale of the Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of the
Collateral may have been given. Contractor may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case the sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by
Contractor until the sale price is paid by the purchaser or purchasers thereof,
but Contractor shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public or private sale made pursuant to this Agreement, Contractor may bid for
or purchase, free from any right of redemption, stay and/or appraisal on the
part of the Owners (all said rights being also hereby waived and released to the
extent permitted by law), all or any part of the Collateral offered for sale and
may make payment on account thereof by using any amounts then due and payable to
Contractor from the Owners as a credit against the purchase price, and
Contractor may, upon compliance with the terms of sale, hold, retain and dispose
of such property without further accountability to the Owners therefor. For
purposes hereof, a written notice by Contractor of purchase by Contractor or any
other Person of all or any part of the Collateral shall be treated as a sale
thereof. As an alternative to exercising the power of sale herein conferred,
Contractor may proceed by suit or suits at law or in equity to foreclose this
Agreement and sell the Collateral or any portion thereof pursuant to judgment or
decree of a court or courts having competent jurisdiction.
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(f) ELECTION TO RETAIN COLLATERAL. The Owners acknowledge and agree that
the exercise by Contractor of any or all of its rights hereunder shall not be
deemed an election to retain the Collateral in satisfaction of any Secured
Obligations secured hereby and that any election to retain the Collateral in
satisfaction of any Secured Obligations secured hereby (in lieu of sale pursuant
to this Section 3.6 and application of proceeds pursuant to Section 3.7 hereof)
shall only be deemed to have occurred if Contractor expressly notifies the
Owners of such election and the Owners do not object thereto.
(g) COMPLIANCE WITH LAW. The Owners hereby agree that any sale pursuant to
this Section 3.6 conforms to commercially reasonable standards as provided in
the NYUCC.
3.7 APPLICATION OF PROCEEDS. The proceeds of any sale pursuant to Section
3.6 hereof of all or any part of the Collateral and all or any part of amounts
credited to the Collateral Account from time to time shall be paid by Collateral
Agent to Contractor upon the written request of Contractor and such amount shall
be applied by Contractor as follows:
FIRST, to the payment of any fees due and payable to Collateral Agent;
SECOND, to the payment of all reasonable costs and expenses incurred
by Collateral Agent and Contractor in connection with the enforcement of
this Agreement, including, but not limited to, all court costs and the fees
and disbursements of counsel for Contractor and Collateral Agent in
connection with such enforcement;
THIRD, to the payment in full to Contractor of all Secured Obligations
then due and owing in such order as Contractor may determine; and
FOURTH, following any such termination pursuant to Section 3.4 hereof,
the remainder, if any, to the Owners (or as the Owners or a court of
competent jurisdiction may direct).
3.8 CONTINUING SECURITY INTEREST. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until termination pursuant to Section 3.4 hereto and (ii) be binding upon
the Owners and their respective successors and assigns. Upon such termination,
the Owners shall be entitled to the prompt return of any portion of the
Collateral that shall not have been sold or otherwise disposed of by Contractor
pursuant to the terms hereof.
3.9 DELIVERY OF PERMITTED INVESTMENTS.
(a) CERTIFICATED SECURITIES. To the extent that any portion of the
Collateral constitutes certificated securities, all certificates or instruments
evidencing the same shall be in registered form and specifically indorsed to
Contractor by an effective indorsement and delivered into the possession of
Collateral Agent, to be held by Collateral Agent on behalf of Contractor for the
purpose of perfecting the security interests granted to Contractor hereunder
with respect to such Collateral and disposed of pursuant to the terms of this
Agreement.
(b) UNCERTIFICATED SECURITIES. To the extent that any portion of the
Collateral constitutes an uncertificated security, other than Permitted
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Investments credited to the Collateral Agent pursuant to 3.9(a), such
uncertificated security shall be registered in the name of the Collateral Agent
and credited by the Collateral Agent to the Collateral Account.
3.10 FURTHER ASSURANCES. The Owners agree that they will join with
Contractor in executing and will file or record such notices, financing
statements or other documents as may be necessary for the perfection of the
security interests granted to Contractor hereunder, and as Contractor or its
counsel may reasonably request, such instruments to be in form and substance
satisfactory to Contractor. The Owners also agree that they will do such further
acts and things and execute and deliver to Contractor such additional
conveyances, assignments, agreements and instruments as Contractor may at any
time reasonably request in connection with the administration and enforcement of
this Agreement or relative to the Collateral or any part thereof or in order to
assure and confirm unto Contractor its rights, powers and remedies hereunder.
