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EXHIBIT 10.8(j)
[GTS LETTERHEAD]
July 21, 1997
Global TeleSystems Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx 00xx Xxxxx
XxXxxx, Xxxxxxxx 00000
Global TeleSystems Group, Inc.
Ladies and Gentlemen:
We refer to (i) the Senior Note Purchase Agreement, dated as of
February 2, 1996, as heretofore amended, between Global TeleSystems Group, Inc.
(the "Company") and Emerging Markets Growth Fund, Inc., as purchaser, and (ii)
the Senior Note Purchase Agreement, dated as of February 2, 1996, as heretofore
amended, between the Company and Capital International Emerging Markets Funds,
as purchaser (each such Senior Note Purchase Agreement being a "Cap Re
Agreement"; and Emerging Markets Growth Fund, Inc. and Capital International
Emerging Markets Fund being, collectively, the "Cap Re Purchasers"). Terms
defined or referenced in either of the Cap Re Agreements and not otherwise
defined or referenced herein are used herein as therein defined or referenced.
The Company and the Cap Re Purchasers hereby agree as follows:
1. Subsection (g) of Section 9.3 of each Cap Re Agreement is amended
by substituting the words "$156 million" for the words "$115 million."
2. Schedule A of each Cap Re Agreement, under the caption "Existing
Financings," is amended by adding the text set forth in Appendix A hereto.
3. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
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4. This letter agreement becomes effective as of the date first
above written, on the date on which the Company and each Cap Re Purchaser shall
have executed and delivered a counterpart hereof. Upon the effectiveness of
this letter agreement, each reference in any Initial Transaction Document or
Transaction Document to either Cap Re Agreement or any term or provision
thereof shall mean such Cap Re Agreement, such term or such provision,
respectively, as amended hereby. Except as otherwise provided herein, the
Transaction Documents shall remain in full force and effect and are hereby in
all respects ratified and confirmed.
5. This letter agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same letter
agreement. Delivery of an executed counterpart of a signature page of this
letter agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this letter agreement.
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Please indicate your agreement to the foregoing by executing a
counterpart of this letter agreement in the appropriate space provided below.
Very truly yours,
EMERGING MARKETS GROWTH CAPITAL INTERNATIONAL
FUND, INC. EMERGING MARKETS FUND
By: /s/ XXXXXXX X. XXXXXX By: /s/ X.X. XXXXXXX
----------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxx Name: X.X. Xxxxxxx
Title: Senior Vice President Title: Director
and Secretary
/s/ XXXXX XXXXXXX
----------------------------
Name: Xxxxx Xxxxxxx
Title: Director
Accepted and Agreed:
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ XXXXX XXXXXXX
---------------------------
Name: Xxxxx Xxxxxxx
Title: Treasurer
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Appendix A
TERMS AND CONDITIONS OF THE BONDS
The following terms and conditions (subject to amendment and except
for the sentences in italics) will be endorsed on the Certificates issued in
respect of the Bonds.
GENERAL
The Senior Subordinated Convertible Bonds due 2000 (the "Bonds") of
Global TeleSystems Group, Inc. (the "Issuer") are issued under an indenture
dated as of July , 1997 (the "Indenture") between the Issuer, The Bank of New
York, as trustee (the "Trustee"), registrar (the "Registrar") and paying,
conversion and transfer agent (the "Principal Paying Agent"). The issue of the
Bonds was authorized by a resolution of the Board of Directors of the Issuer on
June 18, 1997. Certain statements herein are summaries of, and are subject to,
the detailed provisions of the Indenture, which contains the forms of Bonds.
Copies of the Indenture are available for inspection at the registered office
of the Trustee, being at the date hereof at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 and at the specified offices of each of the Paying Agents. The
Bondholders are entitled to the benefit of, are bound by, and are deemed to
have notice of all the provisions of the Indenture. The Bonds are limited in
aggregate original principal amount to U.S.$115,000,000 and mature on June 30,
2000.
STATUS, FORM, DENOMINATION AND TITLE
(A) Status
The Bonds are direct, unsecured, senior subordinated obligations of
the Issuer and will rank pari passu with each other and with all other present
and future unsecured, senior subordinated indebtedness of the Issuer.
(B) Form and Denomination
The Bonds are issued in registered form in the minimum denomination of
U.S.$10,000 and integral multiples of $1,000 in excess thereof.
Bonds which are offered and sold in reliance on Regulation S
("Regulation S Bonds") initially will be represented by beneficial interests in
one or more temporary global certificates in definitive, fully registered form
without interest coupons (each a "Temporary Regulation S Global Certificate")
and will be deposited with a custodian for, and registered in the name of a
nominee of, DTC for the accounts of Euroclear and Cedel. Prior to the 366th day
following the later of the commencement of the offering of the Bonds, the
Closing Date, and the closing date with respect to the Optional Bonds (if any),
beneficial interests in the Temporary Regulation S Global Certificate may be
held only through Euroclear or Cedel and any resale or other transfer of such
interests to "U.S. persons" (as defined in Regulation S) shall not be permitted
during such "Restricted Period" unless made pursuant to an exemption from
registration under the Securities Act and in accordance with the certification
requirements described below. The Temporary Regulation S Global Certificate
will be exchangeable for one or more permanent global certificates (together
with the Temporary Regulation S Global Certificate, the "Regulation S Global
Certificate") after the Restricted Period, upon certification that the
beneficial interests in such Regulation S Global Certificate are owned by
non-U.S. persons in accordance with Regulation S or U.S. persons pursuant to an
exemption from or in a transaction not subject to the Securities Act. The
Issuer has applied to DTC for acceptance of the Bonds which are offered and
resold in reliance on Rule 144A under the Securities Act ("Restricted Bonds")
in DTC's book-entry system. If such application is accepted, such Bonds will be
represented by beneficial interests in one or more permanent global
certificates (the "Restricted Global Certificates" and, together with the
Regulation S Global Certificate, the "Global Certificates") each of which will
be deposited on or about the Closing Date with a custodian for, and registered
in the name of Cede & Co., as nominee for DTC. Beneficial interests in the
Restricted Global Certificates are subject to certain restrictions on transfer.
Bonds offered and sold to Accredited Investors pursuant to the Preemptive
Rights Offering will be delivered in certificated fully registered form only
("Definitive Bonds"). Definitive Bonds will also be Restricted Bonds and are
subject to certain restrictions on transfer. Beneficial interests in the Global
Certificates will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants, which include
Euroclear and Cedel. Except in respect of Bonds originally issued to Accredited
Investors pursuant to the limited preemptive rights offering and in the limited
circumstances described in the Indenture, physical certificates for Bonds will
not be issued in exchange for beneficial interests in the Global Certificates.
The transfer of an interest in a Definitive Bond may only be made in respect of
an interest in a Global Certificate (unless all the Global Certificates have
previously been exchanged for Definitive Bonds). The Bonds are not issuable in
bearer form.
Restricted Bonds will bear the Securities Act Legend unless the Issuer
determines otherwise in accordance with applicable law.
(C) Title
Title to the Bonds passes only by registration in the register of
Bondholders (the "Register") maintained by the Registrar. The registered holder
of any Bond will (except as otherwise required by law) be treated as its
absolute owner for all purposes (whether or not it is overdue and regardless of
any notice of ownership, trust or
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any interest in it or any writing on, or the theft or loss of, the certificate
issued in respect of it) and no person will be liable for so treating the
holder. As used herein, "Bondholder" and (in relation to a Bond) "holder", mean
the person in whose name a Bond is registered.
INTEREST
The Bonds bear interest payable at the rate of per cent. per annum
from and including the date of their issuance to but excluding June 30, 1998,
which rate will increase to per cent. per annum from and including June 30,
1998 to but excluding June 30, 1999 and which rate will increase to per cent.
per annum from and including June 30, 1999 until Maturity. However, in the
event of a Complying Public Equity Offering, the interest rate will remain at
the interest rate prevailing on the day immediately preceding such Complying
Public Equity Offering until Maturity of the Bonds. Interest on each Bond will
cease to accrue from the due date for redemption or conversion thereof unless,
upon due presentation of such Bond, payment of principal is improperly withheld
or refused or conversion is not consummated, as the case may be. In such event,
interest will continue to accrue on such Bond up to and including (a) the date
on which payment in full of the principal thereof (plus accrued interest) is
made or (if earlier) the date on which the funds for the payment in full of the
principal thereof (plus accrued interest) have been received in New York City
by the Trustee or (b) the Bonds are converted to GTS Shares. Interest shall be
computed on the basis of a 360 day year consisting of twelve (12) months of 30
days each and, in the case of an incomplete month, the number of days elapsed.
