<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1998
REGISTRATION NOS. 333-65559 TO -65559-06
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Amendment No. 1 to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
IRIDIUM WORLD COMMUNICATIONS LTD.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
BERMUDA 52-2025291
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
CLARENDON HOUSE, 2 CHURCH STREET, HAMILTON HM 11, BERMUDA
(441) 295-5950
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM LLC
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-1984342
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM OPERATING LLC
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2066319
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2048739
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM ROAMING LLC
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2048734
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM IP LLC
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2048736
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
IRIDIUM FACILITIES CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2083969
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
<PAGE> 2
F. THOMAS TUTTLE, ESQ.
IRIDIUM WORLD COMMUNICATIONS LTD., 1575 EYE STREET, N.W., WASHINGTON, D.C. 20005
(202) 408-3800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
with copies to:
EDWIN D. WILLIAMSON, ESQ.
SULLIVAN & CROMWELL
1701 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20006
(202) 956-7500
ARNOLD B. PEINADO, III, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY
1 CHASE MANHATTAN PLAZA
NEW YORK, NY 10005
(212) 530-5000
---------------------
CALCULATION OF REGISTRATION FEE(1)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED PRICE FEE
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Subordinated Notes of Iridium Operating LLC and Iridium
Capital Corporation $750,000,000 $208,925(1)
Shares of Class A Common Stock, par value $.01 per share, of
Iridium World Communications Ltd.(2)
- -------------------------------------------------------------------------------------------------
Subsidiary Guarantees of Subordinated Notes(3).............. -- --
- -------------------------------------------------------------------------------------------------
Class 1 Membership Interests of Iridium LLC(4).............. -- --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to Rule 457(o). The Registrants previously paid
$7,375.00 in respect of $25,000,000 of the proposed maximum aggregate
offering price at the filing fee rate then in effect, and is currently
paying $201,550 for the increase in maximum aggregate offering price of
$725,000,000 at the current filing fee rate in effect.
(2) Also registered are such additional shares of Class A Common Stock as may be
issuable in exchange for Subordinated Notes of Iridium Operating LLC and
Iridium Capital Corporation.
(3) No separate consideration will be received for the Subsidiary Guarantees.
(4) Not offered separately. Registered for technical purposes.
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
PROSPECTUS
[IRIDIUM LOGO]
IRIDIUM OPERATING LLC
IRIDIUM CAPITAL CORPORATION
Subordinated Notes
which may be guaranteed by
IRIDIUM ROAMING LLC
IRIDIUM IP LLC
IRIDIUM FACILITIES CORPORATION
- --------------------------------------------------------------------------------
We will provide specific terms for the sale of these securities in supplements
to this prospectus.
You should read this prospectus and any prospectus supplement carefully before
you invest.
- --------------------------------------------------------------------------------
INVESTING IN THE SUBORDINATED NOTES INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS" ON ANNEX A.
These securities have not been approved by the SEC or any state securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
This prospectus is dated November 13, 1998
<PAGE> 4
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we and related
companies filed with the SEC utilizing a "shelf" registration process. We may,
over the next two years, use the registration statement and the shelf process to
sell any combination of the Subordinated Notes described in this prospectus in
one or more offerings up to a total dollar amount of $750,000,000, less the
total dollar amount of any equity securities sold by one of our related
companies under the registration statement. This prospectus provides you with a
general description of the Subordinated Notes we may offer and any related
subsidiary guarantees. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. Before you invest in the Subordinated
Notes, you should carefully read both this prospectus and any prospectus
supplement together with additional information described under the heading
"Where You Can Find More Information".
To see more detail, you should read the exhibits filed with our
registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. Our SEC filings are available to the public over the Internet at the
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until we, our related companies or the underwriters sell all of the
securities that we have registered:
- -- Annual Report on Form 10-K for the year ended December 31, 1997;
- -- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998;
- -- Current Reports on Form 8-K, dated September 9, 1998 and November 4, 1998.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Iridium Operating LLC
1575 Eye Street, N.W.
Washington, D.C. 20005
Attention: F. Thomas Tuttle, Vice
President, General Counsel and
Secretary
(202) 408-3800
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you
2
<PAGE> 5
with different information. We are not making an offer of the Subordinated Notes
in any state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
ABOUT IRIDIUM
THIS DISCUSSION FOCUSES ON IRIDIUM OPERATING LLC ("IRIDIUM"), OUR MAIN OPERATING
COMPANY.
IRIDIUM is the owner and operator of a global mobile wireless
communications system. Iridium is transitioning from a development stage company
to an operating company.
Iridium's communications system is designed to enable its customers to
send and receive telephone calls virtually anywhere in the world -- all with one
phone, one phone number and one customer bill. Iridium's system combines the
convenience of traditional cellular phones with the global reach of Iridium's
low earth orbit satellite constellation. Traditional cellular service is limited
by the physical location of cellular service towers. Iridium, on the other hand,
through the combination of satellite and cellular service, expects to provide
service virtually anywhere in the world. This is because Iridium's satellites
will act as "towers in the sky", providing satellite coverage in many areas
where traditional cellular service is unavailable.
Iridium's system has four components:
- -- THE SPACE SEGMENT, which includes the satellites and the related earth-based
control facilities;
- -- THE GROUND STATIONS OR "GATEWAYS", which link the satellites to earth-based
communications systems;
- -- THE IRIDIUM CUSTOMER EQUIPMENT (including telephones and pagers), which
provides mobile access to the satellite system and earth-based wireless
systems; and
- -- THE EARTH-BASED WIRELESS ROAMING INFRASTRUCTURE, which permits an Iridium
customer to "roam" between Iridium's satellite system and many earth-based
wireless systems -- even systems that speak different electronic
languages -- as the customer travels from place to place.
Motorola, Inc. was the principal contractor for the construction of
Iridium's system and is the principal contractor for the operation of the
system. Motorola is a leading international provider of wireless communications
systems, phones and pagers, semiconductors and other electronic equipment and is
the largest single investor in our corporate parent, Iridium LLC. Other
strategic investors include leading wireless communications service providers
from around the world, as well as experienced satellite manufacturers and
satellite launch providers.
The Subordinated Notes will be co-issued by Iridium Capital Corporation, a
wholly-owned subsidiary of Iridium. Iridium Capital has no assets and has no
operations.
The Subordinated Notes may be guaranteed by some of Iridium's other
subsidiaries, including Iridium Roaming LLC ("Roaming"), Iridium IP LLC ("IP")
and Iridium Facilities Corporation ("Facilities"). Roaming enters into roaming
agreements with other wireless
3
<PAGE> 6
telecommunications providers on behalf of Iridium. IP holds the worldwide
trademark registrations of Iridium. Facilities holds certain real property of
Iridium.
SUMMARY FINANCIAL INFORMATION
The data in the following table is a summary of certain information
derived from Iridium's consolidated financial statements. KPMG Peat Marwick LLP,
independent certified public accountants, audited those financial statements
except where the word "unaudited" appears above a column. You should read this
data together with the financial statements and management's discussion and
analysis of Iridium's financial condition and results of operations, which are
included in the documents referred to under "Where You Can Find More
Information". You should not assume that Iridium's results of operations for the
nine months ended September 30, 1998 indicate what Iridium's results for all of
1998 will be like.
<TABLE>
<CAPTION>
PERIOD
PRIOR TO
INITIAL CAPITAL
CONTRIBUTION PERIODS FOLLOWING INITIAL
DATE(1) CAPITAL CONTRIBUTION DATE
--------------- -----------------------------------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 30,
JAN. 1, 1993 JULY 29, 1993 YEAR ENDED DECEMBER 31 -------------------------
TO TO -------------------------------------- 1997 1998
JULY 28, 1993 DEC. 31, 1993 1994 1995 1996 1997 (UNAUDITED) (UNAUDITED)
--------------- -------------- ------- ------- ------- -------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
LOSS DATA:
Revenues(2)............. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Sales, general and
administrative........ 5,309 7,093 16,729 26,436 70,730 177,322 122,888 261,049
Depreciation and
amortization.......... -- 48 832 751 674 119,124 46,539 378,276
Interest (income)
expense, net.......... -- (390) (4,252) (5,226) (2,395) (3,045) (1,516) 173,185
Provision for income
taxes................. -- 173 1,525 1,684 4,589 -- -- --
------ ------ ------- ------- ------- -------- -------- ----------
Net loss................ $5,309 $6,924 $14,834 $23,645 $73,598 $293,401 $167,911 $ 812,510
====== ====== ======= ======= ======= ======== ======== ==========
OTHER DATA:
Deficiency in coverage
of fixed charges
(3)................... $5,309 $6,751 $13,309 $21,961 $97,136 $449,248 $1,039,996
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------------- 1998
1993 1994 1995 1996 1997 (UNAUDITED)
-------- -------- ---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...... $ 23,496 $202,391 $ 51,332 $ 1,889 $ 5,940 $ 65,207
Restricted cash................ -- -- -- -- 350,220(4) --
System under construction...... 275,000 646,000 1,448,000 2,376,884 1,625,054 523,739
Property and equipment, net.... 320 1,522 1,264 2,065 1,526,326 2,865,070
Total assets............ 299,886 851,809 1,505,383 2,434,081 3,642,587 3,564,054
Long-term debt................. -- -- -- 735,904 1,537,590 1,714,891
Total member's equity... $294,308 $795,813 $1,404,610 $1,572,029 $1,631,537 $ 833,693
</TABLE>
- ---------------
(1) These amounts reflect certain costs incurred by Motorola prior to July 29,
1993, which were reimbursed by Iridium.
(2) Iridium was a development stage company for the periods presented and
accordingly had no revenues.
(3) The deficiency in the coverage of fixed charges equals Iridium's net loss
plus any fixed charges not reflected in the net loss. "Fixed charges"
consist of interest, all of which has been capitalized except in the nine
months ended September 30, 1998, and that portion of operating lease rental
expense (deemed to be one-third of rental expense) representative of
interest.
(4) Restricted cash consisted of the first stage of borrowings under Iridium's
Secured Bank Facility. The funds were restricted subject to Iridium meeting
certain milestones. Iridium successfully met the conditions for use of the
first stage of borrowings ($350 million) in January 1998, and such funds
were released.
4
<PAGE> 7
RISK FACTORS
An investment in the Subordinated Notes involves a high degree of risk.
You should carefully consider the risk factors set forth on Annex A to this
prospectus and any risk factors set forth in the prospectus supplement before
investing in Subordinated Notes.
USE OF PROCEEDS
Except as otherwise described in the prospectus supplement, Iridium will
use the net proceeds it receives from the sale of the offered Subordinated Notes
for general corporate purposes, including repayment of debt.
DESCRIPTION OF THE SUBORDINATED NOTES
The Subordinated Notes will be issued in one or more distinct series by
Iridium and Iridium Capital. This section summarizes terms of the Subordinated
Notes that are common to all series. Most of the financial terms and other
specific terms of any series of Subordinated Notes that we offer will be
described in a prospectus supplement to be attached to the front of this
prospectus. Because the terms of specific Subordinated Notes may differ from the
general information we have provided below, you should rely on information in
the prospectus supplement if it is different from information below.
REFERENCES TO "ISSUERS" IN THE REMAINDER OF THIS DESCRIPTION MEAN IRIDIUM AND
IRIDIUM CAPITAL, THE ISSUERS OF THE SUBORDINATED NOTES. REFERENCES TO THE
"SUBSIDIARY GUARANTORS" MEAN THE SUBSIDIARIES OF IRIDIUM, IF ANY, THAT HAVE
GUARANTEED THE SUBORDINATED NOTES, AND REFERENCES TO "US" OR "WE" MEAN THE
ISSUERS AND ANY SUBSIDIARY GUARANTORS.
The Subordinated Notes will be subordinated to the Senior Debt of the
Issuers. Some of the Subordinated Notes may be guaranteed by Subsidiaries of
Iridium, as discussed later under "Subsidiary Guarantees" on page 8. Any
Subsidiary Guarantees will be subordinated to the Senior Debt of the Subsidiary
Guarantor, as described on page 15.
As required by Federal law for all bonds and notes of companies that are
publicly offered, the Subordinated Notes and any Subsidiary Guarantees are
governed by a document called the "Indenture". The Indenture, the Subordinated
Notes and any Subsidiary Guarantees are governed by New York law. (Section 112)
The Indenture is a contract between us and a financial institution acting
as Trustee. The Trustee has two main roles. First, the Trustee can enforce your
rights against us if we default. There are some limitations on the extent to
which the Trustee acts on your behalf, which are described later on page 15.
Second, the Trustee performs certain administrative duties for us.
The Indenture and associated documents contain the full legal text of the
matters described in this section. The form of the Indenture is contained in the
registration statement that we and our related companies have filed with the
SEC. See "Where You Can Find More Information" on page 2 for information on how
to obtain a copy of the Indenture.
Because this section is a summary, it does not describe every aspect of
the Subordinated Notes and the Subsidiary Guarantees. This summary is subject to
and qualified in its entirety by reference to all the provisions of the
Indenture,
5
<PAGE> 8
including definitions of certain terms used in the Indenture. For example, in
this section we use capitalized words to signify defined terms that have been
given special meaning in the Indenture. We describe the meaning for only the
more important terms. We also include references in parentheses to certain
sections of the Indenture. Whenever we refer to particular sections or defined
terms of the Indenture in this prospectus or in the prospectus supplement, those
sections or defined terms are incorporated by reference in this prospectus or in
the prospectus supplement. This summary also is subject to and qualified by
reference to the description of the particular terms of your series of
Subordinated Notes described in the prospectus supplement.
GENERAL
The Subordinated Notes will be general, unsecured obligations of the
Issuers. The Subordinated Notes will have a junior position to all Senior Debt
of the Issuers. See "Subordination" on page 15 for more information on the terms
of subordination and on Senior Debt.
The prospectus supplement and a supplemental indenture relating to any
series of Subordinated Notes being offered will include specific terms relating
to the series of Subordinated Notes being offered. These terms will include some
or all of the following:
- -- The title and type of Subordinated Notes;
- -- The total principal amount of the Subordinated Notes;
- -- The percentage of the principal amount at which the Subordinated Notes will
be issued and any payments due if the maturity of the Subordinated Notes is
accelerated;
- -- The date or dates on which the principal of the Subordinated Notes will be
payable;
- -- The interest rate which the Subordinated Notes will bear and the interest
payment dates for the Subordinated Notes;
- -- Any optional redemption provisions;
- -- Any sinking fund or other provisions that would obligate the Issuers to
repurchase or otherwise redeem the Subordinated Notes;
- -- Any provisions granting special rights to holders when a specified event
occurs;
- -- Any changes to or additional Events of Default or covenants;
- -- Whether the Subordinated Notes are guaranteed by any Subsidiaries of Iridium,
and the terms of the Subsidiary Guarantees;
- -- Any special tax implications of the Subordinated Notes, including provisions
for Original Issue Discount Securities, if offered;
- -- Any provisions that permit a Holder of Subordinated Notes to exchange or
convert them into other securities of the Issuers or into securities of any
other person; and
- -- Any other terms of the Subordinated Notes.
The Indenture will not limit the amount of Subordinated Notes that may be
issued, except as described later under "Restrictive Covenants" on page 12.
LEGAL OWNERSHIP
GLOBAL SECURITIES
Unless otherwise indicated in the prospectus supplement, the Subordinated
6
<PAGE> 9
Notes of a series will be issued only in the form of Global Securities. Global
Securities will be registered in the name of a financial institution we select,
and the Subordinated Notes included in the Global Securities may not be
transferred to the name of any other direct Holder unless the special
circumstances described below occur. The financial institution that acts as the
sole direct Holder of the Global Security is called the "Depositary". Any person
wishing to own a Security must do so indirectly by virtue of an account with a
broker, bank or other financial institution that in turn has an account with the
Depositary.
Special Investor Considerations for Global Securities. Our obligation,
as well as the obligations of the Trustee and those of any third parties
employed by us or the Trustee, run only to Persons who are registered as Holders
of Subordinated Notes. For example, once we make payment to the registered
Holder, we have no further responsibility for the payment even if that Holder is
legally required to pass the payment along to you but does not do so. As an
indirect holder, your rights relating to a Global Security will be governed by
the account rules of your financial institution and of the Depositary, as well
as general laws relating to debt securities transfers.
If you invest in the Subordinated Notes, you should be aware that because
Subordinated Notes will be issued only in the form of Global Securities:
- -- You cannot get Subordinated Notes registered in your own name.
- -- You cannot receive physical certificates for your interest in the
Subordinated Notes.
- -- You must look to your own bank or broker for payments on the Subordinated
Notes and protection of your legal rights relating to the Subordinated Notes.
- -- You may not be able to sell interests in the Subordinated Notes to some
insurance companies and other institutions that are required by law to own
their debt securities in the form of physical certificates.
- -- The Depositary's policies will govern payments, transfers, exchange and other
matters relating to the investor's interest in the Global Security. We and
the Trustee have no responsibility for any aspect of the Depositary's actions
or for its records of ownership interests in the Global Security. We and the
Trustee also do not supervise the Depositary in any way.
- -- Payment for purchases and sales in the market for corporate bonds and notes
is generally made in next-day funds. In contrast, the Depositary will usually
require that interests in a Global Security be purchased or sold within its
system using same-day funds. This difference could have some effect on how
Global Security interests trade, but we do not know what that effect will be.
Special Situations When Global Security Will Be Terminated. In a few
special situations described later, the Global Security will terminate and
interests in it will be exchanged for physical certificates representing
Subordinated Notes. After that exchange, the choice of whether to hold
Subordinated Notes directly or indirectly through an account at your bank or
broker will be up to you. You must consult your own bank or broker to find
7
<PAGE> 10
out how to have your interests in Subordinated Notes transferred to your own
name, so that you will be a direct Holder.
The special situations for termination of a Global Security are:
- -- When the Depositary notifies us that it is unwilling, unable or no longer
qualified to continue as Depositary (unless a replacement Depositary is
named).
- -- When an Event of Default on the Subordinated Notes has occurred and has not
been cured. (Defaults are discussed later under "Events of Default" on page
14.)
The prospectus supplement may list situations for terminating a Global
Security that would apply only to the particular series of Subordinated Notes
covered by the prospectus supplement. When a Global Security terminates, the
Depositary (and not we or the Trustee) is responsible for deciding the names of
the institutions that will be the initial direct Holders. (Sections 204 and 305)
IN THE REMAINDER OF THIS DESCRIPTION "YOU" MEANS DIRECT HOLDERS AND NOT INDIRECT
HOLDERS OF SUBORDINATED NOTES.
SUBSIDIARY GUARANTEES
The Subordinated Notes of any particular series may be guaranteed by one
or more Subsidiaries of Iridium (other than Iridium Capital, which is already an
Issuer). Any Subsidiary that provides a Subsidiary Guarantee is referred to in
this description as a "Guarantor Subsidiary". The prospectus supplement with
respect to a series of Subordinated Notes will state whether that series is
covered by any Subsidiary Guarantee and, if so, the name of the Guarantor
Subsidiary.
Any Subsidiary Guarantee will be a general, unsecured obligation of the
Guarantor Subsidiary that has provided it. Any Subsidiary Guarantee will have a
junior position to all Senior Debt of the Guarantor Subsidiary. See
"Subordination" on page 15 for more information on the terms of subordination
and on Senior Debt.
The prospectus supplement and a supplemental indenture relating to any
series of Subordinated Notes benefitting from a Subsidiary Guarantee will
describe the terms of that Subsidiary Guarantee.
You should note that if any Guarantor Subsidiary declares bankruptcy or
otherwise becomes subject to a bankruptcy proceeding, a court could declare the
Subsidiary Guarantee void, subordinate the Subsidiary Guarantee to other claims
against the Guarantor Subsidiary or determine that a Subsidiary Guarantee is
unenforceable.
OVERVIEW OF REMAINDER OF THIS DESCRIPTION
The remainder of this description summarizes:
- -- ADDITIONAL MECHANICS relevant to the Subordinated Notes under normal
circumstances, such as how you transfer ownership and payment details.
- -- Your rights under several SPECIAL SITUATIONS, such as if the Issuers merge
with another company or if the Issuers want to change a term of the
Subordinated Notes.
- -- Promises the Issuers make to you about how they will run their business, or
business actions they promise not to take (known as "RESTRICTIVE COVENANTS").
8
<PAGE> 11
- -- Your rights if we DEFAULT or experience other financial difficulties.
ADDITIONAL MECHANICS
FORM, EXCHANGE AND TRANSFER
The Subordinated Notes will be issued:
- -- only in fully registered form
- -- without interest coupons
- -- in denominations that are even multiples of $1,000. (Section 302)
You may have your Subordinated Notes broken into more Subordinated Notes
of smaller denominations or combined into fewer Subordinated Notes of larger
denominations, as long as the total principal amount is not changed. (Section
305) This is called an "exchange".
You may exchange or transfer Subordinated Notes at the office of the
Trustee. The Trustee will act as the Issuers' agent for registering Subordinated
Notes in the names of Holders and transferring Subordinated Notes. The Issuers
may change this appointment to another entity or perform it themselves. The
entity performing the role of maintaining the list of registered Holders is
called the "Registrar". It also will perform transfers. (Section 305)
You will not be required to pay a service charge to transfer or exchange
Subordinated Notes, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the Registrar is satisfied with your proof of
ownership.
If the Issuers have designated additional transfer agents, they are named
in the prospectus supplement. The Issuers may cancel the designation of any
particular transfer agent. We may also approve a change in the office through
which any transfer agent acts. (Section 1002)
If the Subordinated Notes are redeemable, the prospectus supplement will
describe the procedure for redemption. If the Subordinated Notes are redeemable
and we redeem less than all of the Subordinated Notes of a particular series, we
may block the transfer or exchange of Subordinated Notes during the period
beginning 15 days before the day we mail the notice of redemption and ending on
the day of that mailing, in order to freeze the list of Holders to prepare the
mailing. We may also refuse to register transfers or exchanges of Subordinated
Notes selected for redemption, except that we will continue to permit transfers
and exchanges of the unredeemed portion of any Subordinated Notes being
partially redeemed. (Section 305)
PAYMENT AND PAYING AGENTS
The Issuers will pay interest applicable to you if you are a direct Holder
listed in the Trustee's records at the close of business on a particular day in
advance of each due date for interest, even if you no longer own the Security on
the interest due date. That particular day, usually about two weeks in advance
of the interest due date, is called the "Record Date" and is stated in the
prospectus supplement. (Section 307) Holders buying and selling Subordinated
Notes must work out between them how to compensate for the fact that we will pay
all the interest for an interest period to the one who is the registered Holder
on the Record Date. The most common manner is to adjust the sales price of the
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<PAGE> 12
Subordinated Notes to pro rate interest fairly between buyer and seller. This
pro rated interest amount is called "accrued interest".
The Issuers will deposit interest, principal and any other money due on
the Subordinated Notes with the Paying Agent specified in the prospectus
supplement. You must make arrangements to receive your payments.
INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW
THEY WILL RECEIVE PAYMENTS.
NOTICES
The Issuers and the applicable Trustee will send notices regarding the
Subordinated Notes only to direct Holders, using their addresses as listed in
the Trustee's records. (Sections 101 and 106)
All money paid by the Issuers to a Paying Agent that remains unclaimed at
the end of two years after the amount is due to direct Holders will be repaid to
them. After that two-year period, you may look only to the Issuers for payment
and not to the Trustee, any other Paying Agent or anyone else. (Section 1003)
INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW
THEY WILL RECEIVE NOTICES.
SPECIAL SITUATIONS
MERGERS AND SIMILAR EVENTS
We are generally permitted to consolidate or merge with another company or
firm. We are also permitted to sell all or substantially all our assets to
another firm, or to buy all or substantially all of the assets of another firm.
However, we may not take any of these actions unless all the following
conditions are met:
- -- Where we merge out of existence or sell our assets, the other firm may not be
organized under any foreign country's laws (that is, it must be a
corporation, partnership or trust organized under the laws of a State or the
District of Columbia or under federal law) and it must agree to be legally
responsible for the Subordinated Notes or Subsidiary Guarantees, as
applicable.
- -- The merger, sale of assets or other transaction must not cause a default on
the Subordinated Notes and we must not already be in default (unless the
merger or other transaction would cure the default). In applying this
no-default test, if in the merger or other transaction we become legally
responsible for another firm's debt, then we must treat that debt as newly
borrowed by us and must comply with any Restrictive Covenant limiting our
ability to borrow. See "Covenants" on page 12 below for information on
whether our ability to borrow may be limited. For purposes of this no-default
test, a default would include an Event of Default that has occurred and not
been cured, as described later on page 14 under "What is An Event of
Default?" A default for this purpose would also include any event that would
be an Event of Default if the requirements for giving us default notice or
our default having to exist for a specific period of time were disregarded.
- -- We must deliver certain certificates and documents to the Trustee.
- -- We must satisfy any other requirements specified in the prospectus
supplement.
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<PAGE> 13
MODIFICATION AND WAIVER
There are three types of changes we can make to the Indenture, the
Subordinated Notes and any Subsidiary Guarantees.
Changes Requiring Your Approval. First, there are changes that cannot be
made to your Subordinated Notes without your specific approval. Following is a
list of those types of changes:
- -- change the Stated Maturity of the principal or interest on a Security;
- -- reduce any amounts due on a Security;
- -- reduce the amount of principal payable upon acceleration of the Maturity of a
Security following a default;
- -- change the place or currency of payment on a Security;
- -- impair your right to sue for payment;
- -- modify the subordination provisions in a manner that is adverse to you;
- -- reduce the percentage of Holders of Subordinated Notes whose consent is
needed to modify or amend the Indenture;
- -- reduce the percentage of Holders of Subordinated Notes whose consent is
needed to waive compliance with certain provisions of the Indenture or to
waive certain defaults;
- -- modify any other aspect of the provisions dealing with modification and
waiver of the Indenture; and
- -- modify any Subsidiary Guarantees in any manner adverse to the Holders.
(Section 902)
Changes Requiring a Majority Vote. The second type of change to the
Indenture and the Subordinated Notes is the kind that requires a vote in favor
by Holders of Subordinated Notes owning a majority of the principal amount of
the particular series affected. Most changes fall into this category, except for
clarifying changes and certain other changes that would not adversely affect
Holders of the Subordinated Notes. The same vote would be required for us to
obtain a waiver of all or part of the Restrictive Covenants described on page 12
or a waiver of a past default. However, we cannot obtain a waiver of a payment
default or any other aspect of the Indenture or the Subordinated Notes listed in
the first category described previously under "Changes Requiring Your Approval"
unless we obtain your individual consent to the waiver. (Section 513)
Changes Not Requiring Approval. The third type of change does not require
any vote by Holders of Subordinated Notes. This type is limited to
clarifications and certain other changes that would not adversely affect Holders
of the Subordinated Notes.