3.11 ATTORNEY-IN-FACT. Contractor is hereby appointed the attorneyinfact of
the Owners (i) for any period, for the purpose of signing documents and taking
other action to perfect its security interest in the Collateral and (ii) during
any period during which a Default has occurred and has been continuing, for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments which Contractor may deem necessary or advisable
to accomplish the purposes hereof, which appointment as attorneyinfact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, during any such period described in clause (ii) above, Contractor
shall have the right and power to receive, endorse and collect all checks made
payable to the order of the Owners representing any payment in respect of the
Collateral or the cash or other property held and maintained in or credited to
the Collateral Account or any part of any of the foregoing and to give full
discharge for the same.
3.12 EXPENSES.
(a) EXPENSES OF CONTRACTOR. The Owners agree to pay to Contractor all
reasonable costs and expenses (including reasonable expenses for legal services
of every kind) of, or incident to, the enforcement of, or protection or
preservation of any right under, any of the provisions of this Agreement, or any
actual or attempted sale, or any exchange, enforcement, collection, compromise
or settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of Contractor in respect
thereof, by litigation or otherwise; and all such expenses shall be Secured
Obligations secured under this Agreement.
(b) EXPENSES OF COLLATERAL AGENT. The Owners agree to pay Collateral Agent
its fees and expenses for acting hereunder, as Developer and Collateral Agent
may separately agree.
3.13 TAXES. Any Taxes payable on or with respect to the Collateral, the
delivery thereof or any earnings therefrom shall be the responsibility of the
Owners, and the Owners hereby agree to indemnify on an aftertax basis, the
Collateral estate, Contractor, and its respective Affiliates from and against
any Taxes arising out of or otherwise attributable to the Collateral or any
earnings therefrom.
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3.14 ADJUSTMENTS TO SCHEDULES. Developer (on behalf of the Owners) and
Contractor hereby agree to work together, in good faith, to make promptly any
necessary adjustments to SCHEDULE I hereto from time to time to reflect any
adjustments to Appendix 10 of the Contract. Developer (on behalf of the Owners)
and Contractor may deliver to the Collateral Agent a substitute SCHEDULE I
reflecting any such agreed to adjustments thereto.
SECTION 4. COLLATERAL AGENT
4.1 APPOINTMENT. Contractor hereby appoints Collateral Agent as its agent
for purposes of holding the Collateral on the terms and conditions of this
Agreement. Collateral Agent hereby accepts such appointment.
4.2 REMOVAL AND RESIGNATION.
(a) Collateral Agent or any successor Collateral Agent may resign at any
time without cause by giving at least 60 days' prior written notice to
Contractor, with copies thereof to Developer, such resignation to be effective
upon the acceptance of appointment by the successor Collateral Agent under
Section 4.2(b) hereof. In addition, Contractor may at any time remove Collateral
Agent without cause by an instrument in writing delivered to Collateral Agent,
with copies thereof to Developer, such removal to be effective upon the
acceptance of appointment by the successor Collateral Agent under Section 4.2(b)
hereof. In the case of the resignation or removal of Collateral Agent,
Contractor may appoint a successor Collateral Agent by an instrument signed by
Contractor, which successor, if no Default shall have occurred and be
continuing, shall be approved by Developer (which approval shall not be
unreasonably withheld or delayed). If a successor Collateral Agent shall not
have been appointed within 30 days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, Collateral Agent, Contractor or Developer may apply to any court of
competent jurisdiction to appoint a successor Collateral Agent to act until such
time, if any, as a successor shall have been appointed as above provided. Any
successor Collateral Agent so appointed by such court shall immediately and
without further act be superseded by any successor Collateral Agent appointed as
above provided within one year from the date of the appointment by such court.
(b) ACCEPTANCE OF APPOINTMENT. Any successor Collateral Agent, however
appointed, shall execute and deliver to the predecessor Collateral Agent, with
copies thereof to Contractor and Developer, an instrument accepting such
appointment, and thereupon such successor Collateral Agent, without further act,
shall become vested with all the estates, properties, rights, powers, duties and
trusts of the predecessor Collateral Agent in the trust hereunder with like
effect as if originally named Collateral Agent herein; but nevertheless, upon
the written request of such successor Collateral Agent, such predecessor
Collateral Agent shall execute and deliver an instrument transferring to such
successor Collateral Agent, all Collateral held by such predecessor Collateral
Agent. Upon any such transfer by a predecessor Collateral Agent, such
predecessor Collateral Agent shall provide the successor Collateral Agent,
Developer and Contractor an accounting of Collateral hereunder.
(c) QUALIFICATION. Any successor Collateral Agent, however appointed, shall
be a bank incorporated and doing business within the United States and having a
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<PAGE>
combined capital and surplus of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of
Collateral Agent hereunder upon reasonable or customary terms.
4.3 WAIVER OF OFFSET RIGHTS. Collateral Agent hereby expressly waives any
right of offset, banker's lien or other similar rights that it might have
against, or any assignment, security interest or other interest that it might
have in, the Collateral.