Interest is payable semiannually in arrears on June 30 and December 31
of each year commencing December 31, 1997 (each, an "Interest Payment Date"),
to the person in whose name a Bond (or any predecessor Xxxx) is registered at
the close of business on the preceding June 15 or December 15, as the case may
be. Each Bond will carry a right to interest in respect of all periods from the
date of issue thereof, or the date from which interest has been paid to,
whichever is later, up to but excluding the relevant Conversion Date.
TRANSFERS OF BONDS; ISSUE OF CERTIFICATES
(A) Transfers
A Bond may be transferred by depositing the certificate issued in
respect of that Xxxx, with the form of transfer on the back duly completed and
signed, at the specified office of the Registrar or any of the Transfer Agents.
Except as set forth below, the Global Certificates may be transferred
in whole, but not in part, solely to another nominee of the depositary or to a
successor of the depositary or its nominee.
Upon the transfer, exchange or replacement of a Restricted Bond, a
Transfer Agent will only deliver certificates that bear The Securities Act
Legend referred to under "Transfer Restrictions", unless there is delivered to
such Transfer Agent such satisfactory evidence, which may include an opinion of
legal counsel, as may be reasonably required by the Transfer Agent, that
neither the Securities Act Legend nor the restrictions on transfer set forth
therein are required to ensure compliance with the provisions of the Securities
Act.
An interest in Bonds represented by the Regulation S Global
Certificate may be transferred to a person who takes delivery in the form of an
interest in Bonds represented by a Restricted Global Certificate only if a
written certificate of the transferor (in the form provided in the Indenture)
is delivered to the Trustee to the effect that such transfer is being made to a
person whom the transferor reasonably believes is a "qualified institutional
buyer" within the meaning of Rule 144A in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities laws
of any State of the United States or any other jurisdiction. Interests in
Restricted Bonds may be transferred to a person who takes delivery in the form
of an interest in Bonds represented by the Regulation S Global Certificate only
if a written certificate from the transferor (in the form provided in the
Indenture) is delivered to the Trustee to the effect that such transfer is
being made in accordance with Regulation S and that, if such transfer occurs
during the Restricted Period, such interest in such Bonds represented by the
Regulation S Global Certificate will be held immediately thereafter through
Euroclear and Cedel. Interests in Bonds represented by a Global Certificate may
not be exchanged for Definitive Bonds except as provided in the limited
circumstances described in (B).
Transfers of Bonds and interests therein are also subject to the
restrictions described under "Subscription and Sale" and "Transfer
Restrictions" below.
Any beneficial interest in one of the Global Certificates that is
exchanged for, or transferred to a person who takes delivery in the form of, an
interest in the other Global Certificate will, upon transfer, cease to be an
interest in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in such
other Global Certificate for as long as it remains such an interest.
Upon the issuance of the Regulation S Global Certificate and the
Restricted Global Certificate, DTC, or its custodian will credit, on its
internal book-entry system, the respective principal amounts of the individual
beneficial interests
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represented by such Global Certificates to the accounts of persons who have
accounts with DTC. Such accounts initially will be designated by or on behalf
of the Managers. Ownership of beneficial interests in such Global Certificates
will be limited to persons who have accounts with DTC ("DTC Participants") or
persons who hold interests through DTC Participants, including depositaries of
Euroclear and Cedel. Ownership of beneficial interests in Global Certificates
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
DTC Participants) and the records of DTC Participants (with respect to
interests of persons other than DTC Participants).
So long as DTC or its nominee is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Bonds represented by such certificate for all
purposes under the Indenture and the Bonds. Unless the circumstances described
below under "Definitive Bonds" have occurred, owners of beneficial interests in
a Global Certificate will not be entitled to have any portion of such Global
Certificate registered in their names, will not receive or be entitled to
receive physical delivery of Bonds in definitive form and will not be
considered to be owners or holders of any Bonds under the Indenture. In
addition, no beneficial owner of an interest in a Global Certificate will be
able to transfer that interest except in accordance with DTC's applicable
procedures (in addition to those under the Indenture referred to herein and, if
applicable, those of Euroclear and Cedel).
Interests in the Regulation S Global Certificate may be held directly
through Euroclear or Cedel by participants in such systems, or indirectly
through organizations that are participants in such systems. After the
expiration of the Restricted Period (but not earlier), interests in the
Regulation S Global Certificate may also he held directly through DTC by DTC
Participants, or indirectly through organizations other than Euroclear or Cedel
or participants in such systems that are DTC Participants. Euroclear and Xxxxx
will hold interests in the Regulation S Global Certificate on behalf of their
participants through their respective depositaries, which in turn will hold
such interests in the Regulation S Global Certificate in customers' securities
accounts in the depositaries' names on the books of DTC.
Payments of the principal, interest and Additional Amounts (as defined
below), if any, in respect of Global Certificates will be made to DTC or its
nominee, as the registered owner thereof. Neither the Issuer, the Trustee, nor
any Paying Agent will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in the Global Certificates or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Issuer expects that DTC or its nominee, upon receipt of any
payment of principal, interest or Additional Amounts, if any, in respect of a
Global Certificate representing any Bonds held by it or its nominee, will
immediately credit DTC Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Certificate as shown on the records of DTC or its nominee. The
Issuer also expects that payments by DTC Participants to owners of beneficial
interests in such Global Certificate held through such DTC Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
DTC Participants.
Transfers between DTC Participants will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds. The
laws of some jurisdictions require that certain persons take physical delivery
of securities in definitive form. Consequently, the ability to transfer
beneficial interests in a Global Certificate to such persons is limited.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a person
having a beneficial interest in a Global Certificate to pledge such interests
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interest, may be affected by lack of a physical
certificate representing such interest. Transfers between participants in
Euroclear and Cedel will be effected in accordance with their respective rules
and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Bonds described herein, cross market transfers between DTC, on the one hand,
and directly or indirectly through Euroclear or Cedel participants, on the
other, will be effected through DTC in accordance with DTC rules on behalf of
Euroclear or Cedel, as the case may be, by its respective depositary; however,
such cross-market transactions will require delivery of instructions to
Euroclear or Cedel, as the case may be, by the counterpart in such system in
accordance with its rules and procedures and within its established deadlines,
Euroclear or Cedel, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the Regulation S Global Certificate in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a
Euroclear or Cedel participant purchasing an interest in a Global Certificate
from a DTC Participant will be credited during the securities settlement
processing day (which must be a business day for Euroclear or Cedel, as the
case may be) immediately following the DTC settlement date, and such credit of
any transactions in interests in a Global Certificate settled during such
processing day will be reported to the relevant Euroclear or Cedel participant
on such day. Cash received in Euroclear or Cedel as a result of sales of
interests in a Global Certificate by or through a Euroclear or Cedel
participant to a DTC Participant will be received for value on the DTC
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settlement date, but will be available in the relevant Euroclear or Cedel cash
account only on the business day following settlement in DTC.
The Issuer expects that DTC will take any action permitted to be taken
by a holder of Bonds (including the presentation of Bonds for exchange as
described below) only at the direction of one or more Participants to whose
account with DTC interests in the Global Certificates are credited, and only in
respect of such portion of the aggregate principal amount of the Bonds as to
which such Participant or Participants has or have given such direction.
However, under the circumstances described below under "Definitive Bonds," DTC
will exchange the Bonds represented by Global Certificates for Definitive
Bonds, which it will distribute to its Participants and which, if representing
interests in the Restricted Global Certificate, will bear the Securities Act
Legend as set forth under "Transfer Restrictions."
The Issuer understands as follows: DTC is a limited purpose trust
company organized under the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities for its
Participants and facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and agents, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, agents
and trust companies that clear through or maintain a custodial relationship
with a DTC Participant, either directly or indirectly ("Indirect
Participants").
Although DTC, Euroclear and Cedel have agreed to the foregoing
procedures in order to facilitate transfers of interests in the Restricted
Global Certificate and in the Regulation S Global Certificate among
participants of DTC, Euroclear and Cedel Bank, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Issuer nor DTC, Euroclear or Cedel or
their respective participants or indirect participants will have any
responsibility for the performance or non-performance of their respective
obligations under the rules and procedures governing their operations.
(B) Definitive Bonds
Bonds represented by interests in Global Certificates are exchangeable
for certificated physical Bonds in registered form only if (i) DTC is at any
time unwilling or unable to continue as a depositary and a successor depositary
is not appointed by the Issuer within 90 days of notice of such fact, or (ii)
the Trustee has instituted or been directed to institute any Judicial
proceeding in a court to enforce the rights of the Bondholders under the Bonds
and has been advised by counsel that it is necessary or appropriate to obtain
possession of certificated physical Bonds.