Further Details Concerning Voting. When taking a vote, we will use the
following rules to decide how much principal amount to attribute to a Security:
- -- For Original Issue Discount Securities, we will use the principal amount that
would be due and payable on the voting date if the Maturity of the
Subordinated Notes were accelerated to that date because of a default.
- -- For Subordinated Notes whose principal amount is not known (for example,
because it is based on an index), we will use a special rule for that
Security described in the prospectus supplement.
Subordinated Notes will not be considered Outstanding, and therefore not
11
<PAGE> 14
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Subordinated Notes will also not be eligible to
vote if they have been fully defeased as described later under "Full
Defeasance". (Section 101)
The Issuers will generally be entitled to set any day as a record date for
the purpose of determining the Holders of Outstanding Subordinated Notes that
are entitled to vote or take other action under the Indenture. If the Issuers
set a record date for a vote or other action to be taken by Holders of a
particular series, that vote or action may be taken only by persons who are
Holders of Outstanding Subordinated Notes of that series on the record date and
must be taken within 180 days following the record date or another period that
we may specify. The Issuers may shorten or lengthen this period from time to
time. (Section 104)
INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW
APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE INDENTURE OR THE
SUBORDINATED NOTES OR REQUEST A WAIVER.
RESTRICTIVE COVENANTS
COVENANTS
We may be subject to restrictions on certain of our activities, including,
among other things:
- -- limitations on borrowings;
- -- limitations on making dividends and distributions;
- -- limitations on certain investments; and
- -- limitations on certain transactions with affiliates.
The covenants for each series of Subordinated Notes are described in the
prospectus supplement for that series.
DEFEASANCE
The following discussion of full defeasance and covenant defeasance will
be applicable to your series of Subordinated Notes only if we choose to have
them apply to that series. If we do so choose, we will state that in the
prospectus supplement. (Section 1301)
Full Defeasance. If there is a change in federal tax law, as described
below, we can legally release ourselves from any payment or other obligations on
the Subordinated Notes and Subsidiary Guarantees (called "full defeasance") if
we put in place the following other arrangements for you to be repaid:
- -- The Issuers must deposit in trust for your benefit and the benefit of all
other direct Holders of the Subordinated Notes a combination of money and
U.S. government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
Subordinated Notes on their various due dates.
- -- The Issuers must deliver to the Trustee a legal opinion of their counsel
confirming that there has been a change in current federal tax law or an IRS
ruling that lets the Issuers make the above deposit without causing you to be
taxed on the Subordinated Notes any differently than if the Issuers did not
make the deposit and just repaid the Subordinated Notes themselves. (Sections
1302 and 1304) (Under current federal tax law, the deposit and the Issuers'
legal release from the Subordinated Notes would be treated as
12
<PAGE> 15
though they took back your Subordinated Notes and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on the Subordinated Notes you give back to the
Issuers.)
If the Issuers ever did accomplish full defeasance, as described above, you
would have to rely solely on the trust deposit for repayment on the Subordinated
Notes and Subsidiary Guarantees. You could not look to us for repayment in the
unlikely event of any shortfall. Conversely, the trust deposit would most likely
be protected from claims of our lenders and other creditors if they ever become
bankrupt or insolvent. You would also be released from the subordination
provisions on the Subordinated Notes described later under "Subordination" on
page 15.
Covenant Defeasance. Under current federal tax law, the Issuers can make
the same type of deposit described above and be released from some of the
restrictive covenants in the Subordinated Notes. This is called "covenant
defeasance". In that event, you would lose the protection of those restrictive
covenants but would gain the protection of having money and debt securities set
aside in trust to repay the Subordinated Notes. You also would be released from
the subordination provisions on the Subordinated Notes described later under
"Subordination" on page 15. In order to achieve covenant defeasance, we must do
the following:
- -- The Issuers must deposit in trust for your benefit and the benefit of all
other direct Holders of the Subordinated Notes a combination of money and
U.S. government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
Subordinated Notes on their various due dates.
- -- The Issuers must deliver to the Trustee a legal opinion of their counsel
confirming that under current federal income tax law the Issuers may make the
above deposit without causing you to be taxed on the Subordinated Notes any
differently than if they did not make the deposit and just repaid the
Subordinated Notes themselves.
If we accomplish covenant defeasance, the subordination provisions
described later under "Subordination" on page 15, certain restrictive covenant
provisions of the Indenture and certain Events of Default would no longer apply.
The prospectus supplement will list the most important covenants released and
Events of Default which are made inapplicable.
If we accomplish covenant defeasance, you can still look to the Issuers
for repayment of the Subordinated Notes, and to the Guarantor Subsidiaries for
payment under any Subsidiary Guarantees, if there were a shortfall in the trust
deposit. In fact, if one of the remaining Events of Default occurred (such as
our bankruptcy) and the Subordinated Notes become immediately due and payable,
there may be such a shortfall. Depending on the event causing the default, you
may not be able to obtain payment of the shortfall.
DEFAULT AND RELATED MATTERS
RANKING
Neither the Subordinated Notes nor the Subsidiary Guarantees are secured
by any of our property or assets. Accordingly,
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<PAGE> 16
your ownership of Subordinated Notes and Subsidiary Guarantees means you are one
of our unsecured creditors. The Subordinated Notes and Subsidiary Guarantees are
subordinated to some of our existing and future debt and other liabilities. See
"Subordination" on page 15 for additional information on how subordination
limits your ability to receive payment or pursue other rights if we default or
have certain other financial difficulties.
EVENTS OF DEFAULT
You will have special rights if an Event of Default occurs and is not
cured, as described later in this subsection.
What Is An Event of Default? The term "Event of Default" means any of
the following:
- -- We do not pay the principal or any premium on a Security on its due date.
- -- We do not pay interest on a Security within 30 days of its due date.
- -- We do not deposit any sinking fund payment on its due date.
- -- We remain in breach of a Restrictive Covenant for 60 days after we receive a
notice of default stating we are in breach. The notice must be sent by either
the Trustee or Holders of 25% in principal amount of the Subordinated Notes
of the affected series.
- -- Other debt of ours totaling $10.0 million or more defaults, our obligation to
repay it is accelerated by our lenders, and this repayment obligation remains
accelerated for 10 days after we receive a notice of default as described in
the previous paragraph.
- -- Any Issuer files for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur.
- -- Any Subsidiary Guarantee is invalid (but this is an Event of Default only in
respect of the Securities guaranteed by such Subsidiary Guarantor).
- -- Any other Event of Default described in the prospectus supplement occurs.
(Section 501)
An Event of Default for a particular series of Subordinated Notes does not
necessarily constitute an Event of Default for any other series of Subordinated
Notes issued under an Indenture. The Trustee may withhold notice to the Holders
of Subordinated Notes of any default (except in the payment of principal or
interest) if it considers such withholding of notice to be in the best interests
of the holders.
Remedies If an Event of Default Occurs. If an Event of Default has
occurred and has not been cured, the Trustee or the Holders of 25% in principal
amount of the Subordinated Notes of the affected series may declare the entire
principal amount of all the Subordinated Notes of that series to be due and
immediately payable. This is called a declaration of acceleration of maturity.
If an Event of Default occurs because of certain events in bankruptcy,
insolvency or reorganization, the principal amount of all the Subordinated Notes
of that series will be automatically accelerated, without any action by the
Trustee or any Holder. A declaration of acceleration of maturity may be canceled
by the Holders of at least a majority in principal amount of the Subordinated
Notes of the affected series. (Section 402)
Except in cases of default, where the Trustee has some special duties, the
Trustee is not required to take any action under the Indenture at the request of
any
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<PAGE> 17
Holders unless the Holders offer the Trustee reasonable protection from expenses
and liability (called an "indemnity"). (Section 603) If reasonable indemnity is
provided, the Holders of a majority in principal amount of the Outstanding
Subordinated Notes of the relevant series may direct the time, method and place
of conducting any lawsuit or other formal legal action seeking any remedy
available to the Trustee. The Trustee may refuse to follow those directions in
certain circumstances.
Before you bypass the Trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the Subordinated Notes or any Subsidiary Guarantee, the
following must occur:
- -- You must give the Trustee written notice that an Event of Default has
occurred and remains uncured.
- -- The Holders of 25% in principal amount of all outstanding Subordinated Notes
of the relevant series must make a written request that the Trustee take
action because of the default, and must offer reasonable indemnity to the
Trustee against the cost and other liabilities of taking that action.
- -- The Trustee must not have taken action for 60 days after receipt of the above
notice and offer of indemnity. (Section 507)
- -- The Holders of a majority in principal amount of the Subordinated Notes must
not have given the Trustee a direction inconsistent with the above notice.
However, you are entitled at any time to bring a lawsuit for the payment
of money due on your Subordinated Notes on or after the due date. (Section 508)
INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO
GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE TRUSTEE AND TO MAKE OR
CANCEL A DECLARATION OF ACCELERATION.
Iridium will furnish to the Trustee every year a written statement of
certain of its officers certifying that to their knowledge the Issuers and any
Guarantor Subsidiaries are in compliance with the Indenture and the Subordinated
Notes, or else specifying any default. (Section 1004)
SUBORDINATION
The Subordinated Notes and any Subsidiary Guarantees are subordinated
securities. As a result, the payment of principal, any premium and interest on
the Subordinated Notes, and any related payment under a Subsidiary Guarantee, is
subordinated in right of payment to the prior payment in full of all of our
Senior Debt. This means that in certain circumstances where we may not be making
payments on all of our debt obligations as they come due, the holders of all of
our Senior Debt will be entitled to receive payment in full of all amounts that
are due or will become due on the Senior Debt before you and the other direct
Holders of Subordinated Notes will be entitled to receive any amounts on the
Subordinated Notes. These circumstances include:
- -- We make a payment or distribute assets to creditors upon any liquidation,
dissolution, winding up or reorganization of our company, or as part of an
assignment or marshaling of
15
<PAGE> 18
our assets for the benefit of our creditors.
- -- We file for bankruptcy or certain other events in bankruptcy, insolvency or
similar proceedings occur.
- -- The maturity of the Subordinated Notes is accelerated. For example, the
entire principal amount of a series of Subordinated Notes may be declared to
be due and immediately payable or may be automatically accelerated due to an
Event of Default as described under "Events of Default" on page 14.
In addition, we are not permitted to make payments of principal, any
premium or interest on the Subordinated Notes (or any related payment under a
Subsidiary Guarantee) if we default on our obligation to make payments on Senior
Debt and do not cure such default. We may also be prohibited from making any
payments in respect of the Subordinated Notes (or any related Subsidiary
Guarantee) for up to 179 days while any other event of default that permits the
holders of Senior Debt to accelerate the maturity of the Senior Debt exists.
Such a prohibition cannot be imposed more than once in any 360-day period, and
there must be at least 181 consecutive days in any 360-day period when no such
prohibition exists.
These subordination provisions mean that if we are insolvent a holder of
our Senior Debt may ultimately receive out of our assets more than a Holder of
the same amount of our the Subordinated Notes; and a creditor of ours that is
owed a specific amount, but who owns neither our Senior Debt nor the
Subordinated Notes, may ultimately receive more than a Holder of the same amount
of Subordinated Notes.
"Senior Debt" of any Person means the principal, any premium and interest
on, and other amounts due with respect to, all of the indebtedness of that
Person (including indebtedness of others that the Person guarantees), whether
such indebtedness exists now or is created, incurred or assumed after the date
of this prospectus, that is for money we borrow, is evidenced by a note or
similar instrument, is our reimbursement obligations with respect to letters of
credit and similar facilities, is issued or assumed as the deferred purchase
price of property or services (excluding certain items arising in the ordinary
course of business), or is a guarantee obligation relating to similar
indebtedness and dividends. Senior Debt also includes any amendment, renewal
replacement, extension, modification and refunding of any indebtedness that
itself was Senior Debt. Senior Debt does not include Iridium's 14 1/2% Senior
Subordinated Notes due 2006 or any indebtedness that expressly states in the
instrument creating or evidencing it that it does not rank senior in right of
payment to the Subordinated Notes. Senior Debt does not include the Subordinated
Notes.
At November 1, 1998, we owed a total of approximately $2.1 billion of
Senior Debt, without counting any accrued interest on that Senior Debt. The
Indenture does not limit the amount of Senior Debt we are permitted to have and
we may in the future incur additional Senior Debt.
NO LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or member of Iridium or
Iridium Capital, as such, will have any liability for any obligations of the
Issuers
16
<PAGE> 19
or any Guarantor Subsidiary under the Subordinated Notes, any Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of a Subordinated
Note, by accepting the Subordinated Note, waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Subordinated Notes. The waiver will not constitute a waiver of liabilities
under the federal securities laws if it is the view of the Securities and
Exchange Commission that such a waiver would be against public policy.
PLAN OF DISTRIBUTION
We may sell the Subordinated Notes (a) through agents; (b) to or through
underwriters; or (c) directly to other purchasers. Any underwriters or agents
will be identified and their compensation described in a prospectus supplement.
We (directly or through agents) may sell, and the underwriters may resell,
the Subordinated Notes in one or more transactions, including negotiated
transactions, at a fixed public offering price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Subordinated Notes, the underwriters or
agents may receive compensation from us or from purchasers of the Subordinated
Notes for whom they may act as agents. The underwriters may sell Subordinated
Notes to or through dealers, who may also receive compensation from purchasers
of the Subordinated Notes for whom they may act as agents. Compensation may be
in the form of discounts, concessions or commissions. Underwriters, dealers and
agents that participate in the distribution of the Subordinated Notes may be
underwriters as defined in the Securities Act of 1933 (the "Act"), and any
discounts or commissions received by them from us and any profit on the resale
of the Subordinated Notes by them may be treated as underwriting discounts and
commissions under the Act.
We will indemnify the underwriters and agents against certain civil
liabilities, including liabilities under the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
VALIDITY OF THE SUBORDINATED NOTES
Sullivan & Cromwell, our counsel, will pass on the validity of the
Subordinated Notes and any Subsidiary Guarantees for us.
EXPERTS
The consolidated financial statements of Iridium as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December 31,
1997, and for the period June 14, 1991 (Inception) through December 31, 1997
have been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
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<PAGE> 20
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- ------------------------------------------------------
- ------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any securities in any jurisdiction where it is unlawful. The information in
this Prospectus is current as of November 13, 1998.
------------------------------------------
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
About This Prospectus......... 2
Where You Can Find More
Information................ 2
About Iridium................. 3
Summary Financial
Information................ 4
Risk Factors.................. 5
Use of Proceeds............... 5
Description of the
Subordinated Notes......... 5
Plan of Distribution.......... 17
Validity of the Subordinated
Notes...................... 17
Experts....................... 17
</TABLE>
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Iridium Operating LLC
Iridium Capital Corporation
Which may be guaranteed by
Iridium Roaming LLC
Iridium IP LLC
Iridium Facilities Corporation
Subordinated Notes
------------------------------------------
PROSPECTUS
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November 13, 1998
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<PAGE> 21
PROSPECTUS
[IRIDIUM LOGO]
IRIDIUM WORLD COMMUNICATIONS LTD.
Class A Common Stock
Our Class A Common
Stock is quoted on the
Nasdaq National Market
under the symbol "IRIDF".
- --------------------------------------------------------------------------------
We will provide specific terms for the sale of these securities in supplements
to this prospectus.
You should read this prospectus and any prospectus supplement carefully before
you invest.
- --------------------------------------------------------------------------------
INVESTING IN THE CLASS A COMMON STOCK INVOLVES CERTAIN RISKS.
SEE "RISK FACTORS" ON ANNEX A.
These securities have not been approved by the SEC or any state securities
commission, nor have these organizations determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
This prospectus is dated November 13, 1998
<PAGE> 22
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we and related
companies filed with the SEC utilizing a "shelf" registration process. We may,
over the next two years, use the registration statement and the shelf process to
sell Class A Common Stock in one or more offerings up to a total dollar amount
of $750,000,000, less the total dollar amount of any subordinated notes sold by
our related companies under the registration statement. Each time we sell Class
A Common Stock, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus. Before
you invest in Class A Common Stock you should read carefully both this
prospectus and any prospectus supplement together with additional information
described under the heading "Where You Can Find More Information".
To see more detail, you should read the exhibits filed with our
registration statement.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until we, our related companies or the underwriters sell all of the
securities that we have registered.
- -- Annual Report on Form 10-K for the year ended December 31, 1997;
- -- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998;
- -- Current Reports on Form 8-K, dated September 9, 1998 and November 4, 1998.
- -- The description of the Class A Common Stock incorporated by reference in our
Registration Statement on Form 8-A filed under the Securities Exchange Act of
1934.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Iridium World Communications Ltd.
1575 Eye Street, N.W.
Washington, D.C. 20005
Attention: F. Thomas Tuttle,
Assistant Secretary
(202) 408-3800
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
2
<PAGE> 23
authorized anyone else to provide you with different information. We are not
making an offer of Class A Common Stock in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
ABOUT IRIDIUM
Iridium World Communications Ltd., or "IWCL", is a publicly traded company
which holds approximately 8.62% of the membership interests in Iridium LLC. IWCL
has no other business or assets. Iridium LLC is the owner and operator of a
global mobile wireless communications system through its wholly-owned
subsidiary, Iridium Operating LLC. Iridium LLC is transitioning from a
development stage company to an operating company.
[IRIDIUM STRUCTURE CHART]
THIS DISCUSSION FOCUSES ON IRIDIUM OPERATING LLC ("IRIDIUM"), OUR MAIN OPERATING
COMPANY.
IRIDIUM's communications system is designed to enable its customers to
send and receive telephone calls virtually anywhere in the world -- all with one
phone, one phone number and one customer bill. Iridium's system combines the
convenience of traditional cellular phones with the global reach of Iridium's
low earth orbit satellite constellation. Traditional cellular service is limited
by the physical location of cellular service towers. Iridium, on the other hand,
through the combination of satellite and cellular service, expects to provide
service virtually anywhere in the world. This is because Iridium's satellites
will act as "towers in the sky", providing satellite coverage in many areas
where traditional cellular service is unavailable.
Iridium's system has four components:
- -- THE SPACE SEGMENT, which includes the satellites and the related earth-based
control facilities;
3
<PAGE> 24
- -- THE GROUND STATIONS OR "GATEWAYS", which link the satellites to earth-based
communications systems;
- -- THE IRIDIUM CUSTOMER EQUIPMENT (including telephones and pagers), which
provides mobile access to the satellite system and earth-based wireless
systems; and
- -- THE EARTH-BASED WIRELESS ROAMING INFRASTRUCTURE, which permits an Iridium
customer to "roam" between Iridium's satellite system and many earth-based
wireless systems -- even systems that speak different electronic
languages -- as the customer travels from place to place.
Motorola, Inc. was the principal contractor for the construction of
Iridium's system and is the principal contractor for the operation of the
system. Motorola is a leading international provider of wireless communications
systems, phones and pagers, semiconductors and other electronic equipment and is
the largest single investor in Iridium LLC. Other strategic investors include
leading wireless communications service providers from around the world, as well
as experienced satellite manufacturers and satellite launch providers.
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<PAGE> 25
SUMMARY FINANCIAL INFORMATION
The data in the following table is a summary of certain information
derived from Iridium LLC's and IWCL's consolidated financial statements. KPMG
Peat Marwick LLP, independent certified public accountants, audited those
financial statements except where the word "unaudited" appears above a column.
You should read this data together with the financial statements and
management's discussion and analysis of Iridium LLC's financial condition and
results of operations, which are included in the documents referred to under
"Where You Can Find More Information". You should not assume that Iridium LLC's
and IWCL's results of operations for the nine months ended September 30, 1998
indicate what their respective results for all of 1998 will be like.
IRIDIUM LLC
<TABLE>
<CAPTION>
PERIOD
PRIOR TO
INITIAL CAPITAL
CONTRIBUTION PERIODS FOLLOWING INITIAL
DATE(1) CAPITAL CONTRIBUTION DATE
--------------- ------------------------------------------------------------------
NINE MONTHS ENDED
SEPTEMBER 30,
JAN. 1, 1993 JULY 29, 1993 YEAR ENDED DECEMBER 31, -------------------------
TO TO -------------------------------------- 1997 1998
JULY 28, 1993 DEC. 31, 1993 1994 1995 1996 1997 (UNAUDITED) (UNAUDITED)
--------------- ------------- ------- ------- ------- -------- ----------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER CLASS 1 INTEREST DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
LOSS DATA:
Revenues (2)............. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Sales, general and
administrative......... 5,309 7,093 16,729 26,436 70,730 177,474 122,926 261,261
Depreciation and
amortization........... -- 48 832 751 674 119,124 46,539 378,276
Interest (income)
expense, net........... -- (390) (4,252) (5,226) (2,395) (3,045) (1,516) 173,185
Provision for income
taxes.................. -- 173 1,525 1,684 4,589 -- -- --
------ ------ ------- ------- ------- -------- -------- --------
Net loss................. $5,309 $6,924 $14,834 $23,645 $73,598 $293,553 $167,949 $812,722
====== ====== ======= ======= ======= ======== ======== ========
Net loss per Class 1
Interest............... $ -- $ .43 $ .38 $ .27 $ .64 $ 2.25 1.33 5.78
====== ====== ======= ======= ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------- 1998
1993 1994 1995 1996 1997 (UNAUDITED)
-------- -------- ---------- ---------- ---------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents..... $ 23,496 $202,391 $ 51,332 $ 1,889 $ 9,040 $ 65,207
Restricted cash............... -- -- -- -- 350,220(3) --
System under construction..... 275,000 646,000 1,448,000 2,376,884 1,625,054 523,739
Property and equipment, net... 320 1,522 1,264 2,065 1,526,326 2,865,070
Total assets........... 299,886 851,809 1,505,383 2,434,081 3,645,687 3,564,602
Long-term debt................ -- -- -- 735,904 1,537,590 1,714,891
Total members'
equity............... $294,308 $795,813 $1,404,610 $1,572,029 $1,634,637 $ 834,241
</TABLE>
- ---------------
(1) These amounts reflect certain costs incurred by Motorola prior to July 29,
1993, which were reimbursed by Iridium LLC.
(2) Iridium LLC was a development stage company for the periods presented and
accordingly had no revenues.
(3) Restricted cash consisted of the first stage of borrowings under Iridium's
Secured Bank Facility. The funds were restricted subject to Iridium meeting
certain milestones. Iridium successfully met the conditions for use of the
first stage of borrowings ($350 million) in January 1998, and such funds
were released.
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IWCL
<TABLE>
<CAPTION>
PERIOD FROM NINE MONTHS ENDED
DECEMBER 12, 1996 SEPTEMBER 30,
(INCEPTION) TO YEAR ENDED ------------------------
DECEMBER 31, 1996 DECEMBER 31, 1997 1997 1998
----------------- ----------------- ---------- -----------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF LOSS DATA:
Equity in loss of Iridium LLC................ $ -- $ 18,834 $ 8,039 $ 69,974
-------- ---------- ---------- -----------
Loss before income taxes..................... -- 18,834 8,039 69,974
Income Taxes................................. -- -- -- --
-------- ---------- ---------- -----------
Net Loss..................................... $ -- $ 18,834 $ 8,039 $ 69,974
======== ========== ========== ===========
Net loss per Class A Common Share -- basic
and diluted................................ $ -- $ 2.79 $ 1.62 $ 5.81
======== ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- NINE MONTHS ENDED
1996 1997 SEPTEMBER 30, 1998
---- -------- ------------------
<S> <C> <C> <C>
CONDENSED BALANCE SHEET DATA:
Cash...................................................... $ -- $ -- $ --
Investment in Iridium LLC................................. -- 223,922 157,294
---- -------- --------
Total assets....................................... $ -- $223,922 $157,294
==== ======== ========
Liabilities............................................... $ -- $ -- $ --
Total stockholders' equity......................... $ -- $223,922 $157,294
==== ======== ========
</TABLE>
RISK FACTORS
An investment in the Class A Common Stock involves a high degree of risk.
You should carefully consider the risk factors set forth on Annex A to this
prospectus and any risk factors set forth in the prospectus supplement before
investing in the Class A Common Stock.
USE OF PROCEEDS
The net proceeds from the sale of the Class A Common Stock will be used to
purchase additional Class 1 Interests of Iridium LLC. Except as set forth in the
prospectus supplement, Iridium LLC and its wholly owned operating subsidiary,
Iridium Operating LLC, will use the net proceeds received from the purchase of
Class 1 Interests for general corporate purposes, including repayment of debt.
DILUTION
Iridium LLC has a negative net tangible book value (that is, its
liabilities are greater than its tangible assets). Because of this, when you
purchase a share of Class A Common Stock and IWCL uses the proceeds to make a
corresponding purchase of a Class 1 Interest of Iridium LLC, IWCL will suffer
immediate "dilution" in an amount equal to the difference between the price paid
per Class 1 Interest (the price you paid per share of Class A Common Stock, less
any underwriting or similar discount) and Iridium LLC's net tangible book value
per Class 1 Interest.
PLAN OF DISTRIBUTION
We may sell shares of Class A Common Stock (a) through agents; (b) to or
through underwriters; or (c) directly to other purchasers. Any underwriters or
agents will be identified and their compensation described in a prospectus
supplement.
We (directly or through agents) may sell, and the underwriters may resell,
shares of the Class A Common Stock in one or more transactions, including
negotiated transactions, at a fixed public offering price or prices, which may
be changed, at market prices prevailing at
6
<PAGE> 27
the time of sale, at prices related to such prevailing market prices or at other
negotiated prices.
In connection with the sale of shares of Class A Common Stock, the
underwriters or agents may receive compensation from us or from purchasers of
the shares for whom they may act as agents. The underwriters may sell shares of
Class A Common Stock to or through dealers, who may also receive compensation
from purchasers of the shares for whom they may act as agents. Compensation may
be in the form of discounts, concessions or commissions. Underwriters, dealers
and agents that participate in the distribution of shares of Class A Common
Stock may be underwriters as defined in the Securities Act of 1933 (the "Act"),
and any discounts or commissions received by them from us and any profit on the
resale of shares of Class A Common Stock by them may be treated as underwriting
discounts and commissions under the Act.
We will indemnify the underwriters and agents against certain civil
liabilities, including liabilities under the Act.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, us or our affiliates in the ordinary course of their
businesses.
VALIDITY OF THE CLASS A COMMON STOCK
Conyers Dill & Pearman, our Bermuda counsel, will give a legal opinion
regarding the validity of the Class A Common Stock.
EXPERTS
The financial statements of IWCL as of December 31, 1997 and 1996, and for
the year ended December 31, 1997, and for the period December 12, 1996
(Inception) through December 31, 1996, and the consolidated financial statements
of Iridium LLC as of December 31, 1997 and 1996, and for each of the years in
the three-year period ended December 31, 1997, and for the period June 14, 1991
(Inception) through December 31, 1997, have been incorporated by reference
herein and in the registration statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
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- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
Prospectus is current as of November 13, 1998.