4.4 DEFAULT. Collateral Agent shall have no responsibility for determining
whether a Default shall have occurred and shall be entitled to rely upon any
notice thereof delivered to it by Contractor.
4.5 DUTIES. The duties and responsibilities of Collateral Agent hereunder
shall be determined solely by the express provisions of this Agreement, and no
other or further duties or responsibilities shall be implied. Collateral Agent
shall not have any liability under, no duty to inquire into the terms and
provisions of any agreement or instructions, other than as outlined in this
Agreement. Anything in this Agreement to the contrary notwithstanding, in no
event shall Collateral Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if Collateral Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action. Collateral Agent confirms
that it shall carry out all duties placed upon it hereunder, but Collateral
Agent shall have no responsibility for determining whether Contractor has a
first priority perfected Lien on and security interest in the Collateral.
Collateral Agent in its capacity as escrow agent hereunder shall not have any
liability for any loss sustained as a result of any investment made pursuant to
the instructions of the parties hereto or as a result of any liquidation of any
investment prior to its maturity or for the failure of the parties to give
Collateral Agent instructions to invest or reinvest the Collateral or any
earnings thereon. Any corporation into which the Collateral Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Collateral Agent in its individual capacity shall be
a party, or any corporation to which substantially all the corporate trust
business of the Collateral Agent in its individual capacity may be transferred,
shall be the Collateral Agent under this Agreement without further act.
4.6 INDEMNIFICATION. The Owners shall release, indemnify, defend and hold
harmless Collateral Agent and each of its officers, directors, affiliates and
employees (collectively "INDEMNIFIED PARTIES") from and against any claim,
liability, loss, damage or expense (including reasonable outside counsel fees
and disbursements of such Indemnified Parties) of any nature, directly or
indirectly arising out of or relating to any act or omission under this
Agreement, except for any such claim, liability, loss, damage or expense arising
out of an Indemnified Party's gross negligence or willful misconduct. This
provision shall survive the termination of this Agreement.
4.7 TAX IDENTIFICATION NUMBERS. Developer shall provide Collateral Agent
with Tax Identification Number (TIN) of the Owners as assigned by the Internal
Revenue Service. All items of income, gain, expense and loss recognized in the
Collateral Account shall be reported to the United States Internal Revenue
Service and all state and local taxing authorities under the name and TIN of the
Owners.
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<PAGE>
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 THE OWNERS, DEVELOPER AND CONTRACTOR. In order to induce each other and
Collateral Agent to enter into this Agreement and transactions contemplated
hereby, each of the Owners, Developer and Contractor hereby makes the following
representations and warranties to each other and Collateral Agent:
(a) it is validly existing and, if applicable under the laws of its
jurisdiction of incorporation, in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to enter into and perform its obligations under this Agreement
and the transactions contemplated hereby;
(b) the execution, delivery and performance of this Agreement by such
party have been duly authorized by all necessary corporate action on the
part of such party and no other corporate proceedings are necessary in
connection therewith; this Agreement has been duly executed and delivered
by such party, and, assuming the due authorization, execution, and delivery
by each other party hereto, this Agreement constitutes the legal, valid and
binding obligation of such party, enforceable against such party in
accordance with the terms hereof;
(c) neither the execution, delivery or performance by such party of
this Agreement, nor the consummation of any of the transactions
contemplated hereby, will contravene any law applicable to or binding on
such party, or any provision of the charter or bylaws of such party; and
(d) neither the execution, delivery or performance by such party of
this Agreement, nor the consummation by such party of any of the
transactions described herein, requires the consent or approval of, the
giving of notice to, the registration with, the recording or filing of any
documents with, or the taking of any other action in respect of, any
governmental authority, any trustee or holders of any indebtedness or
obligations of such party, any stockholder of such party or any other
Person, other than those which shall have been obtained.
5.2 COLLATERAL AGENT. Collateral Agent hereby represents and warrants to
the Owners, Developer and Contractor that:
(i) Collateral Agent is a New York State banking institution duly
organized, validly existing and in good standing under the laws of New York
and has full power, corporate and otherwise, and authority to carry on its
business as currently being conducted, to own or hold under lease all
properties owned or leased by it and to enter into and perform its
obligations under this Agreement.
(ii) The execution and delivery by Collateral Agent of, and the
performance by Collateral Agent of its obligations under, this Agreement
have been duly authorized by all necessary corporate action on the part of
Collateral Agent, and this Agreement constitutes a legal, valid and binding
obligation of Collateral Agent, enforceable against Collateral Agent in
accordance with its terms.
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<PAGE>
(iii) Collateral Agent is a bank which in the ordinary course of
business maintains security accounts such as the Collateral Account defined
herein.