In the case of certificates for Bonds issued in exchange for
Restricted Bonds, such certificates will bear and be subject to the Securities
Act Legend. The holder of a Definitive Bond may transfer such Bond by
surrendering it at the office or agency maintained by the Issuer for such
purpose, which initially will be the office of the Trustee, or at the
office of any Paying Agent. Upon the transfer, exchange or replacement of
Definitive Bonds bearing the Securities Act Legend, or upon specific request
for removal of the Securities Act Legend on a Definitive Bond, the Issuer will
deliver only Definitive Bonds that bear such Securities Act Legend, or will
refuse to remove such Securities Act Legend, as the case may be, unless there
is delivered to the Issuer and the Trustee or relevant Paying Agent such
satisfactory evidence, which may include an opinion of counsel, as may
reasonably be required by the Issuer and the Trustee or relevant Paying Agent
that neither the Securities Act Legend nor the restrictions on transfer set
forth therein are required to ensure compliance with the provisions of the
Securities Act.
(C) Replacement of Bonds
In case any certificate representing a Bond shall become mutilated,
defaced, destroyed, lost or stolen, the Issuer will execute and, upon the
Issuer's request, the Trustee will authenticate and deliver a new certificate
of like tenor (including the same date of issuance) and equal principal amount,
registered in the same manner, dated the date of its authentication and bearing
interest from the date to which interest has been paid on such Bond, in
exchange and substitution for such Bond (upon surrender and cancellation
thereof in the case of mutilated or defaced Bonds) or in lieu of and
substitution for such Bond. In case such Bond is destroyed, lost or stolen, the
applicant for a substitute Xxxx shall furnish to the Issuer satisfactory
evidence of the destruction, loss or theft of such Bond and of the ownership
thereof Upon the issuance of any substituted Bond, the Issuer may require the
payment by the registered holder thereof of a sum sufficient to cover fees and
expenses connected therewith.
(D) Formalities free of charge
Registration of transfer of Bonds will be effected without charge but
only upon payment (or the giving of such indemnity as the Issuer, the Trustee
or any of the Paying Agents may require) in respect of any tax or other
governmental charges which may be imposed in relation to it.
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(E) Closed periods
No Bondholder may require the transfer of a Bond to be registered
during the period of 15 days ending on the due date for any payment of
principal of or interest on or Additional Amounts, if any, on that Bond or
after a Conversion Notice has been delivered with respect thereto.
(F) Regulations
All transfers of Bonds and entries on the Register will be made
subject to the detailed regulations concerning transfer of Bonds set forth in
the Indenture. The regulations may be changed by the Issuer, with the prior
written approval of the Trustee. A copy of the current regulations will be
mailed (at the Issuer's expense) by the Trustee to any Bondholder who asks for
one.
(G) Payments
The principal of, and premium, if any, on the Bonds will be paid
against surrender thereof at the main office of the Principal Paying Agent
(currently, the Trustee in New York City) or, subject to applicable laws and
regulations, at the offices of the paying agent in Luxembourg by U.S. dollar
check drawn on a bank in the City of New York, or by a wire transfer to a U.S.
dollar account maintained by the payee with a bank in the City of New York. The
Issuer will at all times maintain a Principal Paying Agent and Conversion Agent
in New York City, and, so long as the Bonds are listed on the Luxembourg Stock
Exchange and the Luxembourg Stock Exchange so requires, a Paying Agent,
Conversion Agent and Transfer Agent in Luxembourg.
Payment in respect of interest on any Interest Payment Date with
respect to any Bond will be made to the person in whose name such Xxxx is
registered at the close of business on the June 15 or December 15, as the case
may be, preceding such Interest Payment Date by U.S. dollar check drawn on a
bank in the City of New York mailed to such person at the address specified in
the Register on such day or, under certain circumstances, by wire transfer to a
U.S. dollar account maintained by the payee with a bank in the City of New
York, provided that a written request from such holder to such effect
designating such account is received by the relevant Paying Agent no later than
fifteen days before the relevant Interest Payment Date. Unless such designation
is revoked, any such designation made by such person with respect to such Bond
will remain in effect with respect to any future payments with respect to such
Bond payable to such person.
If any payment on a Bond is due on a day that is, at any place of
payment, a day on which banking institutions are authorized or obligated by law
or executive order to close, then, at each place of payment, such payment need
not be made on such day but may be made on the next succeeding day that is not,
at such place of payment, a day on which banking institutions are authorized or
obligated by law or executive order to close (a "Business Day"), with the same
force and effect as if made on the originally scheduled date of such payment,
and no interest will accrue for the period from and after such date.
ADDITIONAL AMOUNTS
All payments of principal, premium, if any, and interest with respect
to the Bonds will be made without withholding or deduction at source for, or on
account of, any present or future taxes, fees, duties, assessments or
governmental charges of whatever nature imposed or levied by the United States
or any political subdivision or taxing authority thereof or therein, unless
such withholding or deduction is required by (i) the laws (or any regulations
or rulings promulgated thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (ii) an official position
regarding the application, administration, interpretation or enforcement of any
such laws, regulations or rulings (including, without limitation, a holding by
a court of competent jurisdiction or by a taxing authority in the United States
or any political subdivision thereof). If a withholding or deduction at source
is required, the Issuer will, subject to certain limitations and exceptions
(set forth below), pay to a holder of Bonds who is a United States Alien (as
defined herein) such additional amounts ("Additional Amounts") as may be
necessary so that every net payment of principal, premium, if any, or interest
with respect to such Bonds after such withholding or deduction, will not be
less than the amount provided for the Bonds. However, the Issuer shall not be
required to make any payment of Additional Amounts for or on account of:
(a) any tax, fee, duty, assessment or other governmental
charge which would not have been imposed but for (i) the existence of
any present or former connection between such Bondholder (or between a
fiduciary, settlor, beneficiary, member or shareholder of, or
possessor of a power over, such Bondholder, if such Bondholder is an
estate, trust, partnership or corporation) and the United States,
including without limitation, such Bondholder (or such fiduciary,
settlor, beneficiary, member, shareholder or possessor) being or
having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having or having
had a permanent establishment therein, or (ii) the presentation of a
Bond for payment on a date more than 15 days after the date on which
such payment
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became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, fee, duty, or future assessment or other
governmental charge imposed by reason of such Bondholder's past or
present status as a personal holding company, foreign personal holding
company, passive foreign investment company or controlled foreign
corporation with respect to the United States or as a corporation
which accumulates earnings to avoid United States federal income tax;
(d) any tax, fee, duty, assessment or other governmental
charge which is payable otherwise than by withholding from payments of
principal or interest with respect to the Bonds;
(e) any tax, fee, duty, assessment or other governmental
charge imposed on any interest received (x) by a holder or beneficial
owner of Bonds that for U.S. federal income tax purposes is treated as
actually or constructively owning 10% or more of the voting power of
the Company's stock, (y) on an extension of credit made pursuant to a
loan agreement entered into in the ordinary course of business by a
holder or beneficial owner of Bonds that is a bank and (z) by a holder
or beneficial owner of Bonds that is a controlled foreign corporation
and with respect to which the Company is a related person;
(f) any tax, fee, duty, assessment or other governmental
charge required to be withheld by any paying agent from any payment of
principal, premium, if any, or interest with respect to any Bond, if
such payment can be made without such withholding by any other paying
agent with respect to the Bonds;
(g) any tax, fee, duty, assessment or other governmental
charge which would not have been imposed but for the failure to comply
with certification, identification, documentation, information or
other reporting requirements concerning the nationality, residence,
identity or connection with the United States of the Bondholder or of
the beneficial owner of such Bond, if such compliance is required by a
present or future statute, treaty, regulation, ruling or
administrative practice as a precondition to a reduction of or relief
or exemption from such tax, assessment or other governmental charge;
or
(h) any combination of items (a), (b), (c), (d), (e), (f) and
(g);
nor shall Additional Amounts be paid to any holder of a Bond who is a fiduciary
or partnership or other than the sole beneficial owner of the Bond to the
extent a beneficiary or settlor with respect to such fiduciary or a member of
such partnership or a beneficial owner of the Bond would not have been entitled
to payment of the Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the holder of the Bond.
The term "Non-U.S. Holder" means any corporation, individual,
fiduciary or partnership that for United States federal income tax purposes is
a foreign corporation, nonresident alien individual, nonresident alien
fiduciary of a foreign estate or trust, or foreign partnership one or more
members of which is a foreign corporation, nonresident alien individual or
nonresident alien fiduciary of a foreign estate or trust.