------------------------------------------
TABLE OF CONTENTS
------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus......... 2
Where You Can Find More
Information................ 2
About Iridium................. 3
Summary Financial
Information................ 5
Risk Factors.................. 6
Use of Proceeds............... 6
Dilution...................... 6
Plan of Distribution.......... 6
Validity of the Class A Common
Stock...................... 7
Experts....................... 7
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Iridium World
Communications Ltd.
Class A Common Stock
------------------------------------------
PROSPECTUS
------------------------------------------
November 13, 1998
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 29
ANNEX A
RISK FACTORS
<TABLE>
<S> <C>
RISKS OF IRIDIUM'S BUSINESS
RISK OF ERROR IN FORWARD LOOKING Iridium is transitioning from a development stage company to
STATEMENTS an operating company and has no meaningful operating
Many of the statements in this history. Accordingly, many statements contained in, or
prospectus (including this incorporated by reference into, this Annex and the attached
Annex) are forward looking and prospectus are forward looking. Examples of these forward
actual results may be materially looking statements include the statements concerning
different from those expressed or Iridium's:
implied by these statements. - operations;
- prospects;
In particular, you should - markets;
recognize that statements about - technical capabilities;
the following topics are forward - funding needs;
looking: - financing sources;
- Iridium's estimate of the last - expected revenues;
year in which it projects a - regulatory activities (including its ability to obtain or
negative cash flow; maintain the right to operate virtually anywhere in the
- Iridium's estimates of the world);
amount of its funding needs; - pricing;
- Iridium's expectations about - commercial operations schedule;
its ability to obtain - expectations regarding characteristics of competing
additional financing; systems;
- Iridium's expectations about - expectations regarding actions of third parties such as
its ability to generate equipment suppliers, gateway operators, service providers
revenues from commercial and roaming partners; and
operations; and - Year 2000 readiness and compliance plans.
- Iridium's expectations about
how much revenue it will Forward looking statements are inherently predictive and
generate from commercial speculative and we cannot assure you that our forward
operations. looking statements will prove to be correct. Actual results
and developments are likely to be different, and may be
The forward looking statements materially different, from those expressed or implied by
are based on a number of these statements. You should carefully review the other risk
assumptions and one or more of factors set forth in this Annex, the prospectus and any
these assumptions is likely to prospectus supplement for a discussion of some of the
be incorrect. factors which could result in any forward looking statement
proving to be inaccurate.
In particular, you should recognize that forward looking
statements are based on a number of assumptions. For
example, many of the statements in this Annex and the
prospectus assume that Iridium will transition smoothly from
a development stage company to an operating company and
assume, among other things, that:
- there will be a sufficient number of customers and usage
of the Iridium System to generate revenues in the amounts,
and at the times, anticipated by Iridium, including the
amount of revenue anticipated from the commencement of
commercial operations to year-end 1999.
- the Iridium System will provide service acceptable to the
market and will meet all systems specifications set forth in
its development contracts and will have service
characteristics across Iridium's various service offerings
that are at least as favorable as those that Iridium
expects;
- there will be no increased costs under the development and
</TABLE>
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<TABLE>
<S> <C>
maintenance contracts for the Iridium System;
- Motorola and Kyocera will manufacture and distribute a
sufficient number of portable, hand-held phones and pagers
for use with the Iridium System on a timely basis, and
Iridium will not incur any significant additional expenses
as a result of any need to place orders for, or subsidize
the sale of, any Iridium phones and pagers;
- there will be a sufficient number of operational gateways
to maintain the service quality and system capacity Iridium
expects;
- Iridium's satellite navigation and communications software
and its business support systems software have been
effectively integrated into Iridium's operations and will
function as expected under the various service demands the
Iridium System experiences;
- Iridium will contract with a sufficient number of service
providers and cellular roaming partners to ensure effective
marketing and distribution of its services;
- the operation of the Iridium System will not be impaired
by the loss of satellites or the need to put replacement
satellites in orbit and Iridium will not be required to
bear the costs of satellite replacement;
- in the various jurisdictions in which Iridium operates or
expects to operate, there will be no material change in
legislation or regulations or the administration thereof
that will have an adverse effect on the business of
Iridium;
- there will be no material adverse changes in any of
Iridium's existing material contracts or the ability of
Iridium's various contractors to perform their
obligations;
- Iridium, its gateways, its service providers and other
companies doing business with Iridium will obtain timely
regulatory approvals in sufficient countries to permit
Iridium to operate on the virtually worldwide basis it
expects; and
- the capacity of the Iridium System, as affected by, among
other things, spectrum allocation and customer usage
patterns, will meet or exceed Iridium's expectations.
You should understand that one or more of these assumptions
is likely to be incorrect.
Iridium does not intend to publish updates or revisions of
the forward looking statements, including the projected
financial information included in this Annex or the
prospectus or of this discussion of factors that could cause
actual results to be materially different from those
expressed or implied in the forward looking statements.
Documents incorporated by reference in this prospectus
contain information, including forward looking information,
as of various dates. You are cautioned that these statements
have not been revised to reflect subsequent events or
circumstances after the date on which they were made.
</TABLE>
A-2
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<TABLE>
<S> <C>
IRIDIUM IS TRANSITIONING FROM A Iridium is in the initial stages of transitioning from a
DEVELOPMENT STAGE COMPANY TO AN development stage company to an operating company. It is
OPERATING COMPANY; IRIDIUM HAS NO extremely important to Iridium's success that it effects
MEANINGFUL REVENUES OR HISTORY OF this transition smoothly. This will require Iridium to
OPERATIONS; IRIDIUM'S FUTURE complete successfully a number of complex tasks for the
REVENUES MAY NOT COVER ITS operation of Iridium's system while simultaneously
EXPENSES attracting customers and ensuring that they are satisfied
Iridium is a start-up company with Iridium Services.
with substantial debt and no
meaningful operating history or Iridium has no meaningful operating history on which
significant revenues. investors can evaluate its performance and has no
significant revenues. In addition, the services Iridium
offers and intends to offer are new and there is no
operational service that provides a direct comparison.
Further, Iridium has accumulated significant losses in the
development and construction of the Iridium System and
expects to continue to accumulate significant losses until
sometime in late 1999. Iridium has incurred significant
indebtedness to fund the development and construction of the
Iridium System. Until Iridium has substantial revenues from
operations, it will rely on additional indebtedness to pay
its expenses and to make payments on its indebtedness. We
cannot give you any assurance about:
- Whether or when Iridium will have sufficient revenues to
satisfy its funding requirements, including servicing and
repaying its outstanding indebtedness.
- Whether Iridium will ever be profitable.
RISK OF HIGHLY LEVERAGED CAPITAL Iridium is a highly leveraged company and it expects to
STRUCTURE incur substantial additional indebtedness, including
indebtedness that is secured by its assets. Iridium
Iridium has already borrowed currently is not generating any meaningful revenues to fund
approximately $2.4 billion as of its operations or repay its indebtedness. The amount of debt
November 1, 1998 and needs to needed to finance the Iridium System could be increased by
borrow a substantial amount of one or more factors outside Iridium's control, including:
additional funds prior to the - the inability to generate revenues in the amount and
time it expects to achieve within the time frame Iridium expects;
positive cash flow. Iridium is - cost increases for the construction or operation of the
not currently generating any Iridium System; and
meaningful revenues to fund its - increases in applicable interest rates.
operations or repay its
indebtedness. Iridium's current and future debt service requirements could
have important consequences on its business including:
- limiting Iridium's ability to obtain additional financing;
- reducing the amount of funds available for operations
because a substantial portion of Iridium's cash flow from
operations will be dedicated to the payment of principal
and interest on its indebtedness; and
- increasing Iridium's sensitivity to adverse economic
conditions.
In addition, Iridium's management is not able to make
decisions freely about certain business matters because
Iridium's guaranteed bank facility, the secured bank
facility and the indentures relating to senior notes include
certain covenants that, among other things, restrict the
ability of Iridium and its subsidiaries to:
- dispose of assets;
- incur additional indebtedness;
- incur or guarantee obligations;
- prepay other indebtedness or amend other debt instruments;
- pay dividends;
</TABLE>
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<TABLE>
<S> <C>
- create liens on assets;
- make investments, loans or advances;
- make acquisitions;
- engage in mergers or consolidations;
- change the business conducted by Iridium; or
- engage in certain transactions with affiliates and
otherwise will restrict certain corporate activities.
SIGNIFICANT ADDITIONAL FUNDING Iridium anticipates that its total cash funding requirements
NEEDS for the development, construction and commercial operation
of the Iridium System will be approximately $5.5 billion
Iridium needs to refinance its (net of assumed revenues from commercial operations) through
$1.0 billion senior secured year-end 1999. Based on its estimated cash funding
credit facility by December 31, requirements and its schedule for refinancing its existing
1998 and estimates it will need $1.0 billion senior secured bank facility, which currently
to borrow an additional $700 matures on December 31, 1998, Iridium estimates that it will
million to operate through the need to refinance its existing $1.0 billion senior secured
time it expects to achieve bank facility and to arrange approximately $700 million in
positive cash flow. additional funding in the near future.
Iridium's estimated funding
needs may increase, perhaps There can be no assurance that Iridium will be able to find
substantially, for a number of banks or any other lender that will be willing to lend to
reasons, including if Iridium is Iridium on terms it will accept or that Iridium will be able
unable to generate revenues in to satisfy its funding needs. In addition, Iridium's
the amount and within the time estimated funding requirements do not reflect any
frame it expects, or if Iridium contingency amounts and may increase, perhaps substantially,
has unexpected cost increases. in the event Iridium is unable to generate revenues in the
amount and within the time frame it expects, or if Iridium
has unexpected cost increases.
RISK OF LOW SERVICE DEMAND BECAUSE The Iridium System is not intended to provide communications
OF PRICING, SERVICE QUALITY, services that compete with landline and land-based wireless
EQUIPMENT CHARACTERISTICS, services. Instead, the Iridium System is designed to
COMPETITION AND OTHER MARKET complement such services. Iridium World Satellite Services
FACTORS will be priced significantly higher than most land-based
phone and paging services, and Iridium customers are not
expected to discontinue their use of land-based wireless
services.
Many market factors, including Iridium's estimates of its funding needs assume there will
pricing, could prevent Iridium be substantial demand for Iridium services shortly after
from generating revenue in the Iridium commences commercial operations and that Iridium
amount and within the time frame will be able to charge a premium over the cost of a
it expects. land-based call for its satellite services because such
services provide global mobility. Iridium currently expects
that its wholesale usage fees for international Iridium
World Satellite Services calls between two countries will
result in suggested retail roaming prices that, in
aggregate, are approximately 25% to 30% above the retail
prices for land-based voice calling options that traveling
customers could use for a similar call between the same two
countries (e.g., international calling card and
international cellular roaming rates). If demand for Iridium
services is not significant or if the market will not
support such a global mobility premium, Iridium may be
unable to generate sufficient revenues. In addition to
pricing, a number of other
</TABLE>
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<TABLE>
<S> <C>
market factors, including service quality, equipment
characteristics and competition, could adversely affect
demand for Iridium services.
The price of Iridium's phones Motorola's multi-mode phone generally has an initial retail
and pagers may adversely affect price of at least $3,000 and Motorola's alphanumeric pager
customer demand for Iridium's generally has an initial retail price of at least $500.
services. Iridium expects the prices for Kyocera phones and pagers to
be similar to Motorola's prices. These prices substantially
exceed current prices for cellular phones and pagers.
Iridium does not control its Under Iridium's pricing strategy it will set wholesale
retail prices and if they are prices for its services and service providers will control
set too high demand for the price to the customer. Service providers may price
Iridium's services may be Iridium services at a level that is too high, thereby
adversely affected. Prices in reducing total demand without an offsetting increase in per
the telecommunications industry minute revenue to Iridium. Moreover, competition may force
have been dropping, which may Iridium and its service providers to lower retail prices. In
adversely affect Iridium's addition, pricing for telecommunication services, including
ability to generate revenues. long distance rates, has trended downward in recent years.
This downward trend may make it difficult for Iridium to
hold or raise its wholesale prices.
The Iridium System does not afford the same voice quality,
signal strength and degree of building penetration in areas
that mature land-based wireless voice or paging systems
serve. This difference in service quality could adversely
affect demand for Iridium services.
The large size of Iridium's The Kyocera and Motorola telephones are larger and heavier
phones and pagers may adversely than today's pocket-sized cellular phones and have a
affect customer demand for significantly longer and thicker antenna. Motorola's pager
Iridium services. is slightly larger than today's standard alphanumeric
belt-worn pagers. The large size of Iridium's phones and
pagers may adversely affect customer demand for Iridium
services.
In addition, competition, including competition from other
satellite systems and from the extension of land-based
telecommunications systems to areas that are currently not
serviced by landline or land-based wireless phone or paging
systems, could reduce demand that might otherwise exist in
such areas for Iridium services.
FACTORS AFFECTING CUSTOMER Iridium's ability to generate sufficient operating revenues
ACCEPTANCE OF SATELLITE-BASED will depend upon customer satisfaction with Iridium
SERVICE services. Iridium believes that customer satisfaction will
depend on a variety of factors, including:
The use of satellites in the - price;
Iridium System expands coverage - the technical capabilities of Iridium's equipment;
but creates certain service - the quality of the services Iridium offers, including
limitations that customers may voice quality, call completion rates and dropped call rates;
not be willing to accept. and
- the extent, availability and price of alternative
telecommunications services.
Satellite-based communications over the Iridium System will
experience degradation in service quality in certain places
and will be completely unavailable in some places. In
particular:
- Satellite-based services will be adversely affected in
places where obstructions, such as buildings and other
natural and man-made obstacles, are positioned between a
satellite and the user.
- These adverse effects on satellite calls will increase as
the obstacles become larger and more densely spaced.
- In densely packed urban areas or inside buildings with
steel
</TABLE>
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<TABLE>
<S> <C>
construction and metal coated glass common in many urban
high rise buildings (including, in particular, in most
hotels and professional buildings), Iridium expects that
only extremely limited satellite voice service, or no
satellite voice service, will be available.
- Use of an Iridium phone in a moving automobile for a
satellite call will make the effect of obstructions
temporary but more pronounced because the structure of
automobiles will tend to obstruct the satellite signal.
- The actual limitations on satellite-based services will
vary, sometimes significantly, as conditions change and as
the satellites move across the sky.
The Iridium satellite paging service also will experience
degradation in certain places. Iridium expects that these
limitations on satellite-based services will be more
significant than current limitations on service experienced
by customers of land-based wireless ("cellular") systems and
traditional paging systems.
For Iridium to succeed, its customers must accept:
- the service limitations described above;
- higher prices for Iridium's satellite services than the
current prices for cellular and paging services; and
- heavier hand-held phones and larger pagers than those
currently used for most commercial service.
Iridium's customers may not accept these limitations. These
limitations could result in significantly lower sales or
lower usage of Iridium's services than Iridium anticipates.
The Iridium System has not been designed to provide
high-speed data and facsimile transmission capability. As a
result, Iridium expects that the appeal of its facsimile and
data services (which will not be available until mid-1999)
will be limited.
Also, the Iridium System will lack the operational capacity
to provide service to large numbers of customers in
concentrated areas.
RISKS RELATING TO LOW DEMAND FOR In an effort to ensure that sufficient quantities of
PAGERS AND PHONES; POTENTIAL NEED hand-held phones and pagers are available for early
FOR SUBSIDIES distribution, Iridium has entered into standby equipment
purchase commitments with Motorola and Kyocera. These
Iridium has committed to standby commitments require Iridium to purchase an aggregate
purchase up to approximately of up to approximately $400 million of phones and pagers
$400 million of phones and from Kyocera and Motorola, but only if such equipment is not
pagers from the manufacturers if purchased by and shipped to gateway operators or service
the gateways do not buy them. providers prior to January 1, 1999. The Kyocera Commitment
Iridium may have to subsidize is expected to provide a similar trigger using a date of
the price of phones and pagers February 8, 1999.
to customers to stimulate demand
for its services. In addition, there is a risk that sufficient demand for
Iridium services will not materialize in a timely manner
unless Iridium, its gateway operators or service providers
subsidize the cost of Iridium phones. Neither Iridium nor,
to Iridium's knowledge, its gateway owners and service
providers currently plan to provide any such subsidies. The
costs associated with those subsidies, including Iridium's
portion of those costs, could be significant. Iridium's
current projected funding needs do
</TABLE>
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not reflect any costs associated with its standby equipment
purchase commitments or any subsidization.
POTENTIAL UNDERSUPPLY OF The Iridium telephones and pagers are an essential part of
TELEPHONES AND PAGERS the Iridium System. Motorola and Kyocera have started
manufacture of the telephones and Motorola has delivered
Insufficient supply of Iridium telephones for commercial use. Kyocera has delivered
telephones and pagers could harm telephones for customer trials but software development
Iridium. issues have delayed production. Motorola's or Kyocera's
inability to manufacture enough telephones and pagers to
meet demand could constrain Iridium's commercial operations
and adversely affect its generation of meaningful revenues.
In addition, if enough telephones and pagers are not
available to supply those people who want to become Iridium
customers, those people could develop a negative impression
of Iridium and decide not to become Iridium customers.
RELIANCE ON MOTOROLA, GATEWAY Operation of the Iridium System. Iridium relies extensively
OWNERS AND OTHER THIRD PARTIES. on third parties to perform functions critical to its
operations. Iridium does not independently have and does not
Iridium relies extensively on intend to acquire, except by contracting with other parties,
third parties to perform functions the ability to:
critical to its operations, - develop or produce the components of the Iridium System;
including the operation of the - launch additional or replacement satellites; or
Iridium System and the - operate and maintain the Iridium system.
distribution and marketing of Currently, Iridium relies on Motorola to provide these
Iridium Services. critical functions under various contracts.
Gateway Operators. Iridium is dependent on the activities
of its gateway operators for its success. Iridium has
obtained commitments from its investors who are gateway
operators that they will use their reasonable best efforts
to perform certain critical functions including:
- obtaining the necessary licenses, if any, from the
jurisdictions in their gateway territories;
- constructing and operating their gateways;
- connecting the Iridium System to public earth-based
telephone systems;
- marketing Iridium Services;
- selecting, or acting as, service providers; and
- managing relationships with Iridium's customers either
directly or through service providers.
Distribution and Marketing of Iridium Services. Iridium's
success also will depend upon the motivation and ability of
its service providers to generate demand for Iridium
Services, phones and pagers on a timely basis. Service
providers will be responsible for the sales of Iridium
Services and of Iridium subscriber equipment to consumers.
The service providers will be, or will be selected by,
Iridium's gateway operators. Iridium's business plan assumes
the service providers will make substantial sales of Iridium
phones as Iridium transitions from a development stage
company to an operating company. However, demand for Iridium
services may not be generated on a timely basis and there
can be no assurance that service providers will effectively
market and
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distribute Iridium Services or that gateway operators will
effectively coordinate the marketing and distribution
efforts in their territories. If Iridium Services are not
timely marketed and distributed on a coordinated basis there
would be a material adverse effect on Iridium.
TECHNOLOGY IMPLEMENTATION RISKS For the Iridium System to operate properly, Motorola,
Iridium and their respective subcontractors must make a
Integrating the Iridium System's number of sophisticated and diverse technologies work
various technologies, including together -- a complex task that no one has attempted before.
software and communications This task is further complicated by the following facts:
hardware, is a complex task and - the Iridium System is expected to operate 24 hours a day;
future operations could reveal - most of the Iridium System's hardware is in space; and
serious problems. - system-wide testing, maintenance and repair may adversely
affect Iridium's ability to provide the service quality it
anticipates.
Iridium believes that the development and implementation of
the software for the Iridium System has been one of the
largest and most complex software creation and integration
tasks ever undertaken in the telecommunications industry.
The Iridium System software, including the software that
controls the satellites and the on-the-ground business
support systems necessary for customer billing, has not been
subject to the demands of commercial operations at the
levels Iridium will need to achieve to be successful. This
software will have to be reprogrammed if errors are
revealed.
In addition, the integration of each of Iridium's roaming
partners into Iridium's telecommunications and business
systems requires substantial programing and testing. For
Iridium to provide roaming capabilities that match its
expectations, it will have to successfully integrate
approximately 130 roaming partners into its systems. There
can be no assurance that Iridium will be able to complete
this task in a timely manner or at all.
POTENTIAL FOR DELAYED OR IMPAIRED The Iridium System is the first satellite-based personal
OPERATIONS communications system. However, other companies are
attempting to develop satellite- based systems to compete
If Iridium's transition from a with Iridium. Part of Iridium's competitive strategy depends
development stage company to a on its commencing substantial commercial operations well
company with substantial before any of its competitors. If Iridium's transition from
commercial operations is delayed a development stage company to an operating company is
or its ability to provide the delayed or its ability to provide the service quality it
service quality it expects is expects is impaired, there likely would be:
impaired, its ability to - harm to the competitive advantage Iridium expects to
generate revenues and its achieve under its current strategy;
competitive position could be - delay in Iridium's generation of revenue; and
materially harmed. - a significant effect on Iridium's ability to repay its
indebtedness.
A significant delay in Iridium's transition to commercial
operations could occur if:
- significant errors in the design and implementation of the
Iridium System are discovered during commercial operations;
- commercial operations reveal that significant improvements
in service quality are needed if Iridium services are to
generate the demand Iridium expects; or
- a significant number of satellites fail to operate for any
reason. (See "Risks Related to the Satellites", below.)
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LIMITED SATELLITE-BASED SERVICE Iridium's ability to supply satellite-based service depends
CAPACITY upon the capacity of the Iridium System. Various factors,
including customer usage patterns, will have a significant
If Iridium experiences effect on the Iridium System's capacity for a particular
unexpected customer usage geographic area and on a system-wide basis. The most
patterns or its available important factors include:
spectrum is fully utilized, the - customer usage patterns; and
ability of customers to place or - the amount of spectrum (the frequencies at which Iridium
receive calls may be adversely is allowed to operate the Iridium System).
affected.
Iridium could experience unexpected customer usage patterns
that could exceed the capacity of the Iridium System at one
or more gateways -- similar to the overload of regional
circuits on an earth-based system. If Iridium faces
significant capacity issues, its ability to increase its
available spectrum (which can be thought of as similar to
adding more "lines" to an earth-based system) is subject to
significant regulatory hurdles. If adverse usage patterns
occur or other significant constraints are placed on the
Iridium System, Iridium may not be able to acquire
additional spectrum and customers may have difficulty in
placing or receiving calls on the system, which would
materially and adversely affect Iridium.
RISKS RELATED TO THE SATELLITES A significant portion of Iridium's tangible assets are low
earth orbit satellites and the related earth-based control
The risk of satellite loss or facilities. Maintaining this equipment is a complex and
damage is significant, and the costly undertaking which has not been attempted previously
effect of satellite losses or on a commercial basis. In particular, the risk of satellite
damage could be substantial. loss is significant.
The loss or failure of one or more satellites, including
temporary losses, that for whatever reason are not promptly
corrected or replaced, could cause:
- gaps in service availability;
- significantly degraded service quality;
- increased costs; and
- losses of revenue for the period that service is
interrupted or impaired.
Accordingly, the loss or failure of any satellite or
satellites could materially and adversely affect Iridium.
A satellite can be lost or fail for a variety of reasons,
including:
- colliding with something, including space debris, another
man-made object or space phenomena such as comets or
meteors;
- mechanical anomalies or malfunctions; and
- failure of the rocket, by explosion or otherwise, that was
to place the satellite in orbit.
Space debris and other in-space risks. Iridium's satellites
operate in low earth orbit and, as a result, face a higher
risk of damage from space debris than satellites that
operate farther away from the earth. Because objects in low
earth orbit are moving at different speeds, the Iridium
satellites can be more readily hit by space debris -- which
can include sand, pebbles, dust and rocks shed by comets, as
well as the remains of man-made objects floating in space.
Even a very small piece of space debris can do great damage
to a satellite.
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One potential area of risk includes meteor showers and
storms. In November 1998 and November 1999, the Leonid
meteor storm is expected to dramatically increase the amount
of space debris in Earth's orbit and could pose a risk to
Iridium's satellites. Although smaller meteor showers occur
annually, the Leonid meteor storm reoccurs every 33 years.
The last storm occurred in 1966, when commercial space
programs were just beginning and few, if any, satellites
were in the sky. Therefore, there is no relevant experience
to base an assessment of the damage, if any, that the storm
might cause to low earth orbit satellites, but such damage
could be significant.
Mechanical Anomalies and Malfunctions. During the
deployment of the Iridium System, Iridium experienced
anomalies in several of its satellites. Those anomalies,
which in some cases included control problems and the
satellite's failure to function as expected, caused those
satellites to be excluded from Iridium's constellation. You
should note that:
- anomalies such as occurred with respect to those
satellites, or other anomalies with comparable effects,
could occur in the future;
- such anomalies could have a significant adverse effect on
Iridium;
- from time to time certain events could occur that may
cause Iridium or Motorola to conclude that one or more
malfunctioning satellites should not be included in the
Iridium System, and the unavailability of such satellite
could have an adverse effect on the operation of the
Iridium System; and
- Motorola has absorbed the financial consequences of all
satellite losses to date.
Launch-related risks. Iridium expects that it will need to
launch additional satellites from time to time to maintain
the Iridium System. Accordingly, a launch failure could have
a material adverse effect on Iridium. Satellites are
launched on launch vehicles, or rockets. Launches of
satellites can fail because:
- a rocket crashes, aborts or explodes (which recently
happened to one of Iridium's competitors); and
- satellites are damaged as they are loaded into the rocket,
during the launch, or as they leave the rocket.
In addition, launches can be delayed for many reasons,
including poor weather conditions, other launch failures or
government actions. Placing multiple satellites in each
Iridium launch vehicle significantly increases the risk that
a launch failure will have a material and adverse effect.
Life Expectancy of the Satellites; Financial Effect of Loss
of Satellites. Iridium's business plan currently assumes
that each of the satellites will have a useful life of five
years from its launch date. Iridium's satellites may not,
however, remain in operation for the full five years that
Iridium expects. If the satellites do not remain in
operations for the full five years, Iridium's operations,
including its ability to provide service and generate
revenues, could be materially harmed and its costs of
operating will likely increase.
Iridium has entered into an Operations and Maintenance
Contract with Motorola which provides for the operation and
maintenance of Iridium's space assets for Iridium's first
five years of operation. Iridium has the
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option to extend the Operations and Maintenance Contract for
an additional two years. Under the Operations and
Maintenance Contract, Motorola will bear the risk of
satellite malfunction, but Iridium will bear the risk of
damage to satellites by the acts of third parties, including
the degradation or complete loss of any satellite due to
contact with space debris.