(iv) Neither the execution or delivery by Collateral Agent of this
Agreement nor the performance by Collateral Agent of its obligations
hereunder, (a) conflicts or will conflict with or violate in any respect
any currently existing law or governmental rule, regulation, or any
judgment or order or any judicial or administrative order or decree
applicable to or binding upon Collateral Agent or any of its properties,
(b) conflicts or will conflict with or violate the articles of
incorporation or by-laws of Collateral Agent, (c) conflicts or will
conflict with, or contravene, violate or result in a breach of, any
indenture, mortgage, loan agreement or any other agreement or instrument to
which Collateral Agent is a party or by which any of its properties is
bound, in any such case which does or will materially adversely affect the
financial condition or the business or assets of Collateral Agent or its
ability to perform its obligations under this Agreement, (d) requires or
will require, on the part of Collateral Agent, the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action in respect of, any governmental or public commission, board,
authority or agency, except for filings, if any, made pursuant to any
notice reporting requirement applicable to it, or (e) requires or will
require the consent or approval of its shareholders or any trustee or
holders of any currently existing indebtedness or obligations of Collateral
Agent.
(v) There are no actions, suits or proceedings pending, or to the best
knowledge of Collateral Agent, threatened before any court or by or before
any other federal, state or local government or public commission, board,
authority or agency, or any arbitrator, domestic or foreign, which can
reasonably be expected to have a materially adverse effect on Collateral
Agent's ability to perform its obligations under this Agreement or which
call into question the validity of any such agreement or instrument.
(vi) As of the date hereof, Collateral Agent has received no notice of
any Lien on any of the Collateral other than the lien in favor of
Contractor. Collateral Agent agrees to give prompt notice to Contractor and
Developer of any such Lien of which it receives written notice hereunder
and under other similar agreements, at the address of Contractor and
Developer set forth in Section 6.1.
SECTION 6. MISCELLANEOUS
6.1. NOTICES. All notices, requests, demands, offers, consents and other
communications in connection with this Agreement shall be effective when
received by the party to which the same is sent and only if delivered in writing
and by hand, private express courier service or facsimile to the relevant
attention and address or facsimile number set forth below:
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<PAGE>
(a) If to Developer, to:
ViCaMe Infrastructure Development GmbH
Hanauer Lanstrabe 187-189
60314 Frankfurt a.m. Germany
Telephone: 011 4969 94 99 4102
Facsimile: 011 4969 94 99 4100
with a copy to:
ViCaMe Infrastructure Development GmbH
c/o Viatel U.K.
Parnell House
25 Wilton Road
London SW1V 1EJ
United Kingdom
Attention: Mr. Derek Foxwell, Project Manager
Telephone: +44-171-802-9000
Facsimile: +44-171-828-1907
WITH A COPY TO:
Viatel, Inc.
685 Third Avenue
New York, New York 10017
United States of America
Attention: General Counsel
Telephone: +1-212-350-9200
Facsimile: +1-212-350-9520
(b) If to Contractor, to:
Bechtel Limited
245 Hammersmith Road
P.O. Box 739
London W6 8DP
United Kingdom
Attention: Mr. William W. West, Project Manager
COPY: Mr. George B. Baber
Telephone: +44-181-846-4483
Facsimile: +44-181-846-4938
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<PAGE>
(c) If to Collateral Agent, to:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
United States of America
Attention: Capital Markets Fiduciary
Services, International/
Project Finance Team
Telephone: +1-212-946-3017
Facsimile: +1-212-946-8177/8178
or to such other attention or address (or facsimile number) as may be specified
by notice to the other parties thereto. All notices required to be given by the
parties hereto to the Owners shall be deemed to have been given by notice duly
provided to the Developer pursuant to this Section 6.1.
6.2. INTEGRATION; AMENDMENT. This Agreement (and, with respect to the
Contractor, the Developer and the Owners only, the Contract) constitute(s) the
complete agreement of the parties hereto with respect to the subject matter
hereof. This Agreement shall not be varied in its terms by oral agreement or
representation or otherwise than by an agreement in writing dated subsequent to
the date hereof, executed and delivered by duly authorized representatives of
each party, except that Section 2 hereof (and the definitions related thereto)
may be amended by an agreement in writing between Developer and Contractor, with
a copy thereof to Collateral Agent at the address set forth in Section 6.1.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and inure
to the benefit of the respective successors and assigns of the parties hereto;
PROVIDED, no party may assign any of its rights, or delegate any of its
obligations, hereunder without the prior written consent of the other parties.
6.4 HEADINGS. The descriptive headings of the several sections and
subsections of this Agreement are inserted for the convenience of reference only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
6.5 COUNTERPARTS, EFFECTIVENESS. This Agreement (a) may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument,
and (b) shall become effective when each of the parties has executed and
delivered a counterpart hereof. A complete set of counterparts of this Agreement
shall be delivered to each party hereto.
6.6. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any
party in exercising any right, power or privilege hereunder and no course of
dealing between or among any parties shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies herein expressly
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<PAGE>
provided are cumulative and not exclusive of any rights or remedies which any
party would otherwise have in respect of the subject matter of this Agreement.