REDEMPTION FOR TAX REASONS
The Issuer may redeem any Bond in whole but not in part at any time at
a redemption price equal to the principal amount thereof together, if
appropriate, with accrued interest to but excluding the date fixed for
redemption, if the Issuer shall determine, based upon a written opinion of
independent counsel selected by the Issuer, that as a result of any change in
or amendment to the laws (or any regulations or rulings promulgated thereunder)
of (i) the United States or any political subdivision or taxing authority
thereof affecting taxation or (ii) the relevant taxing jurisdiction or any
political subdivision or taxing authority thereof or therein affecting
taxation, or any change in application or official interpretation of such laws,
regulations or rulings, which amendment or change is effective on or after the
original Issue Date of such Bond, the Issuer would be required to pay
Additional Amounts on the occasion of the next payment due with respect to such
Bond.
Notice of intention to redeem Bonds will be given at least once as
described herein not less than 30 days nor more than 60 days prior to the date
fixed for redemption, provided that no such notice of redemption shall be given
earlier than 90 days prior to the effective date of such change or amendment
and that at the time notice of such redemption is given, such obligation to pay
such Additional Amounts remains in effect and cannot be avoided by the Issuer's
taking reasonable measures available to it. From and after any redemption date,
if monies for the redemption of Bonds shall have been made available for
redemption on such redemption date, such Bonds shall cease to bear interest, if
applicable, and the only right of the holders of such Bonds appertaining
thereto shall be to receive payment of the principal amount thereof, premium if
any, and, if appropriate, all unpaid interest accrued to such redemption date.
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SUBORDINATION
The indebtedness evidenced by the Bonds will, to the extent set forth in
the Indenture, be subordinated in right of payment to the prior payment in full
in cash or Cash Equivalents of all existing and future Senior Indebtedness. In
the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relating to the Issuer or its assets, or any
liquidation, dissolution or other winding-up of the Issuer, whether voluntary
or involuntary, or any assignment for the benefit of creditors or other
marshalling of assets or liabilities of the Issuer, all Senior Indebtedness
will be entitled to be paid in full before any payment or distribution is made
on account of the principal of (including upon redemption), premium, if any, or
interest on the Bonds or Additional Amounts. Notwithstanding the foregoing,
Bondholders may receive shares of stock and any debt securities that are
subordinated at least to the same extent as the Bonds to Senior Indebtedness
and any securities issued in exchange for Senior Indebtedness.
During the continuance of any default in the payment of principal,
premium, if any, or interest on any Designated Senior Indebtedness, when the
same becomes due and such default is continuing beyond any applicable grace
periods, and after receipt by the Trustee and the Issuer from the
representative of holders of such Designated Senior Indebtedness of written
notice of such default, no direct or indirect payment by or on behalf of the
Issuer of any kind or character may be made on account of the principal of
(including redemption amount), premium, if any, or interest on, or the
purchase, redemption or other acquisition of, the Bonds unless and until such
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness shall have been discharged or paid in full.
In addition, upon the occurrence and during the continuance of any other
default with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated as a result of such default (a
"Non-payment Default") and upon receipt by the Trustee and the Issuer from the
representative of holders of such Designated Senior Indebtedness of written
notice of such Non-payment Default, no payment of any kind or character may be
made by the Issuer on account of the principal of, premium, if any, or interest
on, or the purchase, redemption or other acquisition of, the Bonds for the
period specified below (the "Payment Blockage Period").
The Payment Blockage Period shall commence upon receipt of written notice
of a Non-payment Default by the Trustee from the representatives of holders of
Designated Senior Indebtedness and shall end on the earliest to occur of the
following events: (i) 179 days has elapsed since the receipt of such notice
(provided such Designated Senior Indebtedness shall not theretofore have been
accelerated), (ii) such default is cured or waived or ceases to exist or such
Designated Senior Indebtedness is discharged or paid in full, or (iii) such
Payment Blockage Period shall have been terminated by written notice to the
Issuer or the Trustee from the representative of holders of Designated Senior
Indebtedness initiating such Payment Blockage Period, after which the Issuer
shall promptly resume making any and all required payments in respect of the
Bonds, including any missed payments. Only one Payment Blockage Period with
respect to the Bonds may be commenced within any 365 consecutive day period. No
Non-payment Default that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the basis
for the commencement of a second Payment Blockage Period, whether or not within
a period of 365 consecutive days, unless such default has been cured or waived
for a period of not less than 90 consecutive days. In no event will a Payment
Blockage Period extend beyond 179 days from the receipt by the Trustee of the
notice initiating such Payment Blockage Period and there must be a 186
consecutive day period in any 365 day period during which no Payment Blockage
Period is in effect. Notwithstanding the foregoing, no further notice may be
given in respect of any Non-payment Default or in respect of any acceleration
unless and until all scheduled payments of principal, premium, if any, and
interest not paid on the Bonds during any such Payment Blockage Period as a
result of any notice or acceleration shall have been paid in full in cash.
If the Issuer fails to make any payment on the Bonds when due or within
any applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Bonds to accelerate the
maturity thereof. The Issuer will promptly notify holders of Senior
Indebtedness if payment of the Bonds is accelerated because of an Event of
Default. See "- Events of Default."
By reason of such subordination, in the event of any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or similar case or proceeding of the Issuer, creditors of the Issuer who are
holders of Senior Indebtedness may recover more, ratably, than the holders of
the Bonds and funds which would be otherwise payable to the holders of the
Bonds will be paid to the holders of the Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full, and the Issuer may be unable
to meet its obligations fully with respect to the Bonds.
At March 31, 1997 the Issuer had $76.2 million of Senior Indebtedness
outstanding. The Indenture limits, but does not prohibit, the incurrence by the
Issuer of additional Indebtedness (including Indebtedness which is senior to
the Bonds).
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UNDERTAKINGS
Subject to market conditions, it is the intention of GTS to effect a
Complying Public Equity Offering of its Common Stock before June 30, 2000. The
Issuer has agreed with the Managers that, if a Complying Public Equity Offering
has not occurred on or before June 30, 2000, the Issuer will not effect any
public equity offering for a period of six months thereafter.
CONVERSION
(A) Conversion
(i) Complying Public Equity Offering
If a Complying Public Equity Offering occurs prior to the Maturity of
the Bonds, then the Issuer shall, no earlier than twenty Business Days and no
later than fifteen Business Days prior to the anticipated completion of such
offering, cause notice to be given to the Trustee, the Bondholders and the
Luxembourg Stock Exchange to the effect that a Complying Public Equity Offering
is expected to occur on a specified date (the "Conversion Date") and that on
and after the Conversion Date the Bondholders may from time to time until
Maturity of the Bonds by delivery of a notice pursuant to paragraph (B) below,
elect to exercise their Conversion Right, in whole or in part. Following the
completion of such Complying Public Equity Offering, the Issuer shall promptly
cause notice to be given to the Trustee, the Bondholders and the Luxembourg
Stock Exchange stating that the Complying Public Equity Offering has been
completed and confirming the Conversion Date. The Issuer shall also provide in
such notice all information concerning the Complying Public Equity Offering and
all prior offerings since the Issue Date that may be relevant to a Conversion
Price determination or requested by the Trustee in relation thereto (the
"Notice of Offering").
(ii) Non-Complying Equity Offering
If any Non-Complying Equity Offering occurs prior to the Maturity of
the Bonds, then the Issuer shall no later than ten Business Days after the
completion of such offering cause a Notice of Offering to be given to the
Trustee, the Bondholders and the Luxembourg Stock Exchange of such fact and
that at any time and from time to time, in whole or in part (but no earlier
than the 60th day prior to the Maturity of the Bonds) the Bondholders may by
delivery of notice pursuant to paragraph (B) below elect to exercise their
Conversion Right. The Issuer shall also provide in the Notice of Offering all
information concerning all offerings since the Issue Date that may be relevant
to a Conversion Price determination or requested by the Trustee in relation
thereto.
(iii) Delayed Closing Date
If a Complying Public Equity Offering or a Non-Complying Equity
Offering occurs within the 60 day period prior to and ending at the original
Maturity of the Bonds, then for purposes of exercise of the Conversion Right by
Bondholders, the Maturity for all Bonds shall be postponed to the 60th day
following the date of the Notice of Offering and the Bonds will continue to
accrue interest to the date the Bonds are converted, provided that, in no event
will interest accrue for a period longer than 60 days from the original
Maturity of the Bonds.