COMPETITION RISKS The telecommunications industry is highly competitive. The
uncertainties and risks created by this competition are
Iridium faces direct competition intensified by the continuous technological advances that
from a variety of operating and characterize the industry, regulatory developments which
planned satellite systems and affect competition and alliances between industry
land-based services. participants. While no single wireless communications system
other than Iridium serves the global mobile personal
communications market today, Iridium anticipates that more
than one system or a collaboration of systems will serve
this market in the future.
Iridium believes that its most likely direct competition
will come from the following planned low or mid-earth orbit
satellite-based systems:
- ICO Global Communications (Holdings) Limited;
- Globalstar (backed by Loral/Qualcomm Partnership, L.P.);
- Ellipso; and
- Constellation.
Iridium also expects to face competition from regional
geostationary satellite-based systems, including Asia
Pacific Mobile Telecommunications Satellite, Afro-Asian
Satellite and PT Asia Cellular Satellite ("ACeS") and from
the existing Inmarsat geostationary global satellite system.
While Iridium believes that no competition will be able to
offer virtually worldwide satellite paging prior to the year
2000, Iridium World Page Service will face competition from
existing satellite- and land-based paging services, some of
which have an established customer base that may be
reluctant to switch services. In addition, certain paging
services offer two-way paging capability which Iridium does
not offer.
Other Competitors. Iridium expects to offer Iridium World
Cellular Service across a variety of countries where
different cellular standards have made roaming difficult in
the past. However, certain services currently provide
roaming services among a number of countries, including
those that use incompatible cellular standards. For example,
GlobalRoam and Cellcard provide roaming between some North
American networks and some European and other networks. The
availability of such international near-global roaming
services is likely to increase. These services will compete
directly with Iridium World Cellular Service and with
Iridium's satellite-based phone services. Two other proposed
systems, ICO and Globalstar, and at least one regional
geostationary satellite, ACeS, have indicated that they may
also offer some form of dual-mode satellite/cellular
service, which may include roaming capabilities (enabling
roaming across different cellular standards) similar to
those Iridium expects to offer.
In addition, it is expected that GSM-based wireless service
(a form of wireless used mostly in Europe) will continue to
expand its reach (including further into North America),
permitting broader roaming
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capability across incompatible cellular standards with a
single phone. There is a risk that one or more regional
mobile satellite services could enter into agreements to
provide intersystem roaming which could be global or nearly
global in scope.
Iridium will also compete for travel customers with
businesses that provide short-term rentals of wireless
phones capable of operating in specific countries or
regions. These businesses often have rental locations at
airports, hotels and other locations and will also deliver
phones.
COMPETITION FOR SERVICE PROVIDERS In addition to competing for customers for its service,
AND SPECTRUM ALLOCATION Iridium also expects to compete with various other
communications services for local service providers. A
Iridium will face competition failure to effectively compete with these services could
from other services for local materially and adversely affect Iridium's ability to
service providers. effectively market and distribute its services and
equipment.
Furthermore, ICO could have an advantage in obtaining
spectrum allocations and local operating approvals in a
number of countries because it is affiliated with Inmarsat,
an international satellite organization, and investors in
ICO and Inmarsat include many state-owned telecommunications
companies and the regulatory authorities in their countries.
RISKS ASSOCIATED WITH LICENSING The Iridium System's operation is subject to United States
and international regulation. This regulation is pervasive
Iridium cannot yet offer and largely outside Iridium's control. Iridium, Motorola and
commercial service in every the various gateway owners have made substantial progress in
country. receiving the authorizations necessary to operate the
Iridium System, but a significant number of regulatory
authorizations have not yet been obtained, including:
- in two countries, Saudi Arabia and India, in which a
gateway will be located, an authorization to operate the
gateway, including necessary radio spectrum assignments
for the links between the gateway and the Iridium
satellites;
- in certain countries in which Iridium expects its
customers will want to use Iridium's services, the authority
to offer Iridium's services and operate Iridium phones and
pagers, and unless Iridium receives such authorizations,
service in those countries will be limited or will not
exist at all.
RISKS ASSOCIATED WITH PRINCIPAL Iridium has three principal supply contracts:
SUPPLY CONTRACTS. - The Space System Contract with Motorola for the design,
development, construction and delivery in orbit of the
Iridium's major contracts Iridium System's space segment;
relating to the Iridium System - The Operations and Maintenance Contract with Motorola
are of limited duration, and which runs for five years from the date Iridium commenced
Motorola's liability under them commercial operations and covers the operation of the
is significantly limited. space segment of the Iridium System, including monitoring,
upgrading and replacing the hardware and software
necessary to maintain specified performance levels; and
- The Terrestrial Network Development Contract with Motorola
for the design and development of the gateway hardware and
software.
These contracts are of limited duration and Motorola's
liability under them is significantly limited. The contracts
provide that if Motorola has
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any liability to Iridium under the Space System Contract,
the Operations and Maintenance Contract, the Terrestrial
Network Development Contract or any other contract between
Iridium and Motorola in connection with the Iridium System,
that liability may be limited to $100 million in the
aggregate in virtually all circumstances. In addition, under
the Space System Contract, Motorola is not required to
refund amounts Iridium previously paid to it. Subject to
certain exceptions, Iridium bears the risk, including
additional costs, if any, resulting from excusable delays
under the Space System Contract, as well as certain of the
risks of loss for satellites in orbit. The Operations and
Maintenance Contracts and the Terrestrial Network
Development Contract have similar provisions regarding
excusable delays, waivers and limitations on liability.
CONFLICTS OF INTEREST WITH Motorola has and will have various conflicts of interest
MOTOROLA with Iridium. Motorola is:
- the creator and developer of the concept of the Iridium
Because of Motorola's varying System;
roles with respect to Iridium, - responsible for the design, construction, operation and
there are a number of maintenance of the Iridium System;
significant conflicts of - a founding member of, and the largest single investor in,
interest between Iridium and Iridium LLC;
Motorola. - a gateway owner;
- Iridium LLC's largest Class 1 Membership Interest holder
(and potentially the largest Class A Common Stock holder
because Class 1 Membership Interests are exchangeable for
Class A Common Stock);
- a holder of warrants to acquire additional membership
interests in Iridium LLC; and
- the guarantor of some of Iridium's borrowings.
Motorola's Influence on Iridium. Motorola does not by
itself control the Iridium Board of Directors and it is not
permitted to participate in Iridium's decisions or other
actions concerning the Space System Contract, Operations and
Maintenance Contract or the Terrestrial Network Development
Contract. However, Motorola could in certain situations
exercise significant influence over Iridium because:
- Motorola currently has the right to appoint 5 of the 27
members of the Iridium Board and its representation could
increase if it provides further financial support to
Iridium; and
- Motorola could have control over Iridium similar to that
of a creditor through its position as a guarantor of some of
Iridium's borrowings and as a creditor under various
material contracts.
Motorola's Contractual Relations with Iridium. Motorola and
Iridium entered into the Space System Contract, the
Operations and Maintenance Contract and the Terrestrial
Network Development Contract after extensive negotiations.
The predecessor of Iridium under those contracts, however,
was a wholly owned subsidiary of Motorola at the time the
Space System Contract and Operations and Maintenance
Contract were negotiated and therefore these negotiations
were not conducted on an arm's-length basis. Moreover,
although these agreements provide for specific prices,
Motorola's obligations and liabilities are subject to
certain limitations which allocate various risks to Iridium
and may have the effect of increasing the price paid by
Iridium.
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Iridium's payment obligations under these agreements are
expected to comprise most of Iridium's expenses.
CONFLICTS OF INTEREST WITH GATEWAY The Iridium Board of Directors consists of representatives
OWNERS of certain of the world's leading telecommunications
companies. Almost all of the members of the Iridium Board
Iridium has certain conflicts of have been appointed by investors in Iridium who also are
interest with its gateway owners gateway owners and service providers. Because Iridium will
and service providers. be a supplier to the gateways and the service providers, the
interests of Iridium are expected to conflict in certain
respects with the interests of the gateway owners and the
service providers. For example, this conflict of interest
will be relevant in setting the wholesale prices that
Iridium will charge for satellite airtime and other Iridium
services.
RISKS RELATED TO YEAR 2000 Iridium has only recently begun addressing the Year 2000
READINESS issue. The "Year 2000 issue" refers to the fact that many
computer software application and operations programs
In a reasonably likely worst (including embedded chips) written in the past may not
case scenario, the failure to properly recognize dates ending in "00" as meaning 2000
correct a material Year 2000 rather than 1900. This could result in the incorrect
problem could result in an performance of computer calculations and functionality
interruption in, or a failure involving dates. Such miscalculations could adversely affect
of, certain normal business Iridium's installed computer systems, network elements,
activities and/or operations, software applications and other business systems containing
including operations that are time sensitive programs. The Year 2000 issue may also affect
essential to the provision of the systems and applications of Iridium's roaming partners,
Iridium's services. Iridium has service providers and other material distributors.
established a program to assess
and mitigate those risks, but Iridium has established a Year 2000 Program (the "Y2K
because it has not yet completed Program") to address information-technology ("IT") and
the risk assessment phase, it non-IT problems that may exist within the Iridium System,
cannot assure that all actions including Iridium's suppliers, roaming partners, service
necessary to correct a Year 2000 providers and other material distributors. The Y2K program
problem will be completed in a encompasses Iridium's space and ground facilities, as well
timely manner. as the relevant operations of Iridium's material suppliers
and distributors, and addresses both IT and non-IT systems.
Iridium is in the process of performing an initial inventory
of all Iridium hardware, software and infrastructure, as
well as material vendors, to identify potential Year 2000
issues and to determine the action required, if any, to
correct the problem. Through the gateways, Iridium is
contacting its third party roaming partners and service
providers to determine the Year 2000 status of their
systems, as well as their plans to bring them into
compliance. Once Iridium identifies problem areas, it plans
to upgrade those systems under its direct control, and
verify, test and implement any modifications to them by the
third quarter of 1999. No current assessment of the
completion dates for material repairs, replacements and
renovations not under Iridium's direct control, and for
which third parties such as gateways, service providers and
roaming partners are responsible, is available.
In a reasonably likely worst case scenario, the failure to
correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business
activities and/or operations, including operations that are
essential to the provision of Iridium's services. Such
failures could materially and adversely affect Iridium's
results of operations, liquidity and financial condition.
Due to the general uncertainty inherent in the Year 2000
problem, resulting in major part
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from the present state of Iridium's knowledge concerning the
Year 2000 readiness of third-parties such as its roaming
partners and service providers, Iridium is unable to
determine at this time whether the consequences of Year 2000
failures will have a material impact on its results of
operations, liquidity or financial condition. Iridium
believes that, with the completion of the Y2K Program as
scheduled, the potential of significant interruptions of
normal operations should be reduced. However, Iridium cannot
assure you that its systems and the systems of those third
parties on which its operation relies will be compliant in a
timely manner or that there will not be a material
disruption of Iridium's business or a material adverse
effect on Iridium's liquidity, financial condition or
results of operations because of a Year 2000 problem.
RISKS ASSOCIATED WITH Iridium expects its telecommunications services to be
INTERNATIONAL OPERATIONS AND available in almost every country. As a result, Iridium and
DEVELOPING MARKETS its gateway operators and service providers will be subject
to risks related to each country's domestic and
Certain risks related to the international policies and risks related to economic
domestic and international conditions in many regions of the world, such as:
policies and economies of the - changes in domestic and foreign government regulations and
various countries in which telecommunications standards;
Iridium operates could adversely - licensing requirements, tariffs or taxes and other trade
affect Iridium. barriers;
- price, wage and exchange controls;
- political, social and economic instability;
- inflation; and
- interest rate and currency fluctuations.
Iridium, its gateway operators or service providers could be
adversely affected on a country-specific, regional or
system-wide basis by these factors.
DEPENDENCE ON KEY MANAGEMENT AND Iridium's success will be dependent upon the efforts of its
QUALIFIED PERSONNEL management team and its ability to attract and retain
qualified management and personnel in the future. Iridium
Iridium relies on key employees has no employment contract with any employee and is subject
with whom it does not have to the possibility of loss of one or more key employees at
employment agreements. any time. Iridium must also rely upon several employees of
Motorola who play a key role in the performance of
Motorola's obligations under the Space System Contract, the
Operations and Maintenance Contract and the Terrestrial
Network Development Contract. Iridium has no control over
the relationship between Motorola and its employees. The
loss of one or more of these key employees could adversely
affect Iridium. In addition, Iridium's success will be
dependent in part upon gateway operators having qualified
personnel at the various gateways to:
- oversee the construction and operation of the gateway; and
- execute significant aspects of Iridium's licensing,
marketing and distribution efforts.
RISKS ASSOCIATED WITH GROWTH If significant and rapid growth in demand for Iridium World
Services is achieved it would require Iridium and its
The Iridium System cannot gateways to make additions to personnel and management
currently grow above certain information systems to manage that growth while continuing
limits. to meet customer service expectations. In addition, because
Iridium's assigned spectrum (frequency band) and satellite
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infrastructure characteristics have inherent capacity
limitations, growth above certain levels would not be
possible with the current Iridium System.
------------------------------------------------------------
[To be included in the Annex to the Subordinated Notes
prospectus]
RISKS OF THE SUBORDINATED NOTES
RANKING OF THE SUBORDINATED NOTES The Subordinated Notes and any Subsidiary Guarantees will be
subordinated obligations of the Note Issuers and any
If Iridium becomes insolvent or Guarantor Subsidiaries. As a result, the payment of
if certain defaults occur, principal, any premium and interest on the Subordinated
holders of the Subordinated Notes is subordinated in right of payment to the prior
Notes will be paid after holders payment in full of all of our Senior Debt. Iridium has
of Iridium's senior debt and may outstanding $2.1 billion in aggregate principal amount of
receive less than certain other Senior Debt as of November 1, 1998.
creditors.
In certain circumstances where Iridium may not be making
payments on all of its debt obligations as they come due,
the holders of our Senior Debt will be entitled to receive
payment in full of all amounts that are due or will become
due on the Senior Debt before you will be entitled to
receive any amounts on the Subordinated Notes. In addition,
Iridium is not permitted to make payments of principal, any
premium or interest on the Subordinated Notes if it defaults
on its obligation to make payments on Senior Debt and does
not cure that default, or if an event of default that
permits the holders of Senior Debt to accelerate the
maturity of the Senior Debt occurs.
These subordination provisions mean that if Iridium is
insolvent or if certain defaults occur, a holder of its
Senior Debt may ultimately receive out of its assets more
than a holder of the same amount of its Subordinated Notes;
and a creditor of Iridium that is owed a specific amount,
but who owns neither Iridium's Senior Debt nor the
Subordinated Notes, may ultimately receive more than a
holder of the same amount of Subordinated Notes.
In addition, the Subordinated Notes are not secured by any
of Iridium's assets. Accordingly, the Subordinated Notes
will be effectively subordinated to any secured obligation
of Iridium, whether or not the obligation constitutes Senior
Debt, to the extent of the value of the assets securing
those obligations. Because the Subordinated Notes will not
be secured by any of Iridium's assets, it is possible that
there would be no assets remaining from which claims of the
holders of the Subordinated Notes could be satisfied or, if
any such assets remain, such assets might be insufficient to
satisfy such claims fully.
POSSIBLE UNENFORCEABILITY OF The only claims that the Holders of the Subordinated Notes
SUBSIDIARY GUARANTIES have against the Guarantor Subsidiaries are the claims
created by the Subsidiary Guarantees. In the event of the
The only claims that the Holders bankruptcy of a Guarantor Subsidiary, the Subsidiary
of the Subordinated Notes have Guarantees may be subject to legal challenges, and if such
against the Guarantor challenges were successful, the Subsidiary Guarantees would
Subsidiaries are be unenforceable. If the Subsidiary Guarantees are not
enforceable, then upon the liquidation, bankruptcy,
reorganization or
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the claims created by the otherwise of a Guarantor Subsidiary, other creditors of that
Subsidiary Guarantees, and in Guarantor Subsidiary may be entitled to receive assets of
the event of the bankruptcy of a the Guarantor Subsidiary before the Holders of the
Subsidiary Guarantor, such Subordinated Notes receive any such assets.
Subsidiary Guarantees may be
unenforceable.
RESTRICTIVE LOAN COVENANTS UNDER Iridium's guaranteed bank facility, the secured bank
OTHER INDEBTEDNESS facility and the indentures relating to senior notes include
certain covenants that, among other things, restrict the
Iridium is subject to certain ability of Iridium and its subsidiaries to:
restrictive covenants on its - dispose of assets;
operations. If these covenants are - incur additional indebtedness;
breached, payment of Iridium's - incur or guarantee obligations;
bank facilities, senior notes and - prepay other indebtedness or amend other debt instruments;
other debt may be accelerated. - pay dividends;
- create liens on assets;
- make investments, loans or advances;
- make acquisitions;
- engage in mergers or consolidations;
- change the business conducted by Iridium; or
- engage in certain transactions with affiliates and
otherwise will restrict certain corporate activities.
In addition, the secured bank facility contains a total debt
to capital ratio covenant and a covenant to maintain
committed or available funding sources through the term of
the secured bank facility to meet Iridium's budgeted project
costs. If Iridium does not meet these requirements, the
holders of the indebtedness under the guaranteed bank
facility and secured bank facility, or the holders of the
senior notes (after a payment default or an acceleration of
any such bank facility), will be entitled to declare that
indebtedness immediately due and payable. Future debt
instruments may contain additional or different financial
and operating covenants.
FRAUDULENT TRANSFER CONSIDERATIONS Under applicable provisions of the United States Bankruptcy
Code or comparable provisions of state law, if a court
If a court determines that a determines that a person, at the time it incurred an
Subsidiary Guarantee was issued in obligation:
certain specific circumstances, - did so with the intent to hinder, delay or defraud its
then the court could void or creditors; or
further subordinate that - received less than reasonably equivalent value or fair
Subsidiary Guarantee. consideration and either was insolvent, would become
insolvent because of the transaction, had unreasonably
small assets for its business, or intended to incur or
knew it was incurring debt beyond its ability to pay them,
then, the court could:
- void, in whole or in part, that obligation; or
- subordinate that obligation to existing and future
indebtedness of that person.
This risk should be considered prior to any reliance on a
Subsidiary Guarantee since the applicable Guarantor
Subsidiary is not expected to receive any proceeds from the
offering of Subordinated Notes it guarantees, and therefore
that Guarantor Subsidiary may not be viewed as having
received "reasonably equivalent value" or "fair
consideration"
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for its Subsidiary Guarantee. In addition, it is likely that
any Guarantor Subsidiary will have guaranteed a significant
amount of other debt incurred by Iridium, and the aggregate
amount of the guaranteed debt may exceed the fair value of
its assets.
ABSENCE OF A PUBLIC MARKET Moreover, unless stated in a prospectus supplement, we do
not intend to apply for listing of the Subordinated Notes on
We do not expect there to be any any securities exchange or for quotation through the NASDAQ.
market for a series of Therefore, there is a risk that no market for the
Subordinated Notes at the time Subordinated Notes may develop. If an active public market
that the series is issued. If a does not develop, you may have difficulty selling the
market does not develop, you may Subordinated Notes at all or at a price you deem sufficient.
have difficulty reselling any
Subordinated Note.
------------------------------------------------------------
[To be included in the Class A Common Stock prospectus]
RISKS OF THE CLASS A COMMON STOCK
DIVIDEND POLICY Because IWCL's sole asset is its Class 1 Membership
Interests in Iridium LLC, it would receive revenue only if
IWCL is unlikely to pay any Iridium LLC paid dividends or distributions on its Class 1
dividends on the Class A Common Membership Interests. However, Iridium LLC:
Stock for the foreseeable - has never made distributions on its Class 1 Membership
future. Interests;
- does not anticipate paying any dividends or distributions
until Iridium has demonstrated a positive operating cash
flow for a significant period of time; and
- is effectively restricted under certain of Iridium's debt
covenants from receiving any dividends from Iridium that it
could distribute to holders of its Class 1 Membership
Interests. Those covenants are likely to be in effect long
after Iridium achieves a positive operating cash flow.
You should note that:
- IWCL has never declared or paid any dividends on its Class
A Common Stock or non-voting Class B Common Stock; and
- IWCL will be unable to pay or declare any dividends on its
capital stock until it receives distributions on its Class 1
Membership Interests from Iridium LLC, which is unlikely
until long after Iridium achieves a positive operating
cash flow.
THE PRICE OF CLASS A COMMON STOCK Sales of substantial amounts of Class A Common stock in the
MAY DECLINE DUE TO SHARES ELIGIBLE market, or the market's belief that substantial sales could
FOR FUTURE SALE occur, may cause the price of Class A Common Stock to
decline for a variety of reasons, including that those sales
Future sales of Class A Common may:
Stock could adversely affect the - increase the supply of shares in the marketplace when
market price of Class A Common there is no offsetting increase in demand;
Stock. There are many - be perceived by the market as a signal that IWCL shares
were too highly priced; and
- reduce ("dilute") the indirect equity interest in Iridium
LLC represented by each share of Class A Common Stock.
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circumstances under which In addition to the adverse effect a price decline could have
substantial sales of Class A on holders of Class A Common Stock, that decline would
Common Stock could occur. likely impede the ability of IWCL to raise capital to fund
the construction and operation of the Iridium System through
the issuance of additional Class A Common Stock or other
equity securities.
IWCL has issued Class A Common Stock, warrants to purchase
Class A Common Stock ("Warrants") and Class B Common Stock.
With the proceeds received by IWCL from the issuance of each
share of Class A Common Stock and Class B Common Stock, IWCL
has purchased one Class 1 Membership Interest in Iridium
LLC, and with the proceeds received by IWCL from the
issuance of the Warrants, IWCL has purchased a warrant from
Iridium LLC that operates so that, when a Warrant is
exercised, IWCL uses the proceeds received from the exercise
to purchase one Class 1 Membership Interest in Iridium LLC
for each share of Class A Common Stock issued upon exercise
of the Warrant.
At November 1, 1998, assuming all Warrants were exercised on
that date, there would have been 13,640,685 shares of Class
A Common Stock and 20,625 shares of Class B Common Stock
outstanding. IWCL is authorized to issue up to 50,000,000
shares of Class A Common Stock and 2,500,000 shares of Class
B Common Stock. These authorized amounts could be increased
under certain conditions.
Shares Eligible for Future Sale Upon Direction of
Iridium. IWCL has agreed with Iridium LLC in a contract
called the "Share Issuance Agreement" that, under certain
conditions, Iridium LLC can direct IWCL to sell shares of
Class A Common Stock (or other securities) and be required
to use the proceeds to purchase Class 1 Membership Interests
(or other securities) in Iridium LLC.
Shares Eligible for Future Sale Upon Conversion of Class 1
Membership Interests in Iridium. IWCL has agreed with
Iridium LLC in a contract called the "Interest Exchange
Agreement" that, under certain conditions, it will exchange
shares of Class A Common Stock for Class 1 Membership
Interests in Iridium LLC at the rate of one share of Class A
Common Stock for each Class 1 Membership Interest and will
register those shares of Class A Common Stock for sale with
the Securities and Exchange Commission. Holders of Class 1
Membership Interests are not permitted to exchange their
Class 1 Membership Interests for shares of Class A Common
Stock prior to the day that is 90 days after the first
fiscal quarter in which Iridium achieves positive earnings
before interest, taxes, depreciation and amortization. In
addition, no exchanges will be permitted unless they are
approved by at least 66 2/3% of the Iridium LLC Board. Based
upon the number of Class 1 Membership Interests outstanding
at November 1, 1998, a maximum of 12,179,485 shares of Class
A Common Stock would be issuable upon such exchange. If all
Class 1 Membership Interests which could be issuable in the
future based upon warrants, options and convertible
securities outstanding on November 1, 1998 and other
outstanding commitments to members of Iridium (excluding
certain reserve commitments to purchase Class 1 Membership
Interests by strategic investors in Iridium and potential
warrants issuable to Motorola for guaranteeing indebtedness
that has not yet been incurred) are
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considered, a maximum of 16,115,157 shares of Class A Common
Stock would be issuable upon such exchange.
Shares Eligible for Future Sale Upon Conversion of Class B
Common Stock. IWCL has authorized the issuance of up to
2,500,000 shares of Class B Common Stock, and, at November
1, 1998, had issued 20,625 shares of Class B Common Stock in
connection with Iridium's NOMAD program for promoting the
authorization and use of the Iridium System by governments.
These shares of Class B Common Stock will be exchangeable
for Class A Common Stock on a share for share basis after
the satisfaction of certain conditions, but in no event
earlier than one year after they have been fully paid for by
their purchaser.
Shares Eligible for Future Sale Upon Exercise of Options
Granted Under the Iridium Option Plan. Under the Iridium
Option Plan, employees and outside directors of Iridium LLC
may be granted stock options that are exercisable for shares
of Class A Common Stock. The exercise price of each option
is the fair market value of a share of the Class A Common
Stock on the date the option was granted. A committee of the
Iridium LLC Board of Directors administers the plan and may
establish the terms of the option grants, including the
number of shares for which an option may be exercised, the
term of the option (up to ten years), the vesting schedule,
and other terms and conditions. 5,544,315 shares of Class A
Common Stock remain eligible for issuance under the Iridium
Option Plan. As of November 1, 1998, 2,474,472 options were
outstanding, of which 745,273 were exercisable.
RISK THAT IWCL'S INTEREST IN IWCL will use the proceeds from the issuance of each share
IRIDIUM LLC WILL BE DILUTED AND of Class A Common Stock to purchase one Class 1 Membership
THAT THE CORRESPONDING INDIRECT Interest in Iridium LLC (this one-to-one ratio is subject to
INTEREST THAT INVESTORS IN CLASS A anti-dilution adjustment in the event of a stock split or
COMMON STOCK HAVE IN IRIDIUM LLC certain other transactions). Accordingly, the interest in
WILL BE DILUTED Iridium LLC that IWCL purchases with the proceeds of its
offering of Class A Common Stock (and the corresponding
A Class A Common Stock indirect interest in Iridium LLC of investors in the Class A
investor's indirect interest in Common Stock) will be diluted whenever new Class 1
Iridium LLC will be diluted by Membership Interests are sold at a price that is below the
any sales of new Iridium LLC price paid by IWCL for the Class 1 Membership Interests.