6.7 JURISDICTION. Each of the Owners, Developer and Contractor (each
individually a "PARTY" and collectively, the "PARTIES") (i) hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York and, if such court does not have
jurisdiction, to the courts of the State of New York in New York County, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or the subject matter thereof brought by any Party or its successors or assigns;
PROVIDED, HOWEVER, that the foregoing submission to jurisdiction shall not limit
the availability of any other forum with respect to enforcement of any judgment,
and (ii) to the extent permitted by applicable law, hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, any such suit,
action or proceeding that such action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each Party agrees that its submission to jurisdiction is made for
the express benefit of each of the other Parties. Final judgment against any
Party in any suit in any court of competent jurisdiction shall be conclusive,
and may be enforced in other jurisdictions by suit on the judgment, a certified
or true copy of which shall be conclusive evidence of the fact and of the amount
of any indebtedness or liability of such Party therein described; PROVIDED,
always that the plaintiff may at its option bring suit, or institute other
judicial proceedings, to enforce any such judgment against any Party or any of
its assets in the courts of any country or place where such Party or such
assets, as the case may be, may be found. All parties hereto waive their rights
to a trial by jury in connection with any disputes arising in connection with
this Agreement. The Developer, and each of the Owners, hereby irrevocably
appoints Viatel, Inc. at the address set forth in Section 6.1 hereof as its
agent for service of process in connection with any suit, action or other
proceeding arising out of this Agreement or the subject matter hereof or any of
the transactions contemplated hereby and agrees that it will at all times during
the term of this Agreement maintain a duly authorized agent to receive service
of process. Any and all service of process, and any other notice in any such
action, shall be given personally or by registered mail or certified mail,
return receipt requested, or by any other means of mail that requires a signed
receipt, postage prepaid, mailed to (i) with respect to Contractor and
Collateral Agent, at their respective address as provided in Section 6.1, and
(ii) with respect to Developer and each Owner, to its agent for service of
process at the address as identified above.
6.8 GOVERNING LAW. This Agreement and all rights and obligations hereunder
shall be governed by the laws of the State of New York.
6.9 SEVERABILITY. Any provision of this Agreement which is invalid, illegal
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without invalidating, prohibiting the observance of or rendering unenforceable
the remaining provisions hereof, and any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate, prohibit the
observance of or render unenforceable such provision in any other jurisdiction.
6.10 FURTHER ASSURANCES. Each of the parties hereto shall cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
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<PAGE>
acts, documents and assurances as the other party may from time to time
reasonably request in order to carry out more effectively the intent and
purposes of this Agreement and the transactions contemplated hereby and thereby.
6.11 WAIVER OF IMMUNITY. Each Owner, to the extent that it has or hereafter
may acquire any immunity (sovereign or otherwise) from any legal action, suit or
proceeding, from jurisdiction of any court or from setoff or any legal process
(whether service or notice, attachment prior to judgment, attachment in aid of
judgment, attachment in aid to execution of judgment or otherwise) with respect
to itself or any of its property, whether or not held for its own account, to
the fullest extent permitted by applicable law hereby irrevocably and
unconditionally waives and agrees not to plead or claim such immunity in respect
of its obligations under this Agreement.
6.12 THIRD PARTIES. This Agreement shall not be deemed to create any right
in any person or entity other than the parties hereto, and their respective
successors and assigns, nor be construed in any respect to be a contract in
whole or in part for the benefit of any person or entity other than the parties
hereto, and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers or representatives to execute and deliver this Agreement as of the date
first above written
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<PAGE>
Developer: VICAME INFRASTRUCTURE DEVELOPMENT GmbH
By:_________________________________________
Name:
Title:
Owner: VIATEL GERMAN ASSET GmbH
By:_________________________________________
Name:
Title:
Owner: METROMEDIA FIBER NETWORK GmbH
By:_________________________________________
Name:
Title:
Owner: CARRIER 1 FIBER NETWORK GmbH & Co.
oHG
By: Carrier 1 Holding GmbH
By:_________________________________________
Name:
Title:
Contractor: BECHTEL LIMITED
By:_________________________________________
Name:
Title:
Collateral Agent: THE CHASE MANHATTAN BANK
By:_________________________________________
Name:
Title:
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<PAGE>
SCHEDULE I
REQUIRED AMOUNTS
[REDACTED]
- 22 -
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE FOR WITHDRAWAL BY OWNERS
To: The Chase Manhattan Bank
The undersigned, ViCaMe Infrastructure Development GmbH hereby certifies to
The Chase Manhattan Bank (the "COLLATERAL AGENT") with respect to the
Undertaking and Pledge and Security Agreement, dated as of February 19, 1999
(the "UNDERTAKING AGREEMENT"), among the Collateral Agent, Bechtel Limited (the
"CONTRACTOR"), Viatel German Asset GmbH, Metromedia Fiber Network GmbH, Carrier
1 Fiber Network GmbH & Co. oHG, (collectively, hereinafter called "OWNERS") and
ourselves that:
1. Capitalized terms used without definition have the means assigned in the
Undertaking Agreement.