(iv) Conversion Right Termination
The Conversion Right of any Bondholder in respect of a Bond becoming
redeemable pursuant to the Indenture and in respect of which the conditions
required for conversion have not been satisfied by the relevant Bondholder by
the end of the second Business Day prior to any date for redemption thereof
shall, except as provided below, thereupon terminate. Notwithstanding the
foregoing, if there is a default in making full payment when due of the
redemption monies in respect of any Bond, the Conversion Right in respect
thereof shall extend up to and including the date on which payment has been
received by the Principal Paying Agent or the Trustee.
The Conversion Right of a Bondholder in respect of a Bond becoming
due and payable as a result of the acceleration of the Maturity thereof
following an Event of Default shall terminate on the date that payment with
respect to such Bonds has been received by the Principal Paying Agent or the
Trustee.
(v) General
In the event where Bondholders have elected to convert their Bonds
pursuant to paragraph (i) and (ii) above by giving notice thereof to the
Issuer in accordance with the terms of the Indenture, then any subsequent
redemption of the Bonds shall not affect the right of the holders of such Bonds
to receive GTS Shares and such Bonds shall not be so redeemed.
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No earlier than 60 days and no later than 30 days prior to the Maturity
of the Bonds, the Issuer shall deliver a notice to the Trustee, the Bondholders
and the Luxembourg Stock Exchange of the status of the Conversion Rights, if
any, of the Bondholders.
(B) Conversion Notice
At any time subsequent to the Conversion Date but not later than the
Maturity of the Bonds (as such Maturity may be extended pursuant to (A) (iii)
above) (i) if a Bondholder wishes to elect to exercise his Conversion Right
under paragraph (A)(i) or (A)(ii) above, or (ii) if notice of redemption of the
Bonds pursuant to the Indenture has been given, prior to the date of redemption
specified in such notice or (iii) if the Bonds are subject to acceleration as a
result of an Event of Default, following the date notice thereof is given to
Bondholders, a Bondholder shall complete a notice in the then current form
obtainable from the Trustee or a specified office of a Conversion Agent (a
"Conversion Notice") (which may be accompanied by a share transfer form, or
other instrument which may be required, signed by the Bondholder or may include
an authorization signed by the Bondholder, authorizing the Bondholder's nominee
to become the registered transferee and to execute any requisite transfer form
or other instrument which may be required, on behalf of the Bondholder) and
deliver such Conversion Notice and where appropriate, an executed share
transfer form, or other instrument which may be required, to the Trustee or a
specified office of any Conversion Agent (together with the relevant Bond or
Bonds if in definitive form) and any payment required by paragraph (D) below.
Once given, a Conversion Notice shall be irrevocable and may not be withdrawn
without the consent in writing of the Issuer.
(C) Conversion Price
Each Bond will be converted into such number of GTS Shares as is equal to
the principal amount of such Bond divided by the applicable Conversion Price.
The applicable Conversion Price of the Bonds shall be determined as
follows:
(i) where a Complying Public Equity Offering has not been preceded, since
the Issue Date, by a Non-Complying Equity Offering, the Conversion Price shall
be equal to the per share price to the public in the Complying Public Equity
Offering multiplied by (A) 100 per cent. if the Complying Public Equity
Offering occurs on or before June 30, 1998, (B) 93 per cent. if the Complying
Public Equity Offering occurs on or before June 30, 1999 and after June 30,
1998, or (C) 85 per cent. if the Complying Public Equity Offering occurs after
June 30, 1999;
(ii) where a Complying Public Equity Offering has been preceded by one or
more Non-Complying Equity Offerings since the Issue Date, the Conversion Price
shall be equal to the lower of (a) the dollar-weighted average conversion price
for all of such Non-Complying Equity Offerings and the Complying Public Equity
Offering (as calculated for each such offering by multiplying the gross per
share offering price for the applicable offering by (A) 100 per cent. if the
closing date of such offering occurs on or before June 30, 1998, (B) 93 per
cent. if the closing date of such offering occurs on or before June 30, 1999
and after June 30, 1998, or (C) 85 per cent. if the closing date of such
offering occurs after June 30, 1999) and (b) the conversion price for the
Complying Public Equity Offering alone (as calculated in clause (i) above);
(iii) where a Non-Complying Public Equity Offering which is not a
Complying Public Equity Offering solely by reason of the offering's failure to
satisfy the $100,000,000 offering size condition for a Complying Public Equity
Offering but which offering has an offering size of at least $50,000,000 and
(A) no Complying Public Equity Offering has occurred since the issuance of the
Bonds, and (B) there has been one or more Non-Complying Equity Offerings, the
Conversion Price shall be equal to the lower of (a) the dollar-weighted average
conversion price for all of such Non-Complying Equity Offerings and the
Non-Complying Public Equity Offering (as calculated for each Non-Complying
Equity Offering by multiplying the per share offering price by (A) 100 per
cent. if the closing date of such offering occurs on or before June 30, 1998,
(B) 93 per cent. if the closing date of such offering occurs on or before June
30, 1999 and after June 30, 1998, or (C) 85 per cent. if the closing date of
such offering occurs after June 30, 1999) and (b) the conversion price for the
Non-Complying Public Equity Offering (as calculated in (a) above); or
(iv) in the case of any other Non-Complying Equity Offering not provided
for in clause (iii) above, where no Complying Public Equity Offering has
occurred since the Issue Date, the applicable Conversion Price shall be equal
to the lowest conversion price calculated for each Non-Complying Equity
Offering that has occurred since the Issue Date, where each such conversion
price will be determined by multiplying the gross per share offering price for
each such offering by (A) 100 per cent. if the closing date of such offering
occurs on or before June 30, 1998, (B) 93 per cent. if the closing date of
such offering occurs on or before June 30, 1999 and after June 30, 1998, or (C)
85 per cent. if the closing date of such offering occurs after June 30, 1999.
There shall be excluded from the calculation of the applicable Conversion
Price any Private Equity Offerings aggregating no more than $100 million in
gross proceeds if such offering or offerings are
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consummated on or prior to December 31, 1997 and any Strategic Equity Offering
that occurs from the Issue Date so long as there has occurred a Complying
Public Equity Offering or a Non-Complying Equity Offering.
(D) Stamp and Other Duties and Exchange Costs
Payment of all stamp, transfer and registration duties (if any) and any
brokers' commission and stock exchange transaction charges and any other tax
thereon arising on exercise of Conversion Rights and/or on the transfer or
delivery of GTS Shares by the Issuer (or the Trustee pursuant to the Indenture)
to or to the order of the Trustee or the relevant Bondholder in connection
therewith, payable in or imposed by the United States, any state or other
political sub-division thereof and any other jurisdiction in which the register
in respect of any securities is located will be made or procured by the Issuer.
If the Issuer shall fail to pay any such duties or costs, the relevant
Bondholder shall be entitled to tender and pay the same. The Issuer has in the
Indenture covenanted to reimburse each such Bondholder in respect of the
payment of such duties or costs and any penalties paid in respect thereof. A
Bondholder exercising Conversion Rights must pay to the relevant Conversion
Agent any such duties or costs arising in any other circumstances.
(E) Cash Payment Instructions
Upon the exercise of Conversion Rights, a Bondholder shall, when
delivering the relevant Conversion Notice, give directions to the relevant
Conversion Agent for payment of any cash sum which such Bondholder is entitled
to receive pursuant to the Indenture and which shall be paid by way of U.S.
dollar check drawn on a bank in the City of New York or, under certain
circumstances by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the City of New York.
(F) Fractions arising on Conversion
No fraction of a GTS Share shall be delivered on exercise of Conversion
Rights but a cash payment shall be made by the Issuer to the relevant
Bondholder, pursuant to directions given to the relevant Conversion Agent by
the Bondholder as provided in (E) above, not later than 21 days after the
Conversion Date, of an amount equal to the value of such fraction (such amount
to be rounded up to the nearest U.S.$0.01).
REDEMPTION AND PURCHASE
(A) Final Redemption at Maturity
Unless previously redeemed or converted or to be converted or purchased
and cancelled, on June 30, 2000 (the Maturity) outstanding Bonds will be
redeemed by the Issuer at their principal amount plus accrued interest, if any.
However, in the event that a Complying Public Equity Offering has not occurred
prior to June 30, 2000, outstanding Bonds will be redeemed at Maturity of the
Bonds at 121.0 per cent. of their principal amount plus, accrued interest, if
any.