Class 1 Membership Interests at
a price below the price paid by At November 1, 1998 there were outstanding:
the investor. Iridium LLC has - warrants to purchase 4,997,281 Class 1 Membership
substantial commitments to sell Interests at $.00013 per Class 1 Membership Interest issued
new Class 1 Membership Interests in connection with the issuance and sale of Iridium's
at prices that are substantially 14 1/2% Senior Subordinated Notes due 2006;
below the price of Class A - 44,936 Series A Class 2 Interests that convert into
Common Stock. 831,772 Class 1 Membership Interests without any additional
cash investment; and
- a currently exercisable warrant to purchase up to the
number of Series M Convertible Class 2 Interests that would
be convertible into 2.5% of the number of outstanding
Class 1 Membership Interests on the date of exercise,
calculated on a fully diluted basis, at the equivalent of
$13.33 per underlying Class 1 Membership Interest.
In addition to the warrants described above, under its
credit support arrangements with Motorola, Iridium LLC has a
continuing obligation to issue warrants to Motorola for so
long as Motorola has guaranteed
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borrowings of Iridium LLC or any of its subsidiaries under
certain credit facilities. Through November 1, 1998, under
these arrangements, Motorola had earned warrants to purchase
7,772,923 Class 1 Membership Interests at a purchase price
of $.00013 per Class 1 Membership Interest. It is likely
that Motorola will earn substantial additional warrants in
the future for providing credit support for the construction
and operation of the Iridium System.
The Iridium Board also has authorized the issuance of
warrants to purchase up to 9,165,000 Class 1 Membership
Interests at a purchase price of $.00013 per Class 1
Membership Interest to gateway owners and to Motorola based
on satisfaction of certain performance criteria relating to
the construction and implementation of gateways and gateway
services.
Up to 18,206,550 Class 1 Membership Interests may be issued
to existing investors in Iridium LLC at a purchase price of
$13.33 per Class 1 Membership Interest pursuant to their
various commitments to purchase additional Class 1
Membership Interests under certain circumstances.
VOLATILITY The market price of the Class A Common Stock has been
volatile. The trading prices for the common stock of many
The trading price of the Class A technology companies like IWCL and Iridium have experienced
Common Stock has been volatile extreme price and volume fluctuations, which have at times
and may continue to be volatile been unrelated to their operating performance. Factors that
in the future. could have a significant effect on the price of the Class A
Common Stock include:
- announcements of fluctuations in Iridium's or its
competitors' operating results;
- variations in Iridium's prospects and operating results;
- delays in obtaining service providers or regulatory
approvals in particular countries;
- satellite anomalies;
- general conditions in the telecommunications industry; and
- market conditions for growth stocks or technology stocks
in general.
RISKS ASSOCIATED WITH IWCL is a Bermuda company. IWCL's Bermuda legal counsel has
INCORPORATION UNDER BERMUDA LAW advised IWCL that uncertainty exists about whether Bermuda
courts will:
Bermuda law does not permit you - enforce judgments obtained in other jurisdictions
to sue IWCL for securities law (including the United States) against IWCL or its officers
claims, and you may not be able or directors under the securities laws of those
to enforce a U.S. court's jurisdictions; or
judgment against IWCL. - entertain actions in Bermuda against IWCL or its officers
or directors under the securities laws of other
jurisdictions.
There is no treaty in effect between the United States and
Bermuda providing for enforcement of U.S. judgments. In
addition, there are grounds upon which Bermuda courts may
refuse to enforce judgments of U.S. courts, and certain
remedies available under the U.S. federal securities laws
would not be allowed in Bermuda courts, as they may be
contrary to Bermuda's public policy.
RISK OF LOSS OF MANAGEMENT RIGHTS Under Iridium LLC's Limited Liability Company Agreement,
UPON CHANGE IN IWCL has certain special rights including:
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CONTROL - the right to designate two members of the Iridium LLC
Board of Directors, one of whom will act as a Vice Chairman
IWCL could lose its special of Iridium LLC; and
management rights in Iridium if - the right to approve certain significant transactions
there is change in control of involving Iridium LLC.
IWCL.
Iridium LLC will have the right to terminate these special
rights following an IWCL change in control, which includes
circumstances in which:
- an entity other than Iridium LLC becomes the beneficial
owner of more than 30% of IWCL's outstanding common stock; or
- there is a change in a majority of the members of IWCL's
Board of Directors over a two year period that is not
approved by a vote of 66 2/3% of the members of the IWCL
Board then still in office who were directors at the
beginning of the two year period or whose election or
nomination for election was previously so approved.
As a result of these provisions, holders of Class A Common
Stock may effectively be precluded from replacing a majority
of the IWCL Board, which initially consisted of directors
selected by Iridium.
RISKS RELATED TO PASSIVE FOREIGN Whether IWCL is or is not a passive foreign investment
INVESTMENT COMPANY RULES company ("PFIC") is relevant to you only if you hold a share
of Class A Common Stock and you are:
If IWCL is treated as a PFIC, - a citizen or resident of the United States;
then any gain that you recognize - a domestic partnership or corporation;
on the sale of your shares of - an estate, the income of which is subject to United States
Class A Common Stock and federal income tax without regard to its source; or
distributions you receive in - a trust, if a court within the United States is able to
respect of your shares of Class exercise primary supervision over the administration of the
A Common Stock may be subject to trust and one or more United States persons have the
greater tax liability. authority to control all substantial decisions of the
trust.
Generally, if IWCL were treated as a PFIC for any taxable
year during which you held a share of Class A Common Stock,
the entire gain you recognize on a disposition of the share
would be allocated ratably to each day in your holding
period for the share. For example, if you acquired a share
of Class A Common Stock on January 1, 1998 for $100 and sold
the share on December 31, 1999 for $200, $50 of the gain
would be allocated to 1998 and $50 of the gain would be
allocated to 1999. The amounts allocated to the taxable year
of disposition and to any year before IWCL became a PFIC
would be taxed as ordinary income. The amount allocated to
each other taxable year would be subject to tax at the
highest applicable ordinary income rate in effect for such
taxable year, and an interest charge would be imposed on the
amount allocated to such taxable year. Continuing with the
previous example, the $50 of gain allocated to 1999 would be
taxed as ordinary income, the $50 of gain allocated to 1998
would be taxed at the highest ordinary income tax rates
applicable in 1998, and interest would be charged on the tax
on the gain allocated to 1998. All the tax and interest
would be included in your U.S. federal income tax liability
for the taxable year in which the disposition took place.
Further, any distribution in respect of shares of Class A
Common Stock in excess of 125 percent of the average of the
annual distributions on shares of Class A Common Stock you
received
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during the shorter of the preceding three years or the
portion of your holding period before the current taxable
year would be subject to taxation as described above. For
example, if you purchased a share of Class A Common Stock in
1998 and received distributions in respect of the share of
$10 in 1998, and $15 in 1999, $2.50 of the distribution
would be allocated, taxed and charged interest in the manner
described above. You could avoid these consequences by
electing to include on a current basis your share of IWCL's
ordinary earnings and net capital gain for each taxable
year, or by electing to mark-to-market your Class A Common
Stock at the end of each taxable year. IWCL currently
intends to provide upon request the information necessary
for you to be able to elect to include on a current basis
your share of IWCL's ordinary earnings and net capital gain
for each taxable year.
Under the PFIC rules, IWCL will generally be a PFIC in any
taxable year in which either at least 75 percent of its
gross income is "passive income" or at least 50 percent of
its assets are "passive assets." "Passive income" is
generally income derived from sources other than an active
trade or business; "passive assets" are assets that produce
or are held for the production of passive income. This
discussion assumes that IWCL should, under current law, be
treated for the purposes of determining IWCL's passive
income and passive assets as owning its share of Iridium's
gross assets and as earning directly its share of Iridium's
gross income; IWCL would be a PFIC if it were not permitted
to be treated in this manner. The determination of whether
IWCL is a PFIC must be made annually based upon the
composition of the income and assets of IWCL, Iridium and
any corporation in which IWCL or Iridium holds a
25-percent-or-more interest. IWCL does not currently believe
that it is a PFIC nor does it expect to become a PFIC;
however, there can be no assurance that IWCL will not be
considered a PFIC for any taxable year. Furthermore, if IWCL
were determined to be a PFIC in 1998, IWCL would be
considered a PFIC for 1997 as well.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Registrants in connection with the offering of the securities registered hereby,
other than underwriting discounts and commissions. All the amounts shown are
estimates, except the SEC registration fee:
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<S> <C>
SEC registration fee........................................ $208,925
NASD filing fee............................................. 30,500
Nasdaq National Market listing fees......................... 30,500
Printing costs.............................................. 75,000
Legal fees and expenses..................................... 350,000
Trustee's and transfer agent's fees......................... 15,000
Blue Sky fees and expenses (including legal fees)........... 10,000
Accounting fees and expenses................................ 50,000
Miscellaneous fees and expenses............................. 150,000
--------
Total....................................................... $919,925
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Iridium World Communications Ltd. ("IWCL") is a Bermuda Corporation.
Bermuda law permits a company to indemnify its directors and officers, except
for any act of willful negligence, willful default, fraud or dishonesty. IWCL
has provided in its Bye-Laws that its directors and officers will be indemnified
and held harmless against any expenses, judgments, fines, settlements and other
amounts incurred by reason of any act or omission in the discharge of their
duty, other than in the case of fraud or dishonesty. Bermuda law and the
Bye-Laws of IWCL also permit the purchase of insurance for the benefit of its
directors and officers against any liability incurred by them for the failure to
exercise the requisite care, diligence and skill in the exercise of their powers
and the discharge of their duties, or indemnify them in respect of any loss
arising or liability incurred by them by reason of negligence, default, breach
of duty or breach of trust. Iridium LLC ("Iridium") and Iridium Operating LLC
("Operating") have entered into indemnification arrangements with IWCL for the
benefit of IWCL's officers and directors. To the extent permitted by law, these
indemnification arrangements may require Iridium and Operating, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as officers and directors of
IWCL (other than liabilities arising from willful misconduct of a culpable
nature) and to advance their expenses incurred as a result of any proceedings
against them as to which they could be so indemnified.
Pursuant to the respective LLC Agreements, each of the Iridium, Operating,
Iridium Roaming LLC and Iridium IP LLC (collectively, the "LLC Registrants") has
agreed to indemnify any person against all expenses (including attorneys' fees)
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action brought by such LLC Registrant), in which such person is made a party
by reason of his being or having been an officer or director of such other
Registrant or is or was serving or having served at such other Registrant's
request as a manager, director, officer, employee, fiduciary or agent of another
limited liability company or of a corporation, partnership, joint venture, trust
or other enterprise, if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of such person
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe such person's conduct was unlawful.
Iridium Capital Corporation ("Capital") and Iridium Facilities Corporation
("Facilities") are Delaware corporations. Under Delaware General Corporation Law
(the "DGCL"), subject to the procedures and limitations stated therein, a
Delaware corporation may indemnify any person against expenses (including
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attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding in which such person is made a party by
reason of his being or having been a director, officer, employee or agent of the
Delaware corporation. The DGCL provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a person
may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise. The Certificates of Incorporation and
by-laws of each of Capital and Facilities provide for indemnification of the
directors and officers of such entities to the full extent permitted by the
Delaware General Corporation Law.
A directors' and officers' liability insurance policy is maintained for the
benefit of the directors and officers of each Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.
(b) Financial Statement Schedules:
The financial statement schedule of Iridium LLC is incorporated herein by
reference to the Form 10-K of IWCL, Iridium LLC, Operating and Operating's
subsidiaries for the fiscal year ended December 31, 1997. All other schedules
have been omitted because they are not applicable or not required or the
required information is included in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
(a) Each of the undersigned Registrants hereby undertakes:
(1) To file, during any period in which offers or sales of its
securities are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by a Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of such Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of a
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by a Registrant of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of any action,
suit or proceeding), is asserted by such director, officer or controlling person
in connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) Each of the undersigned Registrants hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by such Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under section
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of the
Registrants has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Washington, District of Columbia, on November 6, 1998.
IRIDIUM WORLD COMMUNICATIONS LTD.
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
Chairman and Chief Executive Officer
IRIDIUM LLC
By: /s/ ROBERT W. KINZIE
------------------------------------
Robert W. Kinzie
Chairman
IRIDIUM OPERATING LLC
By: /s/ ROBERT W. KINZIE
------------------------------------
Robert W. Kinzie
Chairman
IRIDIUM CAPITAL CORPORATION
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
Chairman
IRIDIUM FACILITIES CORPORATION
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
Chairman
IRIDIUM ROAMING LLC
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
acting chief executive officer
IRIDIUM IP LLC
By: /s/ EDWARD F. STAIANO
------------------------------------
Edward F. Staiano
acting chief executive officer
II-4
<PAGE> 56
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Director of IWCL, Capital and November 6, 1998
- ------------------------------------------------ Facilities and Chairman of
Robert W. Kinzie Iridium LLC and Operating
* Chairman and Chief Executive November 6, 1998
- ------------------------------------------------ Officer of IWCL, Capital and
Edward F. Staiano Facilities, Vice Chairman and
Chief Executive Officer of
Iridium LLC and Operating, and
acting chief executive officer of
IP and Roaming
* Vice President and Chief November 6, 1998
- ------------------------------------------------ Financial Officer of Iridium LLC,
Roy Grant IWCL and Operating, Chief
Financial Officer of Capital and
Facilities, and acting chief
financial officer of IP and
Roaming
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Aburizal Bakrie
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Hasan M. Binladin
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Gordon J. Comerford
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Atilano de Oms Sobrinho
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Robert A. Ferchat
Deputy Chairman and Director of November , 1998
- ------------------------------------------------ IWCL and Director of Iridium LLC
Alberto Finol and Operating
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Edward Gams
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Durrell Hillis
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Kazuo Inamori
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
S. H. Khan
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Anatoly I. Kiselev
* Director of IWCL, Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Richard L. Lesher
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
John F. Mitchell
</TABLE>
II-5
<PAGE> 57
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Jung L. Mok
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Giuseppe Morganti
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
J. Michael Norris
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Yusai Okuyama
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
John A. Richardson
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Theodore H. Schell
* Director of IWCL, Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
William A. Schreyer
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Sribhumi Sukhanetr
* Director of Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Tao-Tsun Sun
* Director of IWCL, Iridium LLC and November 6, 1998
- ------------------------------------------------ Operating
Yoshiharu Yasuda
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Wang Mei Yue
Director of Iridium LLC and November , 1998
- ------------------------------------------------ Operating
Peter Zaboji
</TABLE>
*By: /s/ F. THOMAS TUTTLE
-------------------------------
F. Thomas Tuttle
Attorney-in-Fact
II-6
<PAGE> 58
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<S> <C>
1.1 Form of Class A Common Stock Underwriting Agreement.***
1.2 Form of Subordinated Notes Underwriting Agreement.***
4.1 Form of Class A Common Stock Certificate: Incorporated by
reference to Exhibit 4.1 of the Form S-1 of IWCL and Iridium
LLC (Registration Nos. 333-23419 and -01).
4.2 Form of Indenture.*
4.3 Form of Subordinated Note: Contained in Exhibit 4.2.*
5.1 Opinion of Conyers Dill & Pearman.*
5.2 Opinion of Sullivan & Cromwell.*
12 Statement re computation of ratios.*
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Conyers Dill & Pearman: Contained in Exhibit
5.1.*
23.3 Consent of Sullivan & Cromwell: Contained in Exhibit 5.2.*
24 Power of Attorney.**
25 Statement of eligibility of trustee on Form T-1.***
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
*** To be filed on Form 8-K and incorporated by reference herein.
<PAGE> 1
===============================================================================
IRIDIUM OPERATING LLC
IRIDIUM CAPITAL CORPORATION
as Issuers
TO
[TRUSTEE]
as Trustee
______________
INDENTURE
Dated as of ___________, 1998
______________
================================================================================
<PAGE> 2
............................................
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 608
610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 701
702
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 702
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 702
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 703
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 703
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . 101
1004
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
- -------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE ISSUERS AND THE SUBSIDIARY GUARANTORS . . . . . . . . . . . . . . . . . 1
</TABLE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<TABLE>
<S> <C> <C>
SECTION 101. Definitions:
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate; control . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 3
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . 4
Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuers' Request; Issuers' Order . . . . . . . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C> <C>
Original Issue Discount Security . . . . . . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Payment Blockage Period . . . . . . . . . . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Securities Payment . . . . . . . . . . . . . . . . . . . . . . . . . 7
Security Register and Security Registrar . . . . . . . . . . . . . . 7
Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Senior Nonmonetary Default . . . . . . . . . . . . . . . . . . . . . 7
Senior Payment Default . . . . . . . . . . . . . . . . . . . . . . . 7
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . 7
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary Guarantees . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . . . . 8
Subsidiary Guarantor Payment . . . . . . . . . . . . . . . . . . . . 8
Subsidiary Guarantor Proceeding . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
U.S. Government Obligation . . . . . . . . . . . . . . . . . . . . . 8
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Wholly Owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . 9
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . 9
SECTION 104. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. Notices, Etc., to Trustee and Issuers . . . . . . . . . . . . . . . . 12
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . 12
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . 13
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 110. Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . 13
SECTION 111. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 112. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 113. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 114. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE TWO
SECURITY AND SUBSIDIARY GUARANTEE FORMS
<S> <C> <C>
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . 16
SECTION 204. Form of Legend for Global Securities . . . . . . . . . . . . . . . . 21
SECTION 205. Form of Trustee's Certificate of Authentication . . . . . . . . . . . 21
SECTION 206. Form of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . 24
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . 27
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . 30
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . 31
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . 33
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . 36
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . 37
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . 38
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . 39
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
-iii-
<PAGE> 6
<TABLE>
<S> <C>
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . 40
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . 40
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . 40
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 515. Waiver of Usury, Stay or Extension Laws . . . . . . . . . . . . . . . 41
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . 42
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . 43
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . 44
SECTION 608. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . 45
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . 45
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . 46
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 613. Preferential Collection of Claims Against the Issuers . . . . . . . . 48
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . 48
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUERS
SECTION 701. Issuers to Furnish Trustee Names and Addresses
of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 702. Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 704. Reports by Issuers . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Issuers May Consolidate, Etc., Only on
Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 802. Mergers, Consolidations and Certain Sales of Assets by
Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 803. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
-iv-
<PAGE> 7
<TABLE>
<CAPTION>
ARTICLE NINE
SUPPLEMENTAL INDENTURES
<S> <C> <C>
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . 53
SECTION 902. Supplemental Indentures With Consent of Holders . . . . . . . . . . . 54
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . 55
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . 55
SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . 56
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . 56
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . 56
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . 56
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . . . . 57
SECTION 1004. Statement by Officers as to Default . . . . . . . . . . . . . . . . . 58
SECTION 1005. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1006. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1007. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . 59
SECTION 1008. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . 59
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . 60
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . 61
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . . . . . . 62
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . 63
</TABLE>
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ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
<TABLE>
<S> <C> <C>
SECTION 1301. Issuers' Option to Effect Defeasance or
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1302. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . 64
SECTION 1305. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions . . . . . . . . . . 66
SECTION 1306. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
<S> <C> <C>
SECTION 1401. Securities Subordinate to Senior Debt . . . . . . . . . . . . . . . . . 67
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . . 67
SECTION 1403. No Payment When Senior Debt in Default . . . . . . . . . . . . . . . . . 69
SECTION 1404. Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . . 70
SECTION 1405. Subrogation to Rights of Holders of Senior Debt . . . . . . . . . . . . 70
SECTION 1406. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . 70
SECTION 1407. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . 71
SECTION 1408. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . 71
SECTION 1409. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 1410. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . 72
SECTION 1411. Trustee Not Fiduciary for Holders of Senior Debt . . . . . . . . . . . . 73
SECTION 1412. Rights of Trustee as Holder of Senior Debt; Preservation
of Trustee's Rights . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 1413. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . 73
SECTION 1414. Defeasance of this Article Fourteen . . . . . . . . . . . . . . . . . . 73
SECTION 1415. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE FIFTEEN
SUBSIDIARY GUARANTEE
SECTION 1501. Subsidiary Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 1502. Execution and Delivery of Subsidiary Guarantees . . . . . . . . . . . 77
SECTION 1503. Release of Subsidiary Guarantors . . . . . . . . . . . . . . . . . . 77
ARTICLE SIXTEEN
SUBORDINATION OF SUBSIDIARY GUARANTEES
SECTION 1601. Subsidiary Guarantees Subordinate to Senior Debt . . . . . . . . . . 78
SECTION 1602. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . . . . . . 78
SECTION 1603. No Payment When Senior Debt of the Issuers in Default . . . . . . . . 80
SECTION 1604. Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . 80
SECTION 1605. Subrogation to Rights of Holders of Senior Debt of
a Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . 80
SECTION 1606. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . 81
SECTION 1607. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . 81
SECTION 1608. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . 82
SECTION 1609. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 1610. Reliance on Judicial Order or Certificate of Liquidating Agent . . . 83
SECTION 1611. Trustee Not Fiduciary for Holders of Senior Debt of
the Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . 83
SECTION 1612. Rights of Trustee as Holder of Senior Debt of the
Subsidiary Guarantors; Preservation of Trustee's Rights . . . . 84
SECTION 1613. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . 84
</TABLE>
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<PAGE> 10
<TABLE>
<S> <C>
SECTION 1614. Defeasance of this Article Sixteen . . . . . . . . . . . . . . . . . 84
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
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<PAGE> 11
INDENTURE, dated as of ___________, 1998, among Iridium Operating LLC, a
limited liability company duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
1575 Eye Street, N.W., Washington, D.C. 20005, Iridium Capital Corporation, a
corporation duly organized and existing under the laws of the State of Delaware
("Iridium Capital" and together with the Company, the "Issuers"), each of the
Subsidiary Guarantors (as hereinafter defined), and [Trustee], a [State] bank
and trust company duly organized and existing under the laws of [State], as
Trustee (herein called the "Trustee").
RECITALS OF THE ISSUERS AND THE SUBSIDIARY GUARANTORS
Each of the Issuers has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.
All things necessary to make the Guarantees (as hereinafter defined) of each
Subsidiary Guarantor, if endorsed on any Securities, valid agreements of such
Subsidiary Guarantor, and to make this Indenture a valid agreement of each of
the Issuers and each of the Subsidiary Guarantors in accordance with its terms,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by
the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of this instrument;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means, with respect to either Issuer, either the
board of directors of such Issuer or any duly authorized committee of such
board, and with respect to any Subsidiary Guarantor, either the board of
directors of such Subsidiary Guarantor or any duly authorized committee of that
board.
"Board Resolution" means, with respect to either Issuer or a Subsidiary
Guarantor, a copy of a resolution certified by the Secretary or an Assistant
Secretary of the applicable
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<PAGE> 13
Issuer or such Subsidiary Guarantor, as the case may be, to have been duly
adopted by the Board of Directors of such Issuer or such Subsidiary Guarantor,
as the case may be, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law or executive order to close.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of equity interests of
such Person.
"Commission" means the Securities and Exchange Commission, 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 Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture and thereafter "Company" shall mean
such successor Person.
"Corporate Trust Office" means the principal office of the Trustee, at
which at any particular time its corporate trust business shall be administered.
"corporation" means a corporation, association, limited liability
company, limited liability partnership, company, joint-stock company,
partnership or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), and (v) every obligation of the type referred to in clauses (i)
through (iv) of another Person and all dividends of another Person the payment
of which, in either case, such Person has Guaranteed or for which such Person
is responsible or liable, directly or indirectly, jointly or severally, as
obligor, Guarantor or otherwise.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
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<PAGE> 14
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Debt, or dividends or distributions on any
equity security, of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purpose of assuring
the holder of such Debt of the payment of such Debt or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Debt (and "Guaranteed," "Guaranteeing" and "Guarantor" shall have meanings
correlative to the foregoing); provided, however, that the Guarantee by any
Person shall not include endorsements by such Person for collection or deposit,
in either case, in the ordinary course of business.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
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<PAGE> 15
"Issuers" means the Persons named as the "Issuers" in the first paragraph
of this instrument until a successor Person or Persons shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Issuers" shall mean such successor Person or Persons.
"Issuers' Request" or "Issuers' Order" means a written request or order
signed in the name of each of the Issuers by its Chairman of the Board, its
Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the applicable Issuer, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the applicable Issuer.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for either Issuer, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for
an amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than an Issuer) in trust or set aside and segregated in trust by an
Issuer (if an Issuer shall act as its own Paying Agent) for the Holders of
such Securities; provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to
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<PAGE> 16
this Indenture, other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such Securities
are valid obligations of the Issuers;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount
of the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by an Issuer or any other obligor upon the Securities or any Affiliate of
an Issuer or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent, waiver or other action, only Securities which the Trustee knows to be
so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not an Issuer or any other obligor upon the
Securities or any Affiliate of an Issuer or of such other obligor.
"Paying Agent" means any Person authorized by the Issuers to pay the
principal of or any premium or interest on any Securities on behalf of the
Issuers.
"Payment Blockage Period" has the meaning specified in Section 1403.
"Person" means any individual, corporation, limited liability company or
limited liability partnership, partnership, joint venture, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
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<PAGE> 17
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this
instrument, and more particularly means any Securities authenticated and
delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Payment" has the meaning specified in Section 1402.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Debt" of any Person means the principal, any premium and interest
on, and other amounts due with respect to, all the Debt of that Person, whether
such Debt exists now or is created, incurred or assumed after the date of this
Indenture. Senior Debt also includes any amendment, renewal replacement,
extension, modification and refunding of any Debt that itself was Senior Debt.
Senior Debt does not include Iridium's 14 1/2% Senior Subordinated Notes due
2006, the Subordinated Notes, or any Debt that expressly states in the
instrument creating or evidencing it that it does not rank senior in right of
payment to the Subordinated Notes.
"Senior Nonmonetary Default" has the meaning specified in Section 1403.
"Senior Payment Default" has the meaning specified in Section 1403.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
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"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such instalment of principal or interest is due and payable.
"Subsidiary" of any Person means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more other Subsidiaries of such Person. For the purposes of this
definition, "voting stock" means stock which ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"Subsidiary Guarantees" means the Guarantees of each Subsidiary Guarantor,
in the form set forth in Section 206 and as provided in Article Fifteen.
"Subsidiary Guarantor" means each of (i) Iridium Roaming LLC, a
Delaware limited liability corporation, Iridium IP LLC, a Delaware limited
liability corporation, and Iridium Facilities Corporation, a Delaware
corporation; (ii) any successor of any of the foregoing; and (iii) any
Subsidiary of the Company which is specified in a duly authorized, executed and
delivered supplemental indenture relating to one or more series of Securities
issued hereunder, until such Subsidiary Guarantor ceases to be such in
accordance with Section 1603 hereof.
"Subsidiary Guarantor Payment" has the meaning specified in Section 1602.
"Subsidiary Guarantor Proceeding" has the meaning specified in Section
1602.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that
in the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder, and if at any time
there is more than one such Person, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Issuers 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 "vice president".