2. No Default has occurred and is continuing.
3. Pursuant to Section 3.5(a) of the Undertaking Agreement, the Fair Market
Value of the Permitted Investments (and other Collateral, if any credited to the
Collateral Account as to which the Contractor has a perfected security interest)
is greater than the Required Amount set forth opposite the Deposit Date most
recently occurring (i.e., the Deposit Date falling on _______________, _____)
and such excess amount should be transferred to the Developer's account, on
behalf of the Owners, at [INSERT NAME OF BANK], ABA No. ________________,
Account No. _______________, Reference: ________________, Attention:
_______________.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate this __________ day of _______, ___.
ViCaMe Infrastructure Development GmbH
By:_________________________________________
Authorized Signatory
cc: Bechtel Limited
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE FOR WITHDRAWAL BY CONTRACTOR
To: The Chase Manhattan Bank
The undersigned, Bechtel Limited (the "CONTRACTOR"), hereby certifies to
The Chase Manhattan Bank (the "COLLATERAL AGENT") with respect to the
Undertaking and Pledge and Security Agreement, dated as of February 19, 1999
(the "UNDERTAKING AND PLEDGE AND SECURITY AGREEMENT"), among the Collateral
Agent, Viatel German Asset GmbH, Metromedia Fiber Network GmbH, Carrier 1 Fiber
Network GmbH & Co. oHG (collectively, "OWNERS"), ViCaMe Infrastructure
Development GmbH (the "DEVELOPER") and the Contractor that:
1. Capitalized terms used without definition have the means assigned in the
Undertaking Agreement.
2. The amount of $_______________ (the "PAYMENT AMOUNT") is due and owing
to the Contractor from the Owners pursuant to the terms of the Engineering,
Procurement and Construction Contract (Outside Plant), dated February 19, 1999
(the "CONTRACT"), among Contractor, the Owners and the Developer.
3. The Contractor has notified the Developer and each Owner that the
Developer has failed to pay the Payment Amount on behalf of the Owners, within
the period specified for such payment, an amount due and payable to the
Contractor in respect of a Contractor Invoice duly submitted by the contractor
in accordance with Section 13 of the Contract, and at least three Business Days
have elapsed since such notice was duly given without payment being made to the
Contractor of the Payment Amount.
4. No Event of Default nor any other event entitling the Developer to
withhold payment to the Contractor has occurred and is continuing.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
certificate this __________ day of _______, ___.
Bechtel Limited
By:____________________________________________
Authorized Signatory
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 1
REIMBURSABLE COSTS
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 2
NETWORK DESCRIPTION AND PROJECT SCOPE
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 3
OWNER-PROCURED EQUIPMENT
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 4
MILESTONE SCHEDULE
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 5
WAYLEAVE APPLICATION PROCESS
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 6
INSURANCE
- - ----------------------------------------------------------------------------
POLICY TYPE MINIMUM COVERAGE AMOUNT
- - ----------------------------------------------------------------------------
(a) Worker's Compensation and Amount and coverage required by
Employer's Liability laws of country, province or
territory in which the Work is
performed.
- - ----------------------------------------------------------------------------
(b) Disability Benefits and Employee Amount and coverage required by
Benefits laws of country, province or
territory in which the Work is
performed.
- - ----------------------------------------------------------------------------
(c) Commercial General Liability and
Professional US$ [REDACTED] per occurrence
Liability
Maximum Deductible:
(Including bodily injury, property US$ [REDACTED] per loss
damage, premises operations, "XCU,"
products/completed operations,
blanket contractual liability, broad
form property damage and independent
contractor's insurance or the
equivalent.)
- - ----------------------------------------------------------------------------
(d) Comprehensive Automobile Liability Bodily Injury
US$ [REDACTED] per occurrence
(Including bodily injury and property Property Damage:
damage liability with with respect US$ [REDACTED] per occurrence
to vehicles owned or hired by the
Contractor.)
- - ----------------------------------------------------------------------------
(e) Contractor All risk Insurance Limit:
Covering all risk of physical loss or [REDACTED]
damage to the Contract Works for
their full replacement value. Deductible:
US$ [REDACTED] per loss
- - ----------------------------------------------------------------------------
1
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 7
PERFORMANCE TEST STANDARDS
[REDACTED]
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 8
STORAGE AND MARKING PROCEDURES
SECTION I DEFINITION
"PHYSICAL ITEM" shall have the meaning ascribed thereto in ss. 90 of the German
Civil Code (BURGERLICHES GESETZBUCH); i.e. an item of physical identity
("KORPERLICHER GEGENSTAND") which is not built into or otherwise linked to any
other item of personal or real property in a way that would make it an
inseparable part ("WESENTLICHER BESTANDTEIL") of such other item of personal or
real property within the meaning of ss.ss. 93 and 94, respectively, of the
German Civil Code.