(B) Acceleration following an Event of Default
If the Bonds are accelerated following the occurrence of an Event of
Default, the Bonds will be repaid at their principal amount multiplied by 106.5
per cent. plus accrued interest to the date of acceleration, if the date of
acceleration occurs on or before June 30, 1998; 113.5 per cent. if the date of
acceleration occurs after such date but on or before June 30, 1999; and 121.0
per cent. if the date of acceleration occurs thereafter; provided that
notwithstanding the foregoing, each Bondholder shall have the option to
exercise his Conversion Right, if any.
The payment of the premium referred to above upon the occurrence of an
Event of Default may not be enforceable under U.S. federal or New York law.
(C) Cancellation
All Bonds redeemed pursuant to the Indenture or purchased by the Issuer
in the open market will be forthwith cancelled and may not be reissued or sold.
The Issuer will not permit its Subsidiaries and will to the fullest extent of
the rights available to it under the relevant contractual or organizational
documents not permit its Significant Joint Ventures to purchase any of the
Bonds.
(D) Limited Optional Redemption
The Bonds are redeemable at the option of the Issuer, in whole but not in
part, on not less than 90 nor more than 120 days' prior notice (which notice
shall provide the Trustee and the Bondholders information concerning the right
of Bondholders to convert prior to being redeemed and information pertinent to
the Conversion Price) at the principal amount thereof plus accrued interest to
the date of redemption, on or after the second anniversary of a Complying
Public Equity Offering, provided that the GTS Shares into which
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Bonds are convertible would not be at the time of redemption "restricted
securities" in the hands of any Bondholder not affiliated with the Issuer,
within the meaning of the Securities Act, and provided, further, that the
average Closing Price of the GTS Shares for the 20 consecutive Trading Days
prior to the date of the Issuer's notice of redemption is greater than 130 per
cent. of the Conversion Price determined in conjunction with such Complying
Public Equity Offering.
The redemption of the Bonds at the option of the issuer under the
Indenture may be prohibited by the terms of or result in an event of default
under or require the consents of holders of Senior Indebtedness of the Issuer.
The Issuer's obligations under its Senior Indebtedness represent obligations
senior in right of payment to the Bonds. Consequently, the purchase of the
Bonds by the Issuer pursuant to an optional redemption will be precluded,
absent any required consent of the lenders under Senior Indebtedness or
repayment of all amounts outstanding thereunder or the waiver of any event of
default caused thereunder.
EVENTS OF DEFAULT
The following are "Events of Default" under the Indenture:
(a) the Issuer fails to pay the principal of or any premium (if any)
or interest (including Additional Amounts) on any of the Bonds when due
(upon Maturity, acceleration, redemption, required purchase or otherwise
and whether or not prohibited by the subordination provisions) and, in
the case of interest only, such failure continues for a period of 30
days; or
(b) the Issuer does not perform or comply with any one or more of its
other obligations in the Bonds or the Indenture (other than a default
under (a) above) for a period of 60 days after written notice of such
default shall have been given to the Issuer by the Trustee or to the
Issuer and the Trustee by holders of at least 25 per cent. in aggregate
principal amount of Bonds then outstanding; or
(c) (i) one or more defaults in the payment of principal of or
premium, if any, on Indebtedness of the Issuer or any Material Subsidiary
or any Significant Joint Venture aggregating U.S.$10 million (or the
foreign currency equivalent thereof) or more, when the same becomes due
and payable at the Maturity thereof, and such default or defaults shall
have continued after any applicable grace period and shall not have been
cured or waived or (ii) Indebtedness of the Issuer or any Material
Subsidiary or any Significant Joint Venture aggregating U.S.$10 million
(or the foreign currency equivalent thereof) or more shall have been
accelerated or otherwise declared due and payable, or required to be
prepaid or repurchased (other than by regularly scheduled required
prepayment) prior to the Maturity thereof; or
(d) any holder or holders of Indebtedness in excess of U.S.$10
million (or the foreign currency equivalent thereof) in the aggregate of
the Issuer or any Material Subsidiary or any Significant Joint Venture
shall notify the Issuer or the Trustee of the intended sale or
disposition of any assets of the Issuer or any such Material Subsidiary
or Significant Joint Venture that have been pledged to or for the benefit
of such person to secure such Indebtedness or shall commence proceedings,
or take action (including by way of set-off) to retain in satisfaction of
any such Indebtedness, or to collect on, seize, dispose of or apply, any
such assets of the Issuer or any Material Subsidiary or any Significant
Joint Venture pursuant to the terms of any agreement or instrument
evidencing any such Indebtedness or in accordance with applicable law; or
(e) one or more final judgments (or judgments which can no longer be
appealed) or orders or similar judicial or administrative action shall be
rendered against the Issuer or any Material Subsidiary or Significant
Joint Venture for the payment of money, either individually or in an
aggregate amount, in excess of U.S.$10 million (or the foreign currency
equivalent thereof) and which shall not have been discharged and either
(A) an enforcement proceeding shall have been commenced by any creditor
upon such judgment or order or similar judicial or administrative action
or (B) there shall have been a period of 60 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, was not in effect; or
(f) the Issuer or any Material Subsidiary or Material Joint Venture,
pursuant to or under or within any applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or like law; (1) commences a
voluntary case or proceeding; (2) consents to the entry of an order for
relief against it in an involuntary case or proceeding; (3) makes a
general assignment for the benefit of its creditors; (4) or shall
generally not pay its debts when such debts become due or shall admit in
writing its inability to pay its debts generally; (5) or a court of
competent jurisdiction (or like entity) shall enter an order or decree
under any applicable law described above that is for relief against the
Issuer or any Material Subsidiary or Material Joint Venture in an
involuntary case or proceeding, appoints a custodian for the Issuer or
such other entity for all or substantially all its properties or orders
the liquidation of the Issuer or such other entity and in each such case
in this clause (5), the order or decree remains unstayed and in effect
for 60 days; (6) or the Issuer or such other entity shall take any
corporate action regarding any of the foregoing; or
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(g) excluding the events referred to in paragraph (f) above, any
seizure, compulsory acquisition, expropriation or nationalization of any
assets of the Issuer, any Subsidiary or Significant Joint Venture for
which there is not paid Fair Market Value and where the seizure,
compulsory acquisition, expropriation or nationalization (whether by an
outright taking or by confiscatory tax or other policies), individually
or in the aggregate, could reasonably be expected to result in a material
adverse effect on the business, (including without limitation the ability
to generate cash flow over the life of the Bonds) the condition
(financial or other), the properties or the results of operations of the
Issuer, its Subsidiaries, and Significant Joint Ventures on a combined
basis (a "Material Adverse Effect").
If an Event of Default (other than as specified in subparagraph (f) above)
shall occur and be continuing, the Trustee, by notice to the Issuer, or the
holders of at least 25 per cent. in aggregate principal amount of the Bonds
then outstanding by notice to the Trustee and the Issuer, may declare the
principal of, premium, if any, and accrued and unpaid interest on all of the
outstanding Bonds due and payable immediately upon which declaration, all
amounts payable in respect of the outstanding Bonds shall be due and payable
immediately. If an Event of Default specified in subparagraph (f) above occurs
and is continuing, then the principal of, premium, if any, and accrued and
unpaid interest, on all of the outstanding Bonds shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any holders of Bonds.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Bonds, by written notice to the Issuer and the Trustee, may rescind
such declaration if (a) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, (ii) all overdue interest on all Bonds,
(iii) the unpaid principal of and premium, if any, on any outstanding Bonds
which have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Bonds, and (iv) to the extent that
payment of such interest is lawful, interest upon overdue interest and overdue
principal at the rate borne by the Bonds which has become due otherwise than by
such declaration of acceleration; (b) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction; and (c) all Events
of Default, other than the non-payment of principal of, premium, if any, and
interest on the Bonds that have become due solely by such declaration of
acceleration, have been cured or waived.
The holders of not less than a majority in aggregate principal amount of
the outstanding Bonds may on behalf of the holders of all the Bonds waive any
past defects under the Indenture, except a default in the payment of the
principal of, premium, if any, or interest on any Bond, or in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each Bond outstanding.