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock or other ownership interests
of such Subsidiary (other than directors' qualifying shares or investments by
foreign nationals mandated by applicable law) by such Person or one or more
Wholly Owned Subsidiaries of such Person or any combination of the foregoing.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by either of the Issuers to the Trustee
to take any action under any provision of this Indenture, each Issuer shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by an officer of an
Issuer, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (except for certificates provided
for in Section 1004) shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, 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
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of an Issuer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of an Issuer stating that the
information with respect to such factual matters is in the possession of the
Issuers, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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<PAGE> 20
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to one or both of
the Issuers (as specified). Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Issuers, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or either Issuer
in reliance thereon, whether or not notation of such action is made upon such
Security.
The Issuers may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Issuers may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities of such
series on such
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<PAGE> 21
record date. Nothing in this paragraph shall be construed to prevent the
Issuers from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be canceled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Issuers,
at their own expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Trustee
in writing and to each Holder of Securities of the relevant series in the
manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Issuers' expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Issuers in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard
to all or any part of the principal amount of such Security or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
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<PAGE> 22
SECTION 105. Notices, Etc., to Trustee and Issuers.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by an Issuer or any Subsidiary
Guarantor shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office; or
(2) either Issuer or any Subsidiary Guarantor by the Trustee or by
any Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to it at the address of the Company's principal office specified in
the first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by it.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. 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, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
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<PAGE> 23
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by an Issuer or any
Subsidiary Guarantor shall bind its successors and assigns, whether so
expressed or not.
SECTION 110. Joint and Several Liability.
Each of the Issuers shall be jointly and severally liable for the
obligations of the Issuers hereunder and under the Securities.
SECTION 111. Separability Clause.
In case any provision in this Indenture or in the Securities or any
Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 112. Benefits of Indenture.
Nothing in this Indenture, in the Securities or in the Subsidiary
Guarantees, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the holders of Senior Debt and the
Holders, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 113. Governing Law.
This Indenture, the Securities and the Subsidiary Guarantees shall be
governed by and construed in accordance with the law of the State of New York.
SECTION 114. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities (other than a provision of any Security which specifically states
that such provision shall apply in lieu of this Section)) payment of interest
or principal (and premium, if any) need not be made at such Place of Payment on
such date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity.
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<PAGE> 24
ARTICLE TWO
SECURITY AND SUBSIDIARY GUARANTEE FORMS
SECTION 201. Forms Generally.
The Securities of each series and any Subsidiary Guarantees to be
endorsed thereon, if the Board Resolution or supplemental indenture
establishing the terms of any Security provides that such Security is to be
guaranteed by one or more Subsidiary Guarantors, shall be in substantially the
forms set forth in this Article, or in such other form as shall be established
by or pursuant to a Board Resolution or in one or more indentures supplemental
hereto, in each case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities or Subsidiary Guarantees,
as the case may be, as evidenced by their execution thereof. If the form of
Securities or Subsidiary Guarantees of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
applicable Issuer or Subsidiary Guarantor and delivered to the Trustee at or
prior to the delivery of the Issuers' Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The definitive Securities and Subsidiary Guarantees to be endorsed
thereon, if the Board Resolution or supplemental indenture establishing the
terms of any Security provides that such Security is to be guaranteed by one or
more Subsidiary Guarantors, 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 Securities or Subsidiary Guarantees, as the case
may be, as evidenced by their execution of such Securities or Subsidiary
Guarantees, as the case may be.
SECTION 202. Form of Face of Security.
IRIDIUM OPERATING LLC
IRIDIUM CAPITAL CORPORATION
[If the Security is guaranteed by one or more Subsidiary Guarantors,
insert -- GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
BY [A SUBSIDIARY] [CERTAIN SUBSIDIARIES] OF THE ISSUERS]
No. ......... $ ........
Iridium Operating LLC, a limited liability company duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), and
Iridium Capital Corporation, a corporation duly organized and existing under
the laws of Delaware (including any successor Person under the Indenture
hereinafter referred to, herein called "Iridium Capital" and together with the
Company, the "Issuers"), for value received,
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<PAGE> 25
hereby promise to pay to ..............................................., or
registered assigns, the principal sum of ........................... Dollars on
................................................................... [if the
Security is to bear interest prior to Maturity, insert -- , and to pay interest
thereon from ............. or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
............ and ............ in each year, commencing ........., at the rate
of ....% per annum, until the principal hereof is paid or made available for
payment [if applicable, insert -- , provided that any principal and premium,
and any such instalment of interest, which is overdue shall bear interest at
the rate of ...% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment, and such interest shall be payable on
demand]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ....... or ....... (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ....% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are
due until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the
rate of ......% per annum (to the extent that the payment of such interest on
interest shall be legally enforce able), from the date of such demand until the
amount so demanded is paid or made available for payment. Interest on any
overdue interest shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in ___________, __, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts [if applicable, insert --;
provided, however, that at the option of the Company payment of interest may
be made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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<PAGE> 26
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, each of the Issuers has caused this instrument to be
duly executed under its corporate seal.
Dated:
IRIDIUM OPERATING LLC
By:
---------------------------------
Attest:
- ---------------------------
Dated:
IRIDIUM CAPITAL CORPORATION
By:
---------------------------------
Attest:
- ---------------------------
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Issuers (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of [___________], 1998 (herein called
the "Indenture", which term shall have the meaning assigned to it in such
instrument), among the Issuers, the Subsidiary Guarantors and [Trustee], as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Issuers, any Subsidiary Guarantors, the Trustee,
the holders of Senior Debt and the Holders of the Securities and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof [if applicable,
insert -- , limited in aggregate principal amount to $...........].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt of the Company, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to
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<PAGE> 27
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert
- -- (1) on ........... in any year commencing with the year ...... and ending
with the year ...... through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time
[if applicable, insert -- on or after .........., 19..], as a whole or in part,
at the election of the Issuers, at the following Redemption Prices (expressed
as percentages of the principal amount): If redeemed [if applicable, insert --
on or before ..............., ...%, and if redeemed] during the 12-month period
beginning ............. of the years indicated,
<TABLE>
<S> <C> <C> <C>
Redemption Redemption
Year Price Year Price
---- ------------- ---- -------------
</TABLE>
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest instalments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ............ in
any year commencing with the year .... and ending with the year .... through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert -- on or after ............], as a whole or in part, at the
election of the Issuers, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below: If redeemed during the 12-month
period beginning ............ of the years indicated,
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<PAGE> 28
<TABLE>
<S> <C> <C>
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ------------------- -------------------------
</TABLE>
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest instalments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- Notwithstanding the foregoing, the Issuers may
not, prior to ............., redeem any Securities of this series as
contemplated by [if applicable, insert -- Clause (2) of] the preceding
paragraph as a part of, or in anticipation of, any refunding operation by the
application, directly or indirectly, of moneys borrowed having an interest cost
to the Issuers (calculated in accordance with generally accepted financial
practice) of less than .....% per annum.]
[If applicable, insert -- The sinking fund for this series provides for
the redemption on ............ in each year beginning with the year ....... and
ending with the year ...... of [if applicable, insert -- not less than
$.......... ("mandatory sinking fund") and not more than] $......... aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Issuers otherwise than through [if applicable,
insert -- mandatory] sinking fund payments may be credited against subsequent
[if applicable, insert -- mandatory] sinking fund payments otherwise required
to be made [if applicable, insert -- , in the inverse order in which they
become due].]
[If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Indenture contains provisions for
Defeasance at any time of [the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance with certain conditions set forth in
the Indenture.]
[If the Security is guaranteed by one or more Subsidiary Guarantor,
insert -- As provided in the Indenture and subject to certain limitations
therein set forth, the obligations of the Company under this Security are
Guaranteed on a senior
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<PAGE> 29
subordinated basis pursuant to the Subsidiary Guarantee endorsed hereon. The
Indenture provides that a Subsidiary Guarantor shall be released from its
Subsidiary Guarantee upon compliance with certain conditions.]
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and
be continuing, the principal of the Securities of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal, premium and interest (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Issuers' obligations in respect of the payment of the
principal of and premium and interest, if any, on the Securities of this series
shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuers [If the Security is guaranteed by one or more Subsidiary Guarantors,
insert -- and the Subsidiary Guarantor[s]] and the rights of the Holders of
the Securities of each series to be affected under the Indenture at any time by
the Issuers [If the Security is guaranteed by one or more Subsidiary
Guarantors, insert -- , the Subsidiary Guarantor[s]] and the Trustee with the
consent of the Holders of 66 2/3% in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Issuers
[If the Security is guaranteed by one or more Subsidiary Guarantors, insert --
or the Subsidiary Guarantor[s]] with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made
written request to the Trustee to institute proceedings in respect of such
Event of Default as Trustee and offered the Trustee reasonable indemnity, and
the Trustee shall not have received from the Holders of a majority in principal
amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity.
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<PAGE> 30
The foregoing shall not apply to any suit instituted by the Holder of this
Security for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Issuers, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuers in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Issuers and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $....... and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Issuers may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Issuers [If the Security is guaranteed by one or more Subsidiary
Guarantors, insert -- , the Subsidiary Guarantor[s]], the Trustee and any
agent of the Issuers [If the Security is guaranteed by one or more Subsidiary
Guarantors, insert -- , the Subsidiary Guarantor[s]], or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the Issuers
[If the Security is guaranteed by one or more Subsidiary Guarantors, insert --
, the Subsidiary Guarantor[s]], the Trustee nor any such agent shall be
affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
[TRUSTEE],
As Trustee
By..............................
Authorized Officer
SECTION 206. Form of Guarantee.
If the Securities are to be Guaranteed by any Guarantor Subsidiary, the
Guarantee shall be in substantially the following form:
GUARANTEE
For value received, each of the Subsidiary Guarantors named (or deemed
herein to be named) below hereby jointly and severally fully and
unconditionally guarantees to the Holder of the Security upon which this
Subsidiary Guarantee is endorsed, and to the Trustee on behalf of such Holder,
the due and punctual payment of the principal of (and premium, if any) and
interest on such Security when and as the same shall become due and payable,
whether at the Stated Maturity, by acceleration, call for redemption, offer to
purchase or otherwise, according to the terms thereof and of the Indenture
referred to therein. In case of the failure of the Issuers punctually to make
any such payment, each of the Subsidiary Guarantors hereby jointly and
severally agrees to cause such payment to be made punctually when and as the
same shall become due and payable, whether at the Stated Maturity or by
acceleration, call for redemption, offer to purchase or otherwise, and as if
such payment were made by the Issuers.
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<PAGE> 32
Each of the Subsidiary Guarantors hereby jointly and severally agrees
that its obligations hereunder shall be absolute and unconditional,
irrespective of, and shall be unaffected by, the validity, regularity or
enforceability of such Security or the Indenture, the absence of any action to
enforce the same or any release, amendment, waiver or indulgence granted to
either Issuer or any other guarantor, or any consent to departure from any
requirement of any other guarantee of all or of any of the Securities, or any
other circumstances which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each of the Subsidiary
Guarantors hereby waives the benefits of diligence, presentment, demand of
payment, any requirement that the Trustee or any of the Holders protect,
secure, perfect or insure any security interest in or other lien on any
property subject thereto or exhaust any right or take any action against either
Issuer or any other Person or any collateral, filing of claims with a court in
the event of insolvency or bankruptcy of either Issuer, any right to require a
proceeding first against either Issuer, protest or notice with respect to such
Security or the indebtedness evidenced thereby and all demands whatsoever, and
covenants that this Subsidiary Guarantee will not be discharged except by
complete performance of the obligations contained in such Security and in this
Subsidiary Guarantee. Each Subsidiary Guarantor agrees that if, after the
occurrence and during the continuance of an Event of Default, the Trustee or
any of the Holders are prevented by applicable law from exercising their
respective rights to accelerate the maturity of the Securities, to collect
interest on the Securities, or to enforce or exercise any other right or remedy
with respect to the Securities, such Subsidiary Guarantor agrees to pay to the
Trustee for the account of the Holders, upon demand therefor, the amount that
would otherwise have been due and payable had such rights and remedies been
permitted to be exercised by the Trustee or any of the Holders.
The indebtedness of each Subsidiary Guarantor evidenced by this Subsidiary
Guarantee is, to the extent provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor, and this Subsidiary Guarantee is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
No reference herein to the Indenture and no provision of this Subsidiary
Guarantee or of the Indenture shall alter or impair the Subsidiary Guarantee of
any Subsidiary Guarantor, which is absolute and unconditional, of the due and
punctual payment of the principal (and premium, if any) and interest on the
Security upon which this Subsidiary Guarantee is endorsed.
Each Subsidiary Guarantor shall be subrogated to all rights of the Holder
of this Security against the Issuers in respect of any amounts paid by such
Subsidiary Guarantor on account of this Security pursuant to the provisions of
its Subsidiary Guarantee or the Indenture; provided, however, that such
Subsidiary Guarantor shall not be entitled to enforce or to receive any
payments arising out of, or based upon, such right of subrogation until the
principal of (and premium, if any) and interest on this Security and all other
Securities issued under the Indenture shall have been paid in full.
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<PAGE> 33
This Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against either
Issuer for liquidation or reorganization, should either Issuer become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any part of either Issuer's assets, and shall,
to the fullest extent permitted by law, continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Securities is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any Holder of the Securities, whether
as a "voidable preference," "fraudulent transfer," or otherwise, all as though
such payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the
Securities shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
Each of the Subsidiary Guarantors shall be released from this Subsidiary
Guarantee upon the terms and subject to certain conditions provided in the
Indenture.
By delivery of a Supplemental Indenture to the Trustee in accordance with
the terms of the Indenture, each Person that becomes a Subsidiary Guarantor
after the date of the Indenture will be deemed to have executed and delivered
this Subsidiary Guarantee for the benefit of the Holder of the Security upon
which this Subsidiary Guarantee is endorsed with the same effect as if such
Subsidiary Guarantor was named below and has executed and delivered this
Subsidiary Guarantee.
All terms used in this Subsidiary Guarantee which are defined in the
Indenture referred to in the Security upon which this Subsidiary Guarantee is
endorsed shall have the meanings assigned to them in such Indenture.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which this
Subsidiary Guarantee is endorsed shall have been executed by the Trustee under
the Indenture by manual signature.
Reference is made to the Indenture for further provisions with respect to
this Subsidiary Guarantee.
THIS SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, each of the following Subsidiary Guarantors has
caused this Subsidiary Guarantee to be duly executed.
[Insert name of each Subsidiary
Guarantor that is Guaranteeing
the Security --]
By
-----------------------------------
Title:
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<PAGE> 34
Attest
- ----------
Title:
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate,
or established in one or more indentures supplemental hereto, prior to the
issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the
series is payable;
(5) the rate or rates at which any Securities of the series shall
bear interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may be
redeemed, in
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whole or in part, at the option of the Issuers and, if other than by a Board
Resolution, the manner in which any election by the Issuers to redeem the
Securities shall be evidenced;
(8) the obligation, if any, of the Issuers to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions upon
which any Securities of the series shall be redeemed or purchased, in whole
or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(10) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be determined;
(11) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any Securities of the series shall be payable and the
manner of determining the equivalent thereof in the currency of the United
States of America for any purpose, including for purposes of the definition
of "Outstanding" in Section 101;
(12) whether the Securities shall be guaranteed by one or more
Subsidiary Guarantors as provided in Article Fifteen;
(13) if other than the entire principal amount thereof, the portion of
the principal amount of any Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to Section
502;
(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall
be due and payable upon any Maturity other than the Stated Maturity or which
shall be deemed to be Outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to be
the principal amount shall be determined);
(15) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or Section 1303
or both such Sections and, if other than by a Board Resolution, the manner
in which any election by the Issuers to defease such Securities shall be
evidenced;
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<PAGE> 36
(16) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204 and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of Section 305 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or
names of Persons other than the Depositary for such Global Security or a
nominee thereof;
(17) any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of the Trustee
or the requisite Holders of such Securities to declare the principal amount
thereof due and payable pursuant to Section 502;
(18) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(19) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to
the Board Resolution referred to above and (subject to Section 303) set forth,
or determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the applicable
Issuer and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior Debt
as provided in Article Fourteen.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
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<PAGE> 37
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of each Issuer by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of an Issuer shall bind such Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuers may deliver Securities of any series executed by
the Issuers, and if guaranteed by any of the Subsidiary Guarantees, having
endorsed thereon the Subsidiary Guarantees executed as provided in Section 1502
by such Subsidiary Guarantors, to the Trustee for authentication, together with
an Issuers' Order for the authentication and delivery of such Securities with
such Subsidiary Guarantees, if any, endorsed thereon, and the Trustee in
accordance with the Issuers' Order shall authenticate and deliver such
Securities as in this Indenture provided and not otherwise. If the form or
terms of the Securities of the series have been established by or pursuant to
one or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form has
been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Issuers in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Issuers enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
and
(4) that any Subsidiary Guarantees endorsed on such Securities, when
such Securities have been authenticated and delivered by the Trustee and
issued by the Issuers in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute legal and valid obligations of
each Subsidiary Guarantor whose name appears on such Subsidiary Guarantees
enforceable in accordance with their terms, subject to bankruptcy,
insolvency,
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<PAGE> 38
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Issuers' Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security, or Subsidiary Guarantee if endorsed thereon, shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and that each Subsidiary Guarantee endorsed thereon has
been duly endorsed and delivered hereunder. Notwithstanding the foregoing, if
any Security shall have been authenticated and delivered hereunder but never
issued and sold by the Issuers, and the Issuers shall deliver such Security to
the Trustee for cancellation as provided in Section 309, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Issuers may execute, and upon the Issuers' Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Issuers will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at any
office or agency of the Issuers in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series, the Issuers shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
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<PAGE> 39
Securities of the same series, of any authorized denominations, like tenor and
aggregate principal amount. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Issuers shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Issuers in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuers shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series
at the office or agency of the Issuers in a Place of Payment for that series,
the Issuers shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of like
tenor.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Issuers shall execute and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Issuers, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Issuers or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Issuers may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Issuers shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of that
series and specified tenor, as the case may be) during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for
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redemption under Section 1103 and ending at the close of business on the day of
such mailing, or (B) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security
or a nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Security shall constitute a
single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and
no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or
a nominee thereof unless (A) such Depositary (i) has notified the Issuers
that it is unwilling or unable to continue as Depositary for such Global
Security or (ii) has ceased to be a clearing agency registered under the
Exchange Act, (B) there shall have occurred and be continuing an Event of
Default with respect to such Global Security or (C) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have
been specified for this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906 or
1107 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Issuers
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Issuers and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Issuers or the Trustee that such Security has been acquired by a bona fide
purchaser, the Issuers shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen
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Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Issuers in their discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Issuers 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) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuers, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Issuers, at their election in each
case, as provided in Clause (1) or (2) below:
(1) The Issuers may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) 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 Issuers shall
notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security of such series and the date of the
proposed payment, and at the same time the Issuers 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
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Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not 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 Issuers of such Special Record Date and, in the name
and at the expense of the Issuers, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
to be given to each Holder of Securities of such series in the manner set
forth in Section 106, 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 so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and shall no longer
be payable pursuant to the following Clause (2).
(2) The Issuers may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Issuers 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 Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Issuers, any Subsidiary Guarantor, the Trustee and any agent of the Issuers,
such Subsidiary Guarantor or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and any premium and (subject to Section 307)
any interest on such Security and for all other purposes whatsoever, whether or
not such Security be overdue, and neither the Issuers, any Subsidiary
Guarantor, the Trustee nor any agent of the Issuers, such Subsidiary Guarantor
or the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. Either Issuer may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which either Issuer may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Issuers have not issued and sold, and all Securities
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so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by an Issuers'
Order.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon the Issuers' Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Issuers, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuers and thereafter repaid to the
Issuers or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Issuers,
and the Issuers or a Subsidiary Guarantor, in the case of (i), (ii) or
(iii) above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose money in an amount sufficient to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any premium
and interest to the date of such
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deposit (in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Issuers or a Subsidiary Guarantor has paid or caused to be paid
all other sums payable hereunder by the Issuers and the Subsidiary
Guarantors; and
(3) the Issuers have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuers to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including either of the Issuers acting as the Issuers' own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the principal
and any premium and interest for whose payment such money has been deposited
with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article Fourteen or 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):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as due
by the terms of a Security of that series; or
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(4) default in the performance, or breach, of any covenant or warranty
of an Issuer 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 or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Issuers
by the Trustee or to the Issuers and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series 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
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) having an
aggregate principal amount outstanding of at least $10,000,000, or under any
mortgage, indenture or instrument (including this Indenture) under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company having an aggregate principal
amount outstanding of at least $10,000,000, whether such indebtedness now
exists or shall hereafter be created, which default (A) shall constitute a
failure to pay any portion of the principal of such indebtedness when due and
payable after the expiration of any applicable grace period with respect
thereto or (B) shall have resulted in such indebtedness becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, without, in the case of Clause (A), such indebtedness
having been discharged or without, in the case of Clause (B), such
indebtedness having been discharged or such acceleration having been
rescinded or annulled, in each such case within a period of 10 days after
there shall have been given, by registered or certified mail, to the Issuers
by the Trustee or to the Issuers and the Trustee by the Holders of at least
10% in principal amount of the Outstanding Securities of that series a
written notice specifying such default and requiring the Issuers to cause
such indebtedness to be discharged or cause such acceleration to be rescinded
or annulled, as the case may be, and stating that such notice is a "Notice of
Default" hereunder; provided, however, that, subject to the provisions of
Sections 601 and 602, the Trustee shall not be deemed to have knowledge of
such default unless either (A) a Responsible Officer of the Trustee shall
have actual knowledge of such default or (B) the Trustee shall have received
written notice thereof from an Issuer, from any Holder, from the holder of
any such indebtedness or from the trustee under any such mortgage, indenture
or other instrument; or
(6) 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 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 any substantial part of the
property of the Company,
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or ordering the winding up or liquidation of the affairs of the Company, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days;
or
(7) 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 the Company 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 the Company, or the filing by the
Issuers of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by the Company to
the filing of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of the property of
the Company, or the making by the Company of an assignment for the benefit
of creditors, or the admission by the Company 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
(8) any Subsidiary Guarantee shall be held in a judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect, or any Subsidiary Guarantor, or any person acting on behalf of
such a Subsidiary Guarantor, shall deny or disaffirm its obligations under
a Subsidiary Guarantee, provided that this event constitutes an Event of
Default only in respect of Securities guaranteed by such Subsidiary
Guarantor; or
(9) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(6) or 501(7)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount of all the
Securities of that series (or, if any Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms thereof) to be due and payable
immediately, by a notice in writing to the Issuers (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. If an Event of Default
specified in Section 501(6) or 501(7) with respect to Securities of any series
at the time Outstanding occurs, the principal amount of all the Securities of
that series (or, if any Securities of that series
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are Original Issue Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms thereof) shall automatically,
and without any declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Issuers and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Issuers or any Subsidiary Guarantor have paid or deposited with
the Trustee a sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Issuers covenant that if
(1) default is made in the payment of any interest on any Security when
such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
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the Issuers will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to either Issuer, any
Subsidiary Guarantor or any other obligor upon the Securities, or the property
of either Issuer or its creditors or of any Subsidiary Guarantor and its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have claims of the Holders and the Trustee allowed in
any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on 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
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the
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reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
and
SECOND: Subject to Article Fourteen, to the payment of the amounts then
due and unpaid for principal of and any premium and interest on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
and any premium and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to
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enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all of such Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. 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 Issuers, any Subsidiary Guarantor, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, 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 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities 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 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.
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SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series 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
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. 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, suffered 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 such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; provided that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Issuers
or any Subsidiary Guarantor.
SECTION 515. Waiver of Usury, Stay or Extension Laws.
Each of the Issuers 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 usury, stay or extension law
wherever enacted, now or at
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any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and each of the Issuers (to the extent that it may lawfully
do so) 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 SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. 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 Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Issuers mentioned herein shall be
sufficiently evidenced by an Issuers' Request or Issuers' Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
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(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) 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;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Issuers,
personally or by agent or attorney; and
(7) 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.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities and any Subsidiary
Guarantees endorsed thereon, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuers or such
Subsidiary Guarantors, as the case may be, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities or any Subsidiary Guarantees endorsed thereon.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Issuers of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Issuers or any Subsidiary Guarantor, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the Issuers and
any Subsidiary
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Guarantor with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
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 with the Issuers or any Subsidiary Guarantor, as the case may
be.
SECTION 607. Compensation and Reimbursement.
The Issuers jointly and severally agree
(1) to pay to the Trustee from time to time reasonable compensation 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);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it 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 of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series [or a trustee under -- list here any prior
indentures between the Issuers and the Trustee that have not been satisfied and
discharged and that may be excluded by the proviso to Section 310(b)(1) of the
Trust Indenture Act].
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SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee with respect to the Securities of any series shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one
or more series by giving written notice thereof to the Issuers. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Issuers.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Issuers or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Issuers or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who
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has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all
of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect
to all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Issuers and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Issuers or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect
to the Securities of one or more (but not all) series, the Issuers, any
Subsidiary Guarantor,
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the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to
all Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Issuers or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Issuers and the
Subsidiary Guarantors, if any, shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in the first or second preceding
paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee 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. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
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SECTION 613. Preferential Collection of Claims Against the Issuers.
If and when the Trustee shall be or become a creditor of either Issuer,
any Subsidiary Guarantor or any other obligor upon the Securities or any
Subsidiary Guarantee, the Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against such Issuer,
such Subsidiary Guarantor or any such other obligor.
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 306, and Securities so authenticated, and any Subsidiary
Guarantees endorsed thereon, shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor
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Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 106 to all Holders
of Securities of the series with respect to which such Authenticating Agent
will serve. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
........................................,
As Trustee
By......................................,
As Authenticating Agent
By.......................................
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND ISSUERS
SECTION 701. Issuers to Furnish Trustee Names and Addresses of Holders.
The Issuers will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than 45 days after each Interest Payment
Date for each series of Securities, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Securities of
such series as of the preceding Interest Payment Date, and
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(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Issuers of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Issuers, any Subsidiary Guarantor and the Trustee that neither the
Issuers, such Subsidiary Guarantors nor the Trustee nor any agent of any of
them shall be held accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Issuers. The Issuers
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Issuers.
The Issuers shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the
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Exchange Act shall be filed with the Trustee within 15 days after the same is
so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Issuers May Consolidate, Etc., Only on Certain Terms.