SECTION II MARKING OBLIGATIONS
(1) The Contractor shall, and shall cause all Subcontractors to, mark each
Physical Item of supply, equipment, material and other Work, including but not
limited to all ducts, cables and joints (each an "Item"), in a manner that
clearly identifies the Designated Owner of such Item.
(2) Each Item designated to be installed within the four Cable Links, except for
the HDPE ducts described in Appendix 2, Section 3.2.2. of this Contract (for
which sub-section (3) shall apply), shall bear a clearly legible imprint or a
securely and durably fixed tag with the name of the Designated Owner of such
Item: Each Item designated to be installed within the first Cable Link for
Viatel German Asset GmbH shall bear an imprint or name tag reading "Viatel 1".
Each Item designated to be installed within the second Cable Link for Viatel
German Asset GmbH shall bear an imprint or name tag reading "Viatel 2". Each
Item designated to be installed within the Cable Link for Metromedia Fiber
Network GmbH shall bear an imprint or name tag reading "MFN". Each Item
designated to be installed within the Cable Link for Carrier 1 Fiber Network
GmbH & Co. oHG shall bear an imprint or name tag reading "Carrier 1".
(3) Each of the HDPE ducts described in Appendix 2, Section 3.2.2. of this
Contract (each a "Duct") shall be color-coded in a way that identifies the
Designated Owner of each Duct. The Duct designated to be installed within the
first Cable Link for Viatel German Asset GmbH shall be of light gray color
(color code: gray). The Duct designated to be installed within the second Cable
Link for Viatel German Asset GmbH shall be of light gray and green striped color
(color code: green). The Duct designated to be installed within the Cable Link
for Metromedia Fiber Network GmbH shall be of light gray and black striped color
(color code: black). The Duct designated to be installed within the Cable Link
for Carrier 1 Fiber Network GmbH & Co. oHG shall be of light gray and yellow
striped color (color code: yellow).
(4) In order to identify the Designated Owner of each manhole, the entrance to
each manhole shall be marked by clearly visible gray, green, black or yellow
color spots of a minimum diameter of 80 mm in accordance with the color-codes
provided in sub-section (3) above.
1
<PAGE>
(5) Each Item, Duct and manhole shall be marked in accordance with sub-sections
(1), (2), (3) and (4) above prior to being invoiced to its respective Designated
Owner pursuant to Sections 37.3 and 37.7, respectively. To ensure a timely and
cost-effective marking procedure, each Item, Duct and manhole should be marked,
to the extent possible and economically reasonable, during the stage of its
production or assembly. Since the Fiber Optic Cables will be supplied by or on
behalf of the Developer in accordance with Appendix 3 hereof, the marking
obligations with respect to such Fiber Optic Cables are primarily borne by the
Developer, subject to sub-section (6) below.
(6) In order to ensure a clear identification of the Designated Owner of each
Fiber Optic Cable, the Contractor shall verify, upon the delivery of each Fiber
Optic Cable by or on behalf of the Developer, that such Fiber Optic Cable has
been marked in accordance with either sub-section (2) above or the color codes
provided in sub-section (3) above. If such Fiber Optic Cable is not marked
accordingly upon such delivery, the Contractor shall mark it in accordance with
either sub-section (2) or the color codes provided in sub-section (3) above,
whichever is more economical, at the expense of the respective Designated Owner
prior to its assembly and installation within the respective Cable Link.
2
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 9
PAYMENT METHODOLOGY [INTENTIONALLY OMITTED]
[intentionally omitted]
1
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 10
OWNER ESCROW SCHEDULE
[REDACTED]
1
<PAGE>
GERMAN NETWORK DEVELOPMENT PROJECT
APPENDIX 11
INDEPENDENT EXPERT PROCEDURES
PROPOSAL TO REFER OR NOMINATE. Proposals shall be raised and considered in the
following manner:
o the appropriate senior-management representative of the Party wishing
to refer a matter to, nominate a candidate to serve as, an Independent
Expert shall give notice to that effect to the senior management of
the other Party and, with such notice, shall give details of the
reason for the nomination of, and the matter to be referred to, the
Independent Expert, whereupon
o the Parties shall meet and endeavor in good faith to agree upon (i)
referral of the relevant matter to an Independent Expert, and (ii) the
person to serve as the Independent Expert; PROVIDED, that, if within
ten (10) Days from the date of the notice given in accordance with the
foregoing paragraph, the Parties have failed to agree upon an
Independent Expert, the matter shall forthwith be referred to the
dispute resolution procedures set forth in Section 38 of the Contract.