No holder of any of the Bonds has any right to institute any proceeding
with respect to the Indenture or the Bonds or any remedy thereunder, unless the
holders of at least 25% in aggregate principal amount of outstanding Bonds have
made written requests, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Bonds and the Indenture, and the
Trustee has failed to institute such proceeding within 30 days after receipt of
such notice and the Trustee, within such 30-day period, has not received
directions inconsistent with such written request by holders of a majority in
aggregate principal amount of the outstanding Bonds. Such limitations do not
apply, however, to a suit instituted by a holder of a Bond for the enforcement
of the payment of the principal of, premium, if any, or interest on such Bond
on or after the respective due dates expressed in such Bonds.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, whether or not an Event of Default shall occur and be continuing, the
Trustee under the Indenture is not under any obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
holders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of not less than a majority in aggregate principal
amount of the outstanding Bonds 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 under the Indenture.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee shall mail to each holder of the Bonds notice of
the Default or Event of Default within 30 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal or premium, if any, or interest on any Bonds, the Trustee may
withhold the notice to the holders of such Bonds if a committee of its trust
officers in good faith determines that withholding the notice is in the
interest of the holders of the Bonds.
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REPORTING REQUIREMENTS
For the fiscal quarters ending June 30, 1997 and September 30, 1997
and for the fiscal year ended December 31, 1997 the Issuer will (i) transmit by
mail to all Bondholders, as their names and addresses appear in the Register,
without cost to such Bondholders, and (ii) file with the Trustee copies of the
quarterly and audited annual financial reports of the Issuer (including the
condensed, combining financial data in the form and scope set forth in the
condensed, consolidated financial statements of the Issuer for the first
quarter of 1997 and for the fiscal year ending December 31, 1996, respectively)
that are generally distributed to its shareholders at the time such reports are
so distributed.
Beginning with the financial statements of the Issuer for the quarter
ending March 31, 1998 and thereafter, whether or not the Issuer is subject to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto,
the Issuer shall prepare the annual and quarterly reports which the Issuer
would have been required to file with the Securities and Exchange Commission
pursuant to such Section 13(a) or 15(d) or any successor provision thereto
(including the condensed, combining financial data in the form and scope set
forth in the condensed, consolidated financial statements described above) on
or prior to the respective dates (the "Required Filing Dates") by which the
Issuer would have been required so to file such documents. The Issuer shall
also in any event within 15 days of each Required Filing Date (i) transmit by
mail to all Bondholders, as their names and addresses appear in the Register,
without cost to such Bondholders, and (ii) file with the Trustee, copies of
such annual and quarterly reports.
The Issuer is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Issuer of its obligations under the
Indenture and as to any default in such performance. The Issuer is also
required to notify the Trustee within thirty (30) days after the Issuer has
knowledge of any event which is, or after notice or lapse of time or both would
become, an Event of Default.
NEGATIVE PLEDGE AND COVENANTS
So long as any Bond remains outstanding or any amount remains unpaid
with respect to any of the Bonds or up to and including the date of (a) the
Complying Public Equity Offering or (b) a Covenant Defeasance:
(A) Negative Pledge
The Issuer will not, and will not permit any of its Subsidiaries to,
and will to the fullest extent of the rights available to it under the relevant
contractual or organizational documents not permit its Significant Joint
Ventures to, directly or indirectly create, incur, assume or suffer to exist
any Lien that secures obligations under any Pari Passu Indebtedness or
Subordinated Indebtedness on any asset or property of the Issuer or such
Subsidiary or such Significant Joint Venture, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, unless
the Bonds are equally and ratably secured with the obligations so secured
(provided that any Lien securing Subordinated Indebtedness shall be subordinate
and junior to the Lien securing the Bonds with the same relative priority as
such Subordinated Indebtedness shall have with respect to the Bonds) or until
such time as such obligations are no longer secured by a Lien.
(B) Covenants
(a) Limitation on Indebtedness. The Issuer will not, and will not
permit any of its Subsidiaries to and will to the fullest extent of the rights
available to it under the relevant contractual or organizational documents not
permit its Significant Joint Ventures to, directly or indirectly, create,
incur, issue, assume, guarantee or in any manner become directly or indirectly
liable, contingently or otherwise, for the payment of (in each case, to
"incur") any Indebtedness (including any Acquired Indebtedness); provided,
however, that the Issuer, any Subsidiary or any Significant Joint Venture will
be permitted to incur Indebtedness (including Acquired Indebtedness) if (a) at
the time of such incurrence, no Default or Event of Default under the Indenture
has occurred and is continuing, (b) at the time of such incurrence the Fixed
Charge Coverage Ratio for the four full fiscal quarters immediately preceding
the incurrence of such Indebtedness, taken as one period (and after giving pro
forma effect to (i) the incurrence of such Indebtedness and (if applicable) the
application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of such
proceeds occurred, on the first day of such four-quarter period, (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Issuer,
its Subsidiaries and its Significant Joint Ventures since the first day of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period)
and (iii) the acquisition (whether by purchase, merger or otherwise) or
disposition (whether by sale, merger or otherwise) of any company, entity or
business acquired or disposed of by the Issuer or its Subsidiaries or its
Significant joint Ventures, as the case may be, since the first day of such
four-quarter period), would have been at least equal to 2:1 and (c) in the
case of the incurrence of Subordinated Indebtedness or Pari Passu Indebtedness,
such Indebtedness has no scheduled principal payment prior to the 91st day
after the Maturity of the Bonds.
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Notwithstanding the foregoing, the Issuer and its Subsidiaries and
Significant Joint Ventures may, to the extent specifically set forth below,
incur each and all of the following:
(a) Indebtedness of the Issuer evidenced by the Bonds;
(b) Indebtedness of the Issuer, any Subsidiary or any
Significant Joint Venture outstanding on the Issue Date;
(c) Indebtedness of the Issuer, any Subsidiary and any
Significant Subsidiary in an aggregate principal amount at any one
time outstanding not to exceed U.S. $75,000,000 (or the foreign
currency equivalent thereof);
(d) Interest Rate Protection Obligations of the Issuer or
any Subsidiary or any Significant Joint Venture covering Indebtedness
of the Issuer, such Subsidiary or such Significant Joint Venture;
provided, however, that, (x) any Indebtedness to which any such
Interest Rate Protection Obligations relate bears interest at
fluctuating interest rates and is otherwise permitted to be incurred
under this covenant and (y) the notional principal amount of any such
Interest Rate Protection Obligations does not exceed the principal
amount of the Indebtedness to which such Interest Rate Protection
Obligations relate;
(e) Indebtedness of any Subsidiary or Significant Joint
Venture owed to and held by the Issuer, another Subsidiary or
Significant Joint Venture, in each case which is not subordinated in
right of payment to any Indebtedness of such Subsidiary or Significant
Joint Venture, except that (i) any transfer of such Indebtedness by
the Issuer or a Subsidiary or a Significant Joint Venture (other than
to the Issuer or to another Subsidiary or Significant Joint Venture)
and (ii) the sale, transfer or other disposition by the Issuer or any
Subsidiary or Significant Joint Venture of the Capital Stock of any
Subsidiary or ownership interest in any Significant Joint Venture
which is owed Indebtedness from another Subsidiary or Significant
Joint Venture such that the first such Subsidiary or Significant Joint
Venture ceases to be a Subsidiary or Significant Joint Venture shall,
in each case in (i) and (ii), be an incurrence of Indebtedness by the
second such Subsidiary or Significant Joint Venture, as the case may
be, subject to the other provisions of this covenant;
(f) Indebtedness of the Issuer owed to and held by any
Subsidiary or any Significant Joint Venture which is unsecured and
subordinated in right of payment to the payment and performance of the
Issuer's obligations under the Indenture and the Bonds, provided that
any subsequent issuance or transfer of Capital Stock or other
ownership interest or any other event which results in any such
Subsidiary or Significant Joint Venture ceasing to be a Subsidiary or
Significant Joint Venture, as the case may be, or any subsequent
transfer of any such Indebtedness (except to the Issuer or another
Subsidiary or another Significant Joint Venture) shall be deemed, in
each case, to be an incurrence of Indebtedness by the Issuer, subject
to the other provisions of this covenant;
(g) Indebtedness under Currency Agreements; provided that in
the case of Currency Agreements which relate to Indebtedness, such
Currency Agreements do not increase the outstanding Indebtedness of
the Issuer or any Subsidiary or any Significant Joint Venture other
than as a result of fluctuations in foreign currency exchange rates or
by reason of fees, indemnities and compensation payable thereunder;
(h) Indebtedness of the Issuer or any of its Subsidiaries or
any of its Significant Joint Ventures in an aggregate amount on the
date of incurrence, not in excess of 80% of the average of the
outstanding accounts receivable balances of the Issuer, its
Subsidiaries and Significant Joint Ventures on a combined basis at
each of the three preceding quarterly balance sheet dates;
(i) Indebtedness of Hermes as to which the Issuer or any other
Subsidiary or any Significant Joint Venture is not directly or
indirectly liable by virtue of being the primary obligor on, guarantor
of or otherwise liable with respect to, such Indebtedness;
(j) Indebtedness of the Issuer or any Subsidiary or any
Significant Joint Venture represented by letters of credit for the
account of the Issuer or such Subsidiary or such Significant Joint
Venture, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business;
(k) Indebtedness and Acquired Indebtedness incurred by the
Issuer or any Subsidiary or Significant Joint Venture issued to
finance the construction, acquisition, installation or improvement of
Telecommunications Assets to be used in Europe and/or Asia (including
Russia and the CIS) by the Issuer, any Subsidiary or any Significant
Joint Venture;
(l) (i) Indebtedness of the Issuer the proceeds of which are
used solely to refinance (whether by amendment, renewal, extension or
refunding) Indebtedness of the Issuer or any Subsidiary or any
Significant Joint Venture and (ii) Indebtedness of any Subsidiary or
Significant Joint Venture, the proceeds of which are used solely to
refinance (whether by amendment, renewal, extension or refunding)
Indebtedness of such Subsidiary or such Significant Joint Venture, in
each case other than the
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Indebtedness incurred under the preceding clauses (c) through (g) and
(i) through (k) of this covenant; provided, however, that (x) the
principal amount of Indebtedness incurred pursuant to this clause (i)
(or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the original Issue price of such
Indebtedness) shall not exceed the sum of the outstanding principal
amount of Indebtedness so refinanced, plus the amount of any premium
required to be paid in connection with such refinancing pursuant to
the terms of such Indebtedness or the amount of any premium reasonably
determined by the Board of Directors of the Issuer as necessary to
accomplish such refinancing by means of a tender offer or privately
negotiated purchase, plus the amount of expenses in connection
therewith, (y) in the case of Indebtedness incurred by the Issuer
pursuant to this clause (l) to refinance Subordinated Indebtedness,
such Indebtedness (A) has no scheduled principal payment prior to the
91st day after the Maturity of the Bonds, (B) has an Average Life to
Stated Maturity greater than the remaining Average Life to Stated
Maturity of the Bonds and (C) is subordinated to the Bonds in the same
manner and to the same extent that the Subordinated Indebtedness being
refinanced is subordinated to the Bonds and (z) in the case of
Indebtedness incurred by the Issuer pursuant to this clause (l) to
refinance Pari Passu Indebtedness, such Indebtedness (A) has no
scheduled principal payment prior to the 91st day after the Maturity
of the Bonds, (B) has an Average Life to Stated Maturity greater than
the remaining Average Life to Stated Maturity of the Bonds and (C)
constitutes Pari Passu Indebtedness or Subordinated Indebtedness.