Neither of the Issuers may, in a single transaction or a series of
regulated transactions, consolidate with or merge into any other Person (other
than a Wholly Owned Subsidiary) or convey, transfer or lease its properties and
assets substantially as an entirety to any Person (other than a Wholly Owned
Subsidiary), and neither of the Issuers shall permit any Person (other than a
Wholly Owned Subsidiary) to consolidate with or merge into such Issuer or
convey, transfer or lease its properties and assets substantially as an entirety
to such Issuer, unless:
(1) in case either Issuer shall consolidate with or merge into another
Person (other than a Wholly Owned Subsidiary) or convey, transfer or lease
its properties and assets substantially as an entirety to any Person (other
than a Wholly Owned Subsidiary), the Person formed by such consolidation or
into which such Issuer is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the applicable
Issuer substantially as an entirety shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered
to the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of and any premium and interest on all the
Securities and the performance or observance of every covenant of this
Indenture on the part of such Issuer to be performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of either Issuer or a Subsidiary
of the Company as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of either of the Issuers
or any Subsidiary would become subject to a mortgage, pledge,
lien, security interest or other encumbrance which would not be permitted by
this Indenture, such Issuer, such Subsidiary or such successor
Person, as the case may be, shall take such steps as shall be necessary
effectively to secure the Securities equally and ratably with (or prior to)
all indebtedness secured thereby; and
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(4) Such Issuer has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
SECTION 802. Mergers, Consolidations and Certain Sales of Assets by
Subsidiary Guarantors.
Except in a transaction resulting in the release of a Subsidiary Guarantor
in accordance with Section 1503, no Subsidiary Guarantor shall, and the Issuers
shall not permit any Subsidiary Guarantor to, (a) consolidate with or merge into
any Person (other than the Issuers or a Wholly-Owned Subsidiary or a Subsidiary
Guarantor) or permit any Person (other than a Wholly-Owned Subsidiary or a
Subsidiary Guarantor) to consolidate with or merge into such Subsidiary
Guarantor or (b) directly or indirectly, in one or a series of transactions,
transfer, convey, sell, lease or otherwise dispose of all or substantially all
of its properties and assets; unless, in each case:
(1) in a transaction (or series) in which such Subsidiary Guarantor
does not survive or in which all or substantially all of the properties and
assets of such Subsidiary Guarantor are transferred, conveyed, sold, leased
or otherwise disposed of, the successor entity (the "Successor Subsidiary
Guarantor") is a corporation, partnership, limited liability company or
business trust, is organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia and
expressly assumes by an indenture supplemental hereto executed and delivered
to the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of all obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee and this Indenture and the performance of every covenant of this
Indenture on the part of such Subsidiary Guarantor to be performed or
observed; and
(2) the applicable Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
SECTION 803. Successor Substituted.
Upon any consolidation of either Issuer with, or merger of either Issuer
into, any other Person or any conveyance, transfer or lease of the properties
and assets of either Issuer substantially as an entirety in accordance with
Section 801, the successor Person formed by such consolidation or into which
such Issuer is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, such Issuer under this Indenture with the same effect as if such
successor Person had been named as the such Issuer herein, and
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thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
Upon any consolidation of a Subsidiary Guarantor with, or merger of such
Subsidiary Guarantor into, any other Person or any transfer, conveyance, sale,
lease or other disposition of all or substantially all of the properties and
assets of such Subsidiary Guarantor in accordance with Section 802, the
Successor Subsidiary Guarantor shall succeed to, and be substituted for, and
may exercise every right and power of, such Subsidiary Guarantor under this
Indenture or any supplemental indenture with the same effect as if such
successor Person had been named as a Subsidiary Guarantor herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture, any
supplemental indenture and its Subsidiary Guarantee.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, each Issuer, when authorized by a
Board Resolution of such Issuer, the Subsidiary Guarantors, when authorized by
their respective Board Resolutions, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to an Issuer or any
Subsidiary Guarantor and the assumption by any such successor of the
covenants of such Issuer or Subsidiary Guarantor herein and in the
Securities or Subsidiary Guarantee, as the case may be; or
(2) to add to the covenants of the Issuers for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Issuers; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change
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or elimination (A) shall neither (i) apply to any Security of any series
created prior to the execution of such supplemental indenture and entitled
to the benefit of such provision nor (ii) modify the rights of the Holder of
any such Security with respect to such provision or (B) shall become
effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Section 611; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or questions
arising under this Indenture, provided that such action pursuant to this
Clause (9) shall not adversely affect the interests of the Holders of
Securities of any series in any material respect.
(10) to establish any Subsidiary Guarantors pursuant to Section 1502.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Issuers, any
Subsidiary Guarantor and the Trustee, each Issuer, when authorized by a Board
Resolution of such Issuer, such Subsidiary Guarantor, when authorized by their
respective Board Resolutions, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture
or of modifying in any manner the rights of the Holders of Securities of such
series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original
Issue Discount Security or any other Security which would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency
in which, any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or modify the provisions of this Indenture
with respect to the subordination of the Securities in a manner adverse to
the Holders, or
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(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1008, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby; provided, however, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1008, or the
deletion of this proviso, in accordance with the requirements of Sections
611 and 901(8), or
(4) modify any of the provisions of this Indenture relating to the
subordination of any Securities or the Subsidiary Guarantees in a manner
adverse to the Holders.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but 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.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby. No such supplemental indenture shall
directly or indirectly modify the provisions of Article Fourteen or Article
Sixteen in any manner which might terminate or impair or
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otherwise adversely affect the rights of the Senior Debt pursuant to such
subordination provisions.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Issuers and the
Subsidiary Guarantors, if any, shall so determine, new Securities of any series
so modified as to conform, in the opinion of the Trustee, the Issuers and such
Subsidiary Guarantors, to any such supplemental indenture may be prepared and
executed by the Issuers, the Subsidiary Guarantees, if any, may be endorsed
thereon and such new Securities authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Issuers jointly and severally covenant and agree for the benefit of
each series of Securities that they will duly and punctually pay the principal
of and any premium and interest on the Securities of that series in accordance
with the terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Issuers will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Issuers or any Subsidiary Guarantor in respect of the Securities of
that series, any Subsidiary Guarantee endorsed thereon and this Indenture may
be served. The Issuers 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 Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Issuers hereby appoint the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
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The Issuers may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Issuers of their obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Issuers 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.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If either Issuer shall at any time act as the Issuers' own Paying Agent
with respect to any series of Securities, it will, on or before each due date
of the principal of or any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Issuers shall have one or more Paying Agents for any series
of Securities, they will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Issuers will promptly notify the Trustee of their action or failure so to act.
The Issuers will cause each Paying Agent for any series of Securities
other than the Trustee 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, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Issuers may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by the Issuers' Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Issuers or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Issuers or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
either Issuer, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Issuers on the Issuers' Request, or (if then held by either Issuer)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look
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only to the Issuers for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Issuers as trustees thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuers cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Issuers.
SECTION 1004. Statement by Officers as to Default.
The Issuers will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Issuers ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof either Issuer is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if an Issuer
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
SECTION 1005. Existence.
Subject to Article Eight, each Issuer 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 an
Issuer shall not be required to preserve any such right or franchise if the
Board of Directors of such Issuer shall determine that the preservation thereof
is no longer desirable in the conduct of the business of such Issuer and that
the loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of
the business of the Company and its Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the 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,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Board of Directors of the Company,
desirable in the conduct of the business of the Company and its Subsidiaries
and not disadvantageous in any material respect to the Holders.
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SECTION 1007. Payment of Taxes and Other Claims.
Each Issuer will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income, profits or
property, and (2) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien upon its property; provided, however, that
neither Issuer shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1008. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for
Securities of such series, the Issuers may, with respect to the Securities of
any series, omit in any particular instance to comply with any term, provision
or condition set forth in any covenant provided pursuant to Section 301(18),
901(2) or 901(7) for the benefit of the Holders of such series if before the
time for such compliance the Holders of at least a majority in principal amount
of the Outstanding Securities of such series shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such term, provision or condition, but no such waiver shall extend to or
affect such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of the
Issuers and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for such Securities) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Issuers to redeem any Securities shall be evidenced
by a Board Resolution of both of the Issuers or in another manner specified as
contemplated by Section 301 for such Securities. In case of any redemption at
the election of the Issuers of less than all the Securities of any series
(including any such redemption affecting only a single Security), the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date, of the principal amount of Securities of such
series to be redeemed and, if applicable, of the tenor of the Securities to be
redeemed. In the case of any redemption of Securities prior to the
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expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, each of the Issuers shall furnish
the Trustee with an Officers' Certificate evidencing compliance with such
restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed
or unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of
a portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects
only a single Security), the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series and specified tenor not
previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Issuers in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to
be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
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(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Issuers or, at the Issuers' request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Issuers shall deposit with the Trustee
or with a Paying Agent (or, if the Issuers are acting as their own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Issuers shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Issuers at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, instalments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
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SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Issuers or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Issuers and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Issuers shall execute the
Security, and a Subsidiary Guarantor shall endorse thereon (if a Subsidiary
Guarantee was endorsed on the Security to be redeemed), and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms
of any Securities is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms of
such Securities is herein referred to as an "optional sinking fund payment". If
provided for by the terms of any Securities, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 1202. Each
sinking fund payment shall be applied to the redemption of Securities as
provided for by the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Issuers (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Issuers pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be redeemed, for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
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SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
Securities, the Issuers will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant
to Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 45 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Issuers
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Issuers' Option to Effect Defeasance or Covenant Defeasance.
The Issuers may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set forth below
in this Article. Any such election shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.
SECTION 1302. Defeasance and Discharge.
Upon the Issuers' exercise of their option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Issuers and Subsidiary Guarantors, if any, shall be deemed to have been
discharged from their obligations, and the provisions of Articles Fourteen and
Sixteen shall cease to be effective, with respect to such Securities as
provided in this Section on and after the date the conditions set forth in
Section 1304 are satisfied (hereinafter called "Defeasance"). For this purpose,
such Defeasance means that (a) the Issuers shall be deemed to have paid and
discharged the entire indebtedness represented by such Securities and to have
satisfied all their other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of
the Issuers, shall execute proper instruments acknowledging the same), and (b)
the Subsidiary Guarantors, if any, shall be released from their respective
Subsidiary Guarantees, subject to the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 1304 and
as more fully set forth in such Section, payments in respect of the principal
of and any premium and interest on such Securities when payments are due, (2)
the obligations of the Issuers and the Subsidiary
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Guarantors, if any, with respect to such Securities under Sections 304, 305,
306, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and the Issuer's obligations in connection therewith and
(4) this Article. Subject to compliance with this Article, the Issuers may
exercise their option (if any) to have this Section applied to any Securities
notwithstanding the prior exercise of its option (if any) to have Section 1303
applied to such Securities.
SECTION 1303. Covenant Defeasance.
Upon the Issuers' exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Issuers shall be released from its obligations under Sections 801(3), 1006
and 1007, and any covenants provided pursuant to Section 301(18), 901(2) or
901(7) for the benefit of the Holders of such Securities, (2) the occurrence of
any event specified in Sections 501(4) (with respect to any of Sections 801(3),
1006 and 1007, and any such covenants provided pursuant to Section 301(18),
901(2) or 901(7)), 501(5) and 501(9) shall be deemed not to be or result in an
Event of Default and (3) the provisions of Articles Fourteen and Sixteen shall
cease to be effective, in each case with respect to such Securities as provided
in this Section on and after the date the conditions set forth in Section 1304
are satisfied (hereinafter called "Covenant Defeasance"). For this purpose,
such Covenant Defeasance means that, with respect to such Securities, the
Issuers may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such specified Section (to the
extent so specified in the case of Section 501(4)) or Article Fourteen or
Sixteen, whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or Article or by reason of any reference in any such
Section or Article to any other provision herein or in any other document, but
the remainder of this Indenture and such Securities and Subsidiary Guarantees,
if any, shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302
or Section 1303 to any Securities or any series of Securities, as the case may
be:
(1) The Issuers shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, in each case sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or any such other qualifying trustee) to pay and
discharge, the principal of and any premium and interest on such Securities
on the respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, "U.S. Government
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Obligation" means (x) any security which is (i) a direct obligation of the
United States of America for the payment of which the full faith and credit
of the United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable at
the option of the issuer thereof, and (y) any depositary receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with
respect to any U.S. Government Obligation which is specified in Clause (x)
above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest
on any U.S. Government Obligation which is so specified and held, provided
that (except as required by law) such custodian is not authorized to make
any deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (A)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this instrument, there has
been a change in the applicable Federal income tax law, in either case (A)
or (B) to the effect that, and based thereon such opinion shall confirm
that, the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit, Defeasance and
discharge to be effected with respect to such Securities and will be subject
to Federal income tax on the same amount, in the same manner and at the same
times as would be the case if such deposit, Defeasance and discharge were
not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Issuers
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of such Securities will not recognize gain or loss for Federal
income tax purposes as a result of the deposit and Covenant Defeasance to be
effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as
would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Issuers shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such deposit
or, with regard to any such event specified in Sections 501(6) and (7), at
any time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until
after such 90th day).
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(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to
have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Securities are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach
or violation of, or constitute a default under, any other agreement or
instrument to which each Issuer is a party or by which either Issuer is
bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
(9) At the time of such deposit, (A) no default in the payment of any
principal of or premium or interest on any Senior Debt shall have occurred
and be continuing, (B) no event of default with respect to any Senior Debt
shall have resulted in such Senior Debt becoming, and continuing to be, due
and payable prior to the date on which it would otherwise have become due
and payable (unless payment of such Senior Debt has been made or duly
provided for), and (C) no other event of default with respect to any Senior
Debt shall have occurred and be continuing permitting (after notice or lapse
of time or both) the holders of such Senior Debt (or a trustee on behalf of
such holders) to declare such Senior Debt due and payable prior to the date
on which it would otherwise have become due and payable.
(10) Each Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee or other qualifying trustee (solely for purposes of
this Section and Section 1306, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1304 in respect
of any Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any such Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in
respect of principal and any premium and interest, but money so held in trust
need not be segregated from other funds except to the extent required by law.
Money and U.S. Government Obligations so held in trust shall not be subject to
the provisions of Article Fourteen or Article Sixteen.
The Issuers and each Subsidiary Guarantor, if any, shall pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
1304 or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
Outstanding Securities.
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Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the Issuers' Request
any money or U.S. Government Obligations held by it as provided in Section 1304
with respect to any Securities which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect the Defeasance or Covenant
Defeasance, as the case may be, with respect to such Securities.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities and any Subsidiary Guarantees from which the
Issuers and Subsidiary Guarantors have been discharged or released pursuant to
Section 1302 or 1303 shall be revived and reinstated as though no deposit had
occurred pursuant to this Article with respect to such Securities and
Subsidiary Guarantees, until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust pursuant to Section 1305 with
respect to such Securities in accordance with this Article; provided, however,
that if either Issuer or any Subsidiary Guarantor makes any payment of
principal of or any premium or interest on any such Security following such
reinstatement of its obligations, such Issuer or such Subsidiary Guarantor
shall be subrogated to the rights (if any) of the Holders of such Securities to
receive such payment from the money so held in trust.
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinate to Senior Debt.
Each Issuer covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article Four and Article Fifteen), the payment of the principal of (and
premium, if any) and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Debt.
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to an Issuer or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of an Issuer, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities
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of an Issuer, then and in any such event specified in (a), (b) or (c) above
(each such event, if any, herein sometimes referred to as a "Proceeding") the
holders of Senior Debt shall be entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior Debt, or provision
shall be made for such payment in cash or cash equivalents or any other manner
acceptable to the holders of such Senior Debt, before the Holders of the
Securities are entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities (including any payment or
distribution which may be payable or deliverable by reason of the payment of
any other Debt of such Issuer subordinated to the payment of the Securities,
such payment or distribution being hereinafter referred to as a "Junior
Subordinated Payment" but excluding any payment or distribution of stock or
securities of such Issuer provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law
or of any other corporation provided for by such plan of reorganization or
readjustment which stock or securities are subordinated in right of payment to
all then outstanding Senior Debt to substantially the same extent as the
Securities are so subordinated as provided in this Article), on account of
principal of (or premium, if any) or interest on the Securities or on account
of any purchase or redemption or other acquisition of Securities by such Issuer
or any Subsidiary of such Issuer (all such payments, distributions, purchases,
redemptions and acquisitions herein referred to, individually and collectively,
as a "Securities Payment"), and to that end the holders of Senior Debt shall be
entitled to receive, for application to the payment thereof, any Securities
Payment which may be payable or deliverable in respect of the Securities in any
such Proceeding.
Any Securities Payments to which the Trustee or the Holders would be
entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other Person making such Securities Payment,
whether a trustee in bankruptcy, a receiver or otherwise, directly to the
holders of Senior Debt or their representative or representatives or to any
trustee or agent under any indenture or other agreement evidencing or governing
any such Senior Debt, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Debt held or represented by each of them, to
the extent necessary to make payment in full of all Senior Debt remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt. As used in this Article, the phrase "payment in
full" (or any similar phrase), when used to refer to the payment of Senior
Debt, shall mean payment in full of the aggregate amount of such Senior Debt in
cash or cash equivalents or any other manner acceptable to the holders of such
Senior Debt.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
Securities Payment before all Senior Debt is paid in full or payment thereof
provided for in cash or cash equivalents or any other manner acceptable to the
holders of such Senior Debt, then and in such event such Securities Payment
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of such Issuer for application to the
payment of all Senior Debt remaining unpaid, to the extent necessary to pay all
Senior Debt in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
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The consolidation of an Issuer with, or the merger of an Issuer into,
another Person or the liquidation or dissolution of an Issuer following the
conveyance or transfer of all or substantially all of its properties and assets
as an entirety to another Person upon the terms and conditions set forth in
Article Eight shall not be deemed a Proceeding for the purposes of this Section
if the Person formed by such consolidation or into which such Issuer is merged
or the Person which acquires by conveyance or transfer such properties and
assets 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 Eight.
SECTION 1403. No Payment When Senior Debt in Default.
In the event that any Senior Payment Default (as defined below) shall
have occurred and be continuing, then no Securities Payment shall be made
unless and until such Senior Payment Default shall have been cured or waived or
shall have ceased to exist or all amounts then due and payable in respect of
Senior Debt shall have been paid in full, or provision shall have been made for
such payment in cash or cash equivalents or any other manner acceptable to the
holders of the Senior Debt. "Senior Payment Default" means any default in the
payment of principal of (or premium, if any) or interest on or in respect of
any Senior Debt when due, whether at the stated maturity of any such payment or
by declaration of acceleration, call for redemption or otherwise, including any
default in the payment of a reimbursement obligation with respect to a letter
of credit when due.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Issuers and the
Trustee of written notice of such Senior Nonmonetary Default no Securities
Payment shall be made during the period (the "Payment Blockage Period")
commencing on the date of such receipt of such written notice and ending on the
earlier of (i) the date on which the Senior Debt to which such Senior
Nonmonetary Default relates shall have been discharged or such Senior
Nonmonetary Default shall have been waived or otherwise cured and (ii) the
179th day after the date of such receipt of such written notice. No more than
one Payment Blockage Period may be commenced with respect to the Securities
during any 360-day period and there shall be a period of at least 181
consecutive days in each 360-day period when no Payment Blockage Period is in
effect. For all purposes of this paragraph, no Senior Nonmonetary Default that
existed or was continuing on the date of commencement of any Payment Blockage
Period shall be, or be made, the basis for the commencement of a subsequent
Payment Blockage Period by holders of Senior Debt or their representatives
unless such Senior Nonmonetary Default shall have been cured or waived for a
period of not less than 90 consecutive days. The limitations on Payment
Blockage Periods set forth in this paragraph shall not be construed to limit or
affect the provisions of the preceding paragraph. "Senior Nonmonetary Default"
means the occurrence or existence and continuance of any default with respect
to any Senior Debt, other than a Senior Payment Default, permitting after
notice or lapse of time (or both) the holders of such Senior Debt (or a trustee
or other agent on behalf of the holders thereof) to declare such Senior Debt
due and payable prior to the date on which it would otherwise become due and
payable.
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In the event that, notwithstanding the foregoing, any Securities Payment
is made to the Trustee or any Holder prohibited by the foregoing provisions of
this Section, then and in such event such Securities Payment shall be paid over
and delivered forthwith to the Issuers.
The provisions of this Section shall not apply to any Securities Payment
with respect to which Section 1402 would be applicable.
SECTION 1404. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) either Issuer, at any time except
during the pendency of any Proceeding referred to in Section 1402 or under the
conditions described in Section 1403, from making Securities Payments, or (b)
the application by the Trustee of any money deposited with it hereunder to
Securities Payments, if, at the time of such application by the Trustee, it did
not have knowledge that such Securities Payment would have been prohibited by
the provisions of this Article; provided that clause (b) of the foregoing shall
not be construed to permit the Holders to retain any Securities Payment
received by such Holders to the extent such Holders would not be permitted to
retain such Securities Payment by reason of any other provisions of this
Article.
SECTION 1405. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on or
in respect of Senior Debt, or the provision for such payment in cash or cash
equivalents or any other manner acceptable to the holders of the Senior Debt,
the Holders of the Securities shall be subrogated to the rights of the holders
of such Senior Debt to receive payments and distributions of cash, property and
securities applicable to the Senior Debt until the principal of (and premium,
if any) and interest on the Securities shall be paid in full. For purposes of
such subrogation, no payments or distributions to the holders of the Senior
Debt of any cash, property or securities to which the Holders of the Securities
or the Trustee would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among either
Issuer, its creditors other than holders of Senior Debt and the Holders of the
Securities, be deemed to be a payment or distribution by such Issuer to or on
account of the Senior Debt.
SECTION 1406. 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 on the one hand and the
holders of Senior Debt on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or shall (a)
impair, as among either Issuer, its creditors other than holders of Senior Debt
and the Holders of the Securities, the
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obligation of each Issuer, which is absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Debt, is
intended to rank equally with all other general obligations of such Issuer), to
pay to the Holders of the Securities the principal of (and premium, if any) and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against either
Issuer of the Holders of the Securities and creditors of such Issuer other than
the holders of Senior Debt; or (c) prevent the Trustee or the Holder of any
Security 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 Debt to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder or to prohibit
Securities Payments under the circumstances set forth in Section 1203.
SECTION 1407. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any Proceeding, the timely filing of a claim for the
unpaid balance of the indebtedness owing to such Holder in respect of any
Securities, in the form required in such Proceeding, and causing such claim to
be approved or allowed in such Proceeding.
SECTION 1408. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt 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 either Issuer or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by such Issuer 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 Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do
any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding;
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in
any
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manner for the collection or payment of Senior Debt; and (iv) exercise or
refrain from exercising any rights against such Issuer and any other Person.
SECTION 1409. Notice to Trustee.
Each Issuer shall give prompt written notice to the Trustee of any fact
known to such Issuer which would prohibit the making of any payment to or by
the Trustee in respect of the Securities. 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 Securities, unless
and until the Trustee shall have received written notice thereof from an Issuer
or a holder of Senior Debt or from any trustee or agent therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 601, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have 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 (and premium,
if any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money
was received and shall not be affected by any notice to the contrary which may
be received by it within two Business Days prior to such date.
Subject to the provisions of Section 601, 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 Debt (or a trustee or agent therefor) to
establish that such notice has been given by a holder of Senior Debt (or a
trustee or agent 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 Debt 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 Debt 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 1410. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of either Issuer referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such 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 Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior Debt and
other indebtedness of such Issuer, the amount thereof or payable thereon, the
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amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 1411. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Debt and shall not be liable to any such holders if it shall in good
faith (and absent gross negligence) mistakenly pay over or distribute to
Holders of Securities or to either Issuer or to any other Person cash, property
or securities to which any holders of Senior Debt shall be entitled by virtue
of this Article or otherwise. With respect to the holders of Senior Debt, the
Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article Fourteen and no
implied covenants or obligations with respect to holders of Senior Debt shall
be read into this Indenture against the Trustee.
SECTION 1412. Rights of Trustee as Holder of Senior Debt; 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 Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1413. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Issuers 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 1412 shall not apply to the Company, any Subsidiary
Guarantor or any Affiliate of the Issuers or any Subsidiary Guarantor if it,
such Subsidiary Guarantor or such Affiliate acts as Paying Agent.
SECTION 1414. Defeasance of this Article Fourteen.
The subordination of the Securities provided by this Article Fourteen is
expressly made subject to the provisions for defeasance or covenant defeasance
in Article Thirteen hereof and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such defeasance or covenant
defeasance that is consummated at a time when a Securities Payment would not be
prohibited by Section 1402 or 1403, the Securities then outstanding shall
thereupon cease to be subordinated pursuant to this Article Fourteen.
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SECTION 1415. Reinstatement.
The provisions of this Article shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of Senior Debt is
rescinded or must otherwise be returned by any holder of Senior Debt upon the
insolvency, bankruptcy or reorganization of either Issuer or otherwise, all as
though such payment had not been made.
ARTICLE FIFTEEN
SUBSIDIARY GUARANTEE
SECTION 1501. Subsidiary Guarantee.
If the Board Resolution or supplemental indenture establishing the terms
of any Security provides that such Security is to be guaranteed by one or more
Subsidiary Guarantors, each of such Subsidiary Guarantors hereby, jointly and
severally, fully and unconditionally guarantees to each Holder of such Security
authenticated and delivered by the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on such Security when and as the
same shall become due and payable, whether at the Stated Maturity, by
acceleration, call for redemption, offer to purchase or otherwise, in accordance
with the terms of such Security and of this Indenture. In case of the failure of
the Issuers punctually to make any such payment, each Subsidiary Guarantor
hereby, jointly and severally, agrees to cause such payment to be made
punctually when and as the same shall become due and payable, whether at the
Stated Maturity or by acceleration, call for redemption, offer to purchase or
otherwise, and as if such payment were made by the Issuers.
If the Board Resolution or supplemental indenture establishing the terms
of any Security provides that such Security is to be guaranteed by one or more
Subsidiary Guarantors, each of such Subsidiary Guarantors hereby jointly and
severally agrees that its obligations hereunder shall be absolute,
unconditional, irrespective of, and shall be unaffected by, the validity,
regularity or enforceability of such Security or this Indenture, the absence of
any action to enforce the same or any release, amendment, waiver or indulgence
granted to an Issuer or any guarantor or any consent to departure from any
requirement of any other guarantee of all or any of the Securities or any other
circumstances which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor. Each of the Subsidiary Guarantors hereby
waives the benefits of diligence, presentment, demand for payment, any
requirement that the Trustee or any of the Holders protect, secure, perfect or
insure any security interest in or other lien on any property subject thereto
or exhaust any right or take any action against an Issuer or any other Person
or any collateral, filing of claims with a court in the event of insolvency or
bankruptcy of an Issuer, any right to require a proceeding first against an
Issuer, protest or notice with respect to such Security or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this
Subsidiary Guarantee will not be discharged in respect of such Security except
by complete performance of the obligations contained in such Security and in
such Subsidiary Guarantee. Each Subsidiary Guarantor agrees that if, after the
occurrence and during the continuance of an Event of Default, the Trustee or
any of the Holders
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are prevented by applicable law from exercising their respective rights to
accelerate the maturity of such Security, to collect interest on such Security,
or to enforce or exercise any other right or remedy with respect to such
Security, such Subsidiary Guarantor agrees to pay to the Trustee for the
account of the Holders, upon demand therefor, the amount that would otherwise
have been due and payable had such rights and remedies been permitted to be
exercised by the Trustee or any of the Holders.