CONFIRMATION OF APPOINTMENT. Upon a person being appointed as Independent Expert
under the foregoing provisions,
o the Parties forthwith shall notify the relevant appointee of his or
her selection and shall request that such person confirm within five
(5) Business Days whether or not he or she is willing and able to
accept an appointment as Independent Expert, and, to the extent that
o the first nominee so proposed is either unwilling or unable to accept
the appointment to act as Independent Expert, or shall not have
confirmed his or her willingness and ability to accept such
appointment within the said period of five (5) Business Days, then
(unless the Parties are able to agree upon the appointment of another
Independent Expert), the matter shall be referred (by either Party) to
the dispute resolution procedures set forth in Section 39 of the
Contract.
DISQUALIFICATION. No person shall be appointed as an Independent Expert under
the Contract:
o unless he or she is qualified by education, experience and training to
determine the matter in dispute; or
o if he or she has an interest or duty which would materially conflict
with his or her role (including being a director, officer, employee or
consultant to a Party or its Affiliates).
2
<PAGE>
PRESENTATION AND REVIEW OF RELEVANT INFORMATION. The following provisions shall
apply to the Independent Expert's determination:
o each Party shall supply to the Independent Expert, not later than ten
(10) Business Days after such Independent Expert's confirmation of
appointment, all such information, records, statements and other data
for which such Party desires review, and each Party shall make
available to the Independent Expert all such additional information as
the Independent Expert may request;
o the Independent Expert shall ignore any data, information or
submissions supplied and made after the ten (10) Business Day period
noted above, unless the same are furnished in response to a specific
request from him or her;
o the Independent Expert shall make his or her decision as soon as
reasonably practicable after receipt of sufficient information from
the Parties (but, in no event, more than ten (10) Business Days after
the deadline above for the Parties' submissions or the date of the
Independent Expert's last request for supplemental information), the
failure to so render a decision shall entitle either Party to refer
the matter to the dispute resolution procedures set forth in Section
38 of the Contract;
o the Independent Expert shall be entitled to obtain such independent
professional and/or technical advice as he or she may reasonably
require and to obtain any necessary secretarial assistance as is
reasonably necessary; and
o all communications between the Parties and the Independent Expert
shall be made in writing and a copy thereof provided simultaneously to
the other Party. No meeting between the Independent Expert and the
Parties or either of them, shall take place unless all Parties have a
reasonable opportunity to attend any such meeting.
DECISION-MAKING PROCEDURES. The following provisions shall apply:
o the determination of the Independent Expert shall be in writing and
shall provide full written reasons for his or her decisions;
o if either Party disagrees with the Independent Expert's determination,
such dispute shall be finally settled in accordance with the dispute
resolution procedure in accordance with the procedures set forth in
Section 38 of the Contract; and
o the Independent Expert shall be deemed not to be an arbitrator, but
shall render his or her decision as an expert and the law relating to
arbitration shall not apply to the Independent Expert or his or her
determination or the procedure by which he or she reaches a decision.
ALLOCATION OF COSTS AND EXPENSES. The Parties shall share equally in all fees
charged by the Independent Expert in respect of any referral thereto. Each Party
shall bear the costs of providing all data, information and submissions given by
2
<PAGE>
it, and the costs and expenses of all counsel, witnesses and employees retained
by it, but (unless the Independent Expert shall make any award of such costs and
expenses, which award, if made, shall be part of the Independent Expert's
decision) the costs and expenses of the Independent Expert and any independent
advisers to the Independent Expert shall be equally borne by the Parties.
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information in thousands
extracted from the unaudited consolidated financial statements of the company
for the three months ended March 31, 2000 and is qualified in its entirety by
reference to such unaudited consolidated financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 488,528
<SECURITIES> 142,282
<RECEIVABLES> 225,353
<ALLOWANCES> 16,263
<INVENTORY> 0
<CURRENT-ASSETS> 914,485
<PP&E> 1,188,857
<DEPRECIATION> 105,535
<TOTAL-ASSETS> 3,053,606
<CURRENT-LIABILITIES> 564,010
<BONDS> 1,678,127
0
307,469
<COMMON> 502
<OTHER-SE> 424,838
<TOTAL-LIABILITY-AND-EQUITY> 3,053,606
<SALES> 180,678
<TOTAL-REVENUES> 180,678
<CGS> 130,162
<TOTAL-COSTS> 130,162
<OTHER-EXPENSES> 128,665
<LOSS-PROVISION> 6,293
<INTEREST-EXPENSE> 41,039
<INCOME-PRETAX> (119,188)
<INCOME-TAX> 0
<INCOME-CONTINUING> (119,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (120,968)
<EPS-BASIC> (2.51)
<EPS-DILUTED> (2.51)
</TABLE>