(b) Limitation on Restricted Payments. The Issuer will not, and will
not permit any of its Subsidiaries to, and will to the fullest extent of the
rights available to it under the relevant contractual or organizational
documents not permit its Significant Joint Ventures to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution
or payment on or in respect of Capital Stock of the Issuer or any
Subsidiary or any Significant Joint Venture or any payment to the
direct or indirect holders (in their capacities as such) of Capital
Stock of the Issuer or any Subsidiary or any Significant Joint Venture
(other than (x) dividends or distributions payable solely in Capital
Stock of the Issuer such Subsidiary or such Significant Joint Venture
(other than, in each case, Redeemable Capital Stock) or in options,
warrants or other rights to purchase Capital Stock of the Issuer
(other than Redeemable Capital Stock), (y) the declaration or payment
of dividends or other distributions to the extent declared or paid to
the Issuer or any Subsidiary or any Significant Joint Venture, and (z)
the declaration or payment of dividends or other distributions by any
such entity to all holders of equity or similar economic interests of
such entity on a pro rata basis),
(ii) purchase, redeem, defease or otherwise acquire or retire
for value any Capital Stock or other ownership interest of the Issuer
or any Subsidiary or any Significant Joint Venture (other than any
such Capital Stock or other ownership interest owned by a Wholly-Owned
Subsidiary of the Issuer),
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to
any scheduled maturity, scheduled repayment, scheduled sinking fund
payment or other Maturity, any Subordinated Indebtedness (other than
any such Indebtedness owned by the Issuer or a Wholly-Owned Subsidiary
of the Issuer), or
(iv) make any Investment (other than any Permitted Investment)
in any person
(such payments or Investments described in the preceding clauses (i), (ii),
(iii) and (iv) are collectively referred to as "Restricted Payments"), unless,
at the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall be the Fair
Market Value on the date of such Restricted Payment of the asset(s) proposed to
be transferred by the Issuer or the relevant entity described above, as the
case may be, pursuant to such Restricted Payment), (A) no Default or Event of
Default under the Indenture shall have occurred and be continuing, (B)
immediately prior to and after giving effect to such Restricted Payment, the
Issuer would be able to incur $1.00 of additional Indebtedness pursuant to the
first paragraph of the covenant described under "--Limitation on Indebtedness"
above (assuming a market rate of interest with respect to such additional
Indebtedness) and (C) the aggregate amount of all Restricted Payments declared
or made from and after the Issue Date would not exceed the sum of (1) 50 per
cent. of the aggregate Pro rata Combined Adjusted Net Income accrued on a
cumulative basis during the period beginning on the first day of the fiscal
quarter of the Issuer during which the Issue Date occurs and ending on the last
day of the fiscal quarter of the Issuer immediately preceding the date of such
proposed Restricted Payment, which period shall be treated as a single
accounting period (or, if such aggregate cumulative Pro rata Combined Adjusted
Net Income for such period shall be a deficit, minus 100 per cent. of such
deficit) plus (2) the aggregate net cash proceeds received by the Issuer, such
Subsidiary or such Significant Joint Venture either (x) as capital
contributions after the Issue Date from any person (other than a Subsidiary or
Significant Joint Venture) or (y) from the issuance or sale of Capital Stock
(excluding Redeemable Capital Stock, but including Capital Stock issued upon
the conversion of convertible Indebtedness or from the exercise of options,
warrants or rights to purchase Capital Stock (other than Redeemable Capital
Stock)) of such entity to any person (other than to a Wholly-Owned Subsidiary)
after the Issue Date plus (3) in the case of the disposition or repayment of
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any Investment constituting a Restricted Payment made after the Issue Date
(excluding any Investment described in clause (v) of the following paragraph),
an amount equal to the lesser of the return of capital with respect to such
Investment and the cost of such Investment, in either case, less the cost of
the disposition of such Investment. For purposes of the preceding clause
(C)(2), the value of the aggregate net proceeds received by the Issuer upon the
issuance of Capital Stock upon the conversion of convertible Indebtedness or
upon the exercise of options, warrants or rights will be the net cash proceeds
received upon the issuance of such Indebtedness, options, warrants or rights
plus the incremental cash amount received by the Issuer upon the conversion or
exercise thereof.
None of the foregoing provisions will prohibit (i) the payment of any
dividend within 60 days after the date of its declaration, if at the date of
declaration such payment would be permitted by the foregoing paragraph; (ii)
the redemption, repurchase or other acquisition or retirement of any shares of
any class of Capital Stock of the Issuer or any Subsidiary in exchange for, or
out of the net cash proceeds of, a substantially concurrent (x) capital
contribution to the Issuer from any person (other than a Subsidiary) or (y)
issue and sale of other shares of Capital Stock (other than Redeemable Capital
Stock) of the Issuer to any person (other than to a Subsidiary); provided,
however, that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase or other acquisition or retirement shall be
excluded from clause (C)(2) of the preceding paragraph; (iii) any redemption,
repurchase or other acquisition or retirement of Subordinated Indebtedness by
exchange for, or out of the net cash proceeds of, a substantially concurrent
(x) capital contribution to the Issuer from any person (other than a Subsidiary
or Joint Venture) or (y) issue and sale of (1) Capital Stock (other than
Redeemable Capital Stock) of the Issuer to any person (other than to a
Subsidiary or Joint Venture); provided, however, that the amount of any such
net cash proceeds that are utilized for any such redemption, repurchase or
other acquisition or retirement shall be excluded from clause (C)(2) of the
preceding paragraph; or (2) Indebtedness of the Issuer issued to any person
(other than a Subsidiary or Joint Venture), so long as such Indebtedness is
Subordinated Indebtedness which (x) has no Maturity earlier than the 91st day
after the Maturity of the Bonds, (y) has an Average Life to Stated Maturity
equal to or greater than the remaining Average Life to Stated Maturity of the
Bonds and (z) is subordinated to the Bonds in the same manner and at least to
the same extent as the Subordinated Indebtedness so purchased, exchanged,
redeemed, acquired or retired; (iv) so long as no Default or Event of Default