The indebtedness evidenced by the Subsidiary Guarantees is, to the extent
provided in this Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Debt and the Subsidiary Guarantees are
issued subject to the provisions of this Indenture with respect thereto. Each
Holder of such Security, by accepting the same, will be deemed to have (a)
agreed to and be bound by such provisions, (b) authorized and directed the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appointed the Trustee his
attorney-in-fact for any and all such purposes.
Each Subsidiary Guarantor shall be subrogated to all rights of the
Holders of the Securities upon which its Guarantee is endorsed against the
Issuers in respect of any amounts paid by such Subsidiary Guarantor on account
of such Security pursuant to the provisions of its Subsidiary Guarantee or this
Indenture; provided, however, that no Subsidiary Guarantor shall be entitled to
enforce or to receive any payments arising out of, or based upon, such right of
subrogation until the principal of (and premium, if any) and interest on all
Securities issued hereunder shall have been paid in full.
Each Subsidiary Guarantor that makes or is required to make any payment
in respect of its Subsidiary Guarantee shall be entitled to seek contribution
from the other Subsidiary Guarantors which are also obligated under such
Subsidiary Guarantee to the extent permitted by applicable law; provided,
however, that no Subsidiary Guarantor shall be entitled to enforce or receive
any payments arising out of, or based upon, such right of contribution until
the principal of (and premium, if any) and interest on all Securities issued
hereunder shall have been paid in full.
Each Subsidiary Guarantee shall remain in full force and effect and
continue to be effective should any petition be filed by or against an Issuer
for liquidation or reorganization, should an Issuer become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any part of such Issuer's assets, and shall, to the
fullest extent permitted by law, continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Securities, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by any Holder of the Securities, whether as a "voidable
preference," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Securities shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
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SECTION 1502. Execution and Delivery of Subsidiary Guarantees.
The Subsidiary Guarantees to be endorsed on the Securities, if any, shall
include the terms of the Subsidiary Guarantee set forth in Section 1501 and any
other terms that may be set forth in the form established pursuant to Section
206. If the Board Resolution or supplemental indenture establishing the terms
of any Security provides that such Security is to be guaranteed by one or more
Subsidiary Guarantors, each of such Subsidiary Guarantors hereby agrees to
execute its Subsidiary Guarantee, in a form established pursuant to Section
206, to be endorsed on each Security authenticated and delivered by the Trustee.
The Subsidiary Guarantee shall be executed on behalf of each respective
Subsidiary Guarantor by any one of such Subsidiary Guarantor's Chairman of the
Board, Vice Chairman of the Board, President, Vice Presidents or other person
duly authorized by the Board of Directors of such Subsidiary Guarantor,
attested by its Secretary or Assistant Secretary. The signature of any or all
of these persons on the Subsidiary Guarantee may be manual or facsimile.
A Subsidiary Guarantee bearing the manual or facsimile signature of
individuals who were at any time the proper officers of a Subsidiary Guarantor
shall bind such Subsidiary Guarantor, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of the Security on which such Subsidiary Guarantee is endorsed or did
not hold such offices at the date of such Subsidiary Guarantee.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee
endorsed thereon on behalf of the Subsidiary Guarantors and shall bind each
Subsidiary Guarantor notwithstanding the fact that Subsidiary Guarantee does
not bear the signature of such Subsidiary Guarantor. If the Board Resolution or
supplemental indenture establishing the terms of any Security provides that
such Security is to be guaranteed by one or more Subsidiary Guarantors, each of
such Subsidiary Guarantors hereby jointly and severally agrees that its
Subsidiary Guarantee set forth in Section 1501 and in the form of Subsidiary
Guarantee established pursuant to Section 206 shall remain in full force and
effect notwithstanding any failure to endorse a Subsidiary Guarantee on any
Security.
SECTION 1503. Release of Subsidiary Guarantors.
Each Subsidiary Guarantee of a Subsidiary Guarantor, if any, will remain
in effect with respect to such Subsidiary Guarantor until the entire principal
of, premium, if any, and interest on the Securities shall have been paid in full
or otherwise discharged in accordance with the provisions of the Securities and
this Indenture; provided, however, that if (i) the Securities are defeased and
discharged pursuant to Section 1302 or (ii) all or substantially all of the
assets of such Subsidiary Guarantor or all of the Capital Stock of such
Subsidiary Guarantor is sold (including by issuance, merger, consolidation or
otherwise) by an issuer or Subsidiary, then, upon delivery by the Issuers of an
Officers' Certificate and an Opinion of Counsel stating that all conditions
precedent herein provided for relating to the release of such Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee and this Article
Fifteen have been complied with, such Subsidiary Guarantor or the Person
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets
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<PAGE> 87
or Capital Stock of such Subsidiary Guarantor) shall be released and discharged
of its obligations under its Subsidiary Guarantee and under this Article
Fifteen without any action on the part of the Trustee or any Holder, and the
Trustee shall execute any documents reasonably required in order to acknowledge
the release of such Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee endorsed on the Securities and under this Article Fifteen.
ARTICLE SIXTEEN
SUBORDINATION OF SUBSIDIARY GUARANTEES
SECTION 1601. Subsidiary Guarantees Subordinate to Senior Debt
If the Board Resolution or supplemental indenture establishing the terms
of any Security provides that such Security is to be guaranteed by one or more
Subsidiary Guarantors, each of such Subsidiary Guarantors covenants and agrees,
and each Holder of a Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set forth in this
Article (subject to the provisions of Article Four and Article Fifteen), the
payment of the principal of (and premium, if any) and interest on the Subsidiary
Guarantee of such Subsidiary Guarantor is hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all Senior Debt of
such Subsidiary Guarantor.
SECTION 1602. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to a Subsidiary Guarantor or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding up of a Subsidiary Guarantor, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshaling of assets and liabilities of a
Subsidiary Guarantor, then and in any such event specified in (a), (b) or (c)
above (each such event, if any, herein sometimes referred to as a "Subsidiary
Guarantor Proceeding") the holders of Senior Debt of such Subsidiary Guarantor
shall be entitled to receive payment in full of all amounts due or to become due
on or in respect of such Senior Debt, or provision shall be made for such
payment in cash or cash equivalents or any other manner acceptable to the
holders of such Senior Debt, before the Holders of the Securities are entitled
to receive any payment or distribution of any kind or character, whether in
cash, property or securities (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other Debt of such
Subsidiary Guarantor subordinated to the payment of the Subsidiary Guarantee of
such Subsidiary Guarantor, but excluding any payment or distribution of stock or
securities of such Senior Debt provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy law
or of any other corporation provided for by such plan of reorganization or
readjustment which stock or securities are subordinated in right of payment to
all then outstanding Senior Debt of such Subsidiary
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<PAGE> 88
Guarantor to substantially the same extent as the Subsidiary Guarantees are so
subordinated as provided in this Article), on account of the Subsidiary
Guarantee of such Subsidiary Guarantor (all such payments, distributions,
purchases, redemptions and acquisitions herein referred to, individually and
collectively, as a "Subsidiary Guarantor Payment"), and to that end the holders
of Senior Debt of such Subsidiary Guarantor shall be entitled to receive, for
application to the payment thereof, any Subsidiary Guarantor Payment which may
be payable or deliverable in respect of the Subsidiary Guarantee of such
Subsidiary Guarantor in any such Subsidiary Guarantor Proceeding.
Any Subsidiary Guarantor Payments to which the Trustee or the Holders
would be entitled but for the provisions of this Article shall be paid by the
liquidating trustee or agent or other Person making such Subsidiary Guarantor
Payment, whether a trustee in bankruptcy, a receiver or otherwise, directly to
the holders of Senior Debt of such Subsidiary Guarantor or their representative
or representatives or to any trustee or agent under any indenture or other
agreement evidencing or governing any such Senior Debt, ratably according to
the aggregate amounts remaining unpaid on account of the Senior Debt held or
represented by each of them, to the extent necessary to make payment in full of
all Senior Debt remaining unpaid, after giving effect to any concurrent payment
or distribution to the holders of such Senior Debt. As used in this Article,
the phrase "payment in full" (or any similar phrase), when used to refer to the
payment of Senior Debt, shall mean payment in full of the aggregate amount of
such Senior Debt in cash or cash equivalents or any other manner acceptable to
the holders of such Senior Debt.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
Subsidiary Guarantor Payment before all Senior Debt of a Subsidiary Guarantor
are paid in full or payment thereof provided for in cash or cash equivalents or
any other manner acceptable to the holders of such Senior Debt, then and in
such event such Subsidiary Guarantor Payment shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of such Subsidiary Guarantor for application to the payment of all
Senior Debt of such Subsidiary Guarantor remaining unpaid, to the extent
necessary to pay all such Senior Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
The consolidation of a Subsidiary Guarantor with, or the merger of a
Subsidiary Guarantor into, another Person or the liquidation or dissolution of
a Subsidiary Guarantor following the conveyance or transfer of all or
substantially all of its properties and assets as an entirety to another Person
upon the terms and conditions set forth in Article Eight shall not be deemed a
Subsidiary Guarantor Proceeding for the purposes of this Section if the Person
formed by such consolidation or into which such Subsidiary Guarantor is merged
or the Person which acquires by conveyance or transfer such properties and
assets 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 Eight.
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<PAGE> 89
SECTION 1603. No Payment When Senior Debt of the Issuers in Default.
No payment shall be made by a Subsidiary Guarantor under a Subsidiary
Guarantee during any period in which payments by the Issuers on the Securities
are suspended pursuant to the provisions of Section 1403.
In the event that, notwithstanding the foregoing, a Subsidiary Guarantor
shall make any Subsidiary Guarantor Payment to the Trustee or any Holder
prohibited by the foregoing provisions of this Section, then and in such event
such Subsidiary Guarantor Payment shall be paid over and delivered forthwith to
such Subsidiary Guarantor.
The provisions of this Section shall not apply to any Subsidiary
Guarantor Payment with respect to which Section 1602 would be applicable.
SECTION 1604. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Subsidiary Guarantees shall prevent (a) any Subsidiary Guarantor at
any time except during the pendency of any Subsidiary Guarantor Proceeding
referred to in Section 1602 or under the conditions described in Section 1603,
from making Subsidiary Guarantor Payments, or (b) the application by the
Trustee of any money deposited with it hereunder to Subsidiary Guarantor
Payments if, at the time of such application by the Trustee, it did not have
knowledge that such Subsidiary Guarantor Payment would have been prohibited by
the provisions of this Article; provided that clause (b) of the foregoing shall
not be construed to permit the Holders to retain any Subsidiary Guarantor
payment received by such Holders to the extent such Holders would not be
permitted to retain such Subsidiary Guarantor Payment by reason of any other
provisions of this Article.
SECTION 1605. Subrogation to Rights of Holders of Senior Debt of a
Subsidiary Guarantor.
Subject to the payment in full of all amounts due or to become due on or
in respect of Senior Debt of a Subsidiary Guarantor, or the provision for such
payment in cash or cash equivalents or any other manner acceptable to the
holders of Senior Debt of a Subsidiary Guarantor, the Holders of the Securities
shall be subrogated to the rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities applicable to such
Senior Debt until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Debt of such Subsidiary Guarantor
of any cash, property or securities to which the Holders of such Securities or
the Trustee would be entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the holders of
Senior Debt of such Subsidiary Guarantor by Holders of such Securities or the
Trustee, shall, as among any Subsidiary Guarantor, its creditors other than
holders of Senior Debt of such Subsidiary
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<PAGE> 90
Guarantor and the Holders of such Securities, be deemed to be a payment or
distribution by such Subsidiary Guarantor to or on account of the Senior
Debt of such Subsidiary Guarantor.
SECTION 1606. 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 on the one hand and the
holders of Senior Debt of each Subsidiary Guarantor on the other hand.
Nothing contained in this Article or elsewhere in this Indenture, in any
supplemental indenture, in the Securities or in the Subsidiary Guarantees is
intended to or shall (a) impair, as among any Subsidiary Guarantor, its
creditors other than holders of Senior Debt of such Subsidiary Guarantor
and the Holders of the Securities, the obligation of each Subsidiary Guarantor,
which is absolute and unconditional (and which, subject to the rights under
this Article of the holders of Senior Debt of such Subsidiary Guarantor,
is intended to rank equally with all other general obligations of such
Subsidiary Guarantor), to pay to the Holders the payments of all amounts due on
such Securities pursuant to its Subsidiary Guarantee as and when the same shall
become due and payable in accordance with the terms of such Subsidiary
Guarantee; or (b) affect the relative rights against any Subsidiary Guarantor
of the Holders of such Securities and creditors of such Subsidiary Guarantor
other than the holders of Senior Debt of such Subsidiary Guarantor; or
(c) prevent the Trustee or the Holder of any such Security 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 Debt of a Subsidiary Guarantor to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder or to
prohibit Subsidiary Guarantor Payments under the circumstances set forth in
Section 1403.
SECTION 1607. Trustee to Effectuate Subordination.
Each Holder of a Security, by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any Subsidiary Guarantor Proceeding, the timely
filing of a claim for the unpaid balance of the indebtedness owing to such
Holder in respect of such Subsidiary Guarantor's Subsidiary Guarantee, in the
form required in such Subsidiary Guarantor Proceeding, and causing such claim
to be approved or allowed in such Subsidiary Guarantor Proceeding.
-81-
<PAGE> 91
SECTION 1608. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt of any
Subsidiary Guarantor 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 such Subsidiary Guarantor or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by such Subsidiary Guarantor
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt of any Subsidiary Guarantor may, at any time and from
time to time, without the consent of or notice to the Trustee or the Holders of
the Securities, without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the Securities to the
holders of Senior Debt of such Subsidiary Guarantor, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, any Senior Debt of such Subsidiary Guarantor,
or otherwise amend or supplement in any manner any Senior Debt of such
Subsidiary Guarantor or any instrument evidencing the same or any agreement
under which any Senior Debt of such Subsidiary Guarantor is outstanding; (ii)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing any Senior Debt of such Subsidiary Guarantor; (iii)
release any Person liable in any manner for the collection or payment of any
Senior Debt of such Subsidiary Guarantor; and (iv) exercise or refrain from
exercising any rights against such Subsidiary Guarantor and any other Person.
SECTION 1609. Notice to Trustee.
Each Subsidiary Guarantor shall give prompt written notice to the Trustee of
any fact known to such Subsidiary Guarantor which would prohibit the making of
any payment to or by the Trustee in respect of its Subsidiary Guarantee.
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 any Subsidiary Guarantee, unless and until the Trustee shall have
received written notice thereof from a Subsidiary Guarantor or a holder of such
Senior Debt of a Subsidiary Guarantor or from any trustee or agent therefor;
and, prior to the receipt of any such written notice, the Trustee, subject to
the provisions of Section 601, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have
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
(and premium, if any) or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within two Business Days prior to such date.
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<PAGE> 92
Subject to the provisions of Section 601, 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 Debt of a Subsidiary Guarantor (or a trustee or agent
therefor) to establish that such notice has been given by a holder of Senior
Debt of such Subsidiary Guarantor (or a trustee or agent 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 Debt of a Subsidiary
Guarantor 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 the Senior Debt of
such Subsidiary Guarantor 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 1610. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article, the Trustee, subject to the provisions of Section
601, and the Holders of the Securities shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
Subsidiary Guarantor 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, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Debt of a Subsidiary Guarantor and other indebtedness of such
Subsidiary Guarantor, 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 1611. Trustee Not Fiduciary for Holders of Senior Debt of the
Subsidiary Guarantors.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
any Senior Debt of any Subsidiary Guarantor and shall not be liable to any such
holders if it shall in good faith (and absent gross negligence) mistakenly pay
over or distribute to Holders or to any Subsidiary Guarantor or to any other
Person cash, property or securities to which any holders of Senior Debt of such
Subsidiary Guarantor shall be entitled by virtue of this Article or otherwise.
With respect to the holders of any Senior Debt of any Subsidiary Guarantor, the
Trustee undertakes to perform or to observe only such of its covenants or
obligations as are specifically set forth in this Article Sixteen and no implied
covenants or obligations with respect to holders of any Senior Debt of any
Subsidiary Guarantor shall be read into this Indenture against the Trustee.
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<PAGE> 93
SECTION 1612. Rights of Trustee as Holder of Senior Debt of the Subsidiary
Guarantors; 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 Debt of any Subsidiary
Guarantor which may at any time be held by it, to the same extent as any other
holder of any Senior Debt of such Subsidiary Guarantor, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
SECTION 1613. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Issuers 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 1612 shall not apply to the Company, any Subsidiary
Guarantor or any Affiliate of the Issuers or any Subsidiary Guarantor if it,
such Subsidiary Guarantor or such Affiliate acts as Paying Agent.
SECTION 1614. Defeasance of this Article Sixteen.
The subordination of the Subsidiary Guarantees provided by this Article
Sixteen is expressly made subject to the provisions for defeasance or covenant
defeasance in Article Thirteen hereof and, anything herein to the contrary
notwithstanding, upon the effectiveness of any such defeasance or covenant
defeasance that is consummated at a time when a Subsidiary Guarantor Payment
would not be prohibited by Section 1602 or 1603, the Subsidiary Guarantees then
outstanding shall thereupon cease to be subordinated pursuant to this Article
Sixteen.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
IRIDIUM OPERATING LLC
By
----------------------------------
Attest:
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<PAGE> 94
......................................
IRIDIUM CAPITAL CORPORATION
By
----------------------------------
Attest:
......................................
[TRUSTEE]
By
----------------------------------
Attest:
......................................
-85-
<PAGE> 95
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of _______, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is ___________________ of _______________________, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
-----------------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of _______, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is ___________________ of _______________________, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
-----------------------------------
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<PAGE> 96
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ___ day of _______, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is ___________________ of _______________________, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
-----------------------------------
- -----------------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 1
Exhibit 5.1
[CONYERS DILL & PEARMAN LETTERHEAD]
9 November 1998
Iridium World Communications Ltd.
Clarendon House
Church Street
Hamilton HM11
Bermuda
Dear Sirs
Iridium World Communications Ltd.
We have acted as special Bermuda legal counsel to Iridium World Communications
Ltd. (the "Company") in connection with the Registration Statement on Form S-3
(the "Registration Statement", which term does not include any exhibits
incorporated by reference into the Registration Statement) filed with the U.S.
Securities and Exchange Commission (the "Commission") for the purpose of
registering under the United States Securities Act of 1933, as amended (the
"Act") shares of Class A Common Stock in the Company up to an aggregate initial
public offering price of US$750,000,000, less the aggregate initial public
offering price of Subordinated Notes of Iridium Operating LLC and Iridium
Capital Corporation (the "Subordinated Notes") registered pursuant to the
Registration Statement and such additional shares of Class A Common Stock as may
be issuable in exchange for the Subordinated Notes (the "Common Stock").
For the purposes of giving this opinion, we have examined a copy of the
Registration Statement and we have reviewed and have relied upon originals, or
copies certified or otherwise identified to our satisfaction, of the Memorandum
of Association and Bye-laws of the Company as well as Board minutes and
resolutions and Members' minutes and resolutions of the Company. We have also
reviewed originals, or copies certified to our satisfaction, of such corporate
records of the Company and other instruments, certificates of appropriate public
officials and certificates of officers and representatives of the Company and
such other documents and have made such enquiries as to
<PAGE> 2
Iridium World Communications, Ltd.
9 November 1998
Page 2
questions of Bermuda law as we have deemed necessary in order to render the
opinions set forth below.
We have assumed:
(i) the genuineness and authenticity of all signatures and the conformity
to the originals of all copies (whether or not certified) of all
documents examined by us and the authenticity and completeness of the
originals from which such copies were taken;
(ii) the correctness, accuracy and completeness of all factual
representations made in the Registration Statement and in the other
documents which we have reviewed; and
(iii) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions
expressed herein.
We have made no investigation of and express no opinion in relation to the laws
of any jurisdiction other than Bermuda. This opinion is to be governed by and
construed into accordance with the laws of Bermuda and is limited to and is
given on the basis of the current law and practice in Bermuda.
On the basis of and subject to the foregoing, we are of the opinion that when
the Registration Statement has become effective under the Act the Shares of
Common Stock covered by the Registration Statement will be duly authorized for
issuance and sale and upon sale and delivery will be duly and validly issued,
fully paid and non-assessable (which term when used herein shall mean no further
sums are required to be paid by the holders thereof in connection with the
issuance of such shares).
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and to the references of this Firm in the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Yours faithfully
CONYERS DILL & PEARMAN
<PAGE> 1
Exhibit 5.2
November 10, 1998
Iridium Operating LLC,
Iridium Capital Corporation,
Iridium Roaming LLC,
Iridium IP LLC,
Iridium Facilities Corporation,
1575 Eye Street, N.W.,
Washington, D.C. 20005.
Dear Sirs:
In connection with the filing of a registration statement on Form S-3
(the "Registration Statement") for the purpose of registering under the
Securities Act of 1933 (the "Act") (i) up to $750,000,000 aggregate amount of
Subordinated Notes (the "Notes") of Iridium Operating LLC, a Delaware limited
liability company ("Iridium"), and its wholly-owned subsidiary Iridium Capital
Corporation, a
<PAGE> 2
Iridium Operating LLC -2-
Iridium Capital Corporation
Iridium Roaming LLC
Iridium IP LLC
Iridium Facilities Corporation
Delaware corporation (together with Iridium, the "Note Issuers"), and (ii) any
Guarantees of the Notes (the "Guarantees") that may be executed by Iridium
Roaming LLC, a Delaware limited liability company ("Roaming"), Iridium IP LLC, a
Delaware limited liability company ("IP"), or Iridium Facilities Corporation, a
Delaware corporation ("Facilities", and together with Roaming and IP, the
"Guarantor Subsidiaries"), we, as your counsel, have examined such corporate
records, certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. The Notes
and the Guarantees are collectively referred to herein as the "Securities".
Upon the basis of such examination, we advise you that, in our opinion,
when the Registration Statement has become effective under the Act, an
appropriate Prospectus Supplement has been prepared, delivered and filed in
<PAGE> 3
Iridium Operating LLC -3-
Iridium Capital Corporation
Iridium Roaming LLC
Iridium IP LLC
Iridium Facilities Corporation
compliance with the Act and the rules and regulations thereunder, the Indenture
and any Supplemental Indentures relating to the Securities have been duly
authorized, executed and delivered, the terms of the Securities and of their
issuance and sale have been duly established in conformity with the Indenture
and any Supplemental Indenture so as not to violate any applicable law or result
in a default under or breach of any agreement or instrument binding upon any of
the Note Issuers or the Guarantor Subsidiaries and so as to comply with any
requirement or restriction imposed by any court or governmental body having
jurisdiction over any of the Note Issuers or the Guarantor Subsidiaries, and the
Securities have been duly executed, and the Subordinated Notes have been duly
authenticated, in accordance with the Indenture and any Supplemental Indenture
and issued and sold as contemplated in the Registration Statement, (i) the Notes
will constitute valid and legally
<PAGE> 4
Iridium Operating LLC -4-
Iridium Capital Corporation
Iridium Roaming LLC
Iridium IP LLC
Iridium Facilities Corporation
binding obligations of the Note Issuers, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, and (ii) the Guarantees of each Guarantor Subsidiary will constitute
valid and legally binding obligations of such Guarantor Subsidiary, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
In rendering the foregoing opinion, we are expressing no opinion as to
Federal or state laws relating to fraudulent transfers.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law and
<PAGE> 5
Iridium Operating LLC -5-
Iridium Capital Corporation
Iridium Roaming LLC
Iridium IP LLC
Iridium Facilities Corporation
Limited Liability Company Act of the State of Delaware, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from
public officials, officers of the Note Issuers and Guarantor Subsidiaries and
other sources believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity
of the Subordinated Notes and the Subsidiary Guarantees" in the Prospectus
relating to the Securities included in the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
<PAGE> 1
EXHIBIT 12
IRIDIUM OPERATING L.L.C.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
PRIOR PERIOD
TO INITIAL
CAPITAL
CONTRIBUTION DATE PERIODS FOLLOWING INITIAL CAPITAL CONTRIBUTION DATE
------------------ -----------------------------------------------------
December 31,
January 1, 1993 July 29, 1993 to --------------------------
to July 28, 1993 December 31, 1993 1994 1995
---------------- ----------------- ----- -----
<S> <C> <C> <C> <C>
Fixed charges:
Capitalized interest ................. - - - -
Portion of rent expense representative
of interest (1) ...................... - 54 264 342
-------- ----- ------ ----
Total fixed charges................. - 54 264 342
======== ===== ===== ===
Earnings:
Loss before income taxes........... (5,309) (6,751) (13,309) (21,961)
Fixed charges, less capitalized
interest......................... - 54 264 342
Amortization of capitalized
interest......................... - - - -
------- ------ ------ -----
Earnings adjusted
for fixed charges.............. (5,309) (6,697) (13,045) (21,619)
======== ====== ========= ========
Ratio of earnings to fixed charges... - - - -
Deficiency in earnings to cover
fixed charges...................... 5,309 6,751 13,309 21,961
<CAPTION>
PERIODS FOLLOWING INITIAL CAPITAL CONTRIBUTION DATE
-----------------------------------------------------
December 31, Nine
--------------------- Months Ended
1996 1997 September 30, 1998
----- ------ ------------------
<S> <C> <C> <C>
Fixed charges:
Capitalized interest ................. 28,127 163,747 247,448
Portion of rent expense representative
of interest (1) ...................... 398 3,858 4,687
----- ------ -------
Total fixed charges................. 28,525 167,605 252,135
======= ======= ========
Earnings:
Loss before income taxes........... (69,009) (293,401) (812,510)
Fixed charges, less capitalized
interest......................... 398 3,858 4,687
Amortization of capitalized
interest......................... - 7,900 24,649
----- ------- -------
Earnings adjusted
for fixed charges.............. (68,611) (281,643) (787,861)
======= ======== =========
Ratio of earnings to fixed charges... - - -
Deficiency in earnings to cover
fixed charges...................... 97,136 449,248 1,039,996
- ------------
</TABLE>
(1) One-third of rent expense is deemed to be representative of interest.
<PAGE> 1
Exhibit 23.1
Accountants' Consent
The Boards of Directors
Iridium World Communications Ltd., Iridium LLC, and Iridium Operating LLC:
We consent to the use of our reports incorporated herein by reference and to
the references to our firm under the headings "Summary Financial Information"
and "Experts" in the prospectuses.
KPMG Peat Marwick LLP
McLean, Virginia
November 12, 1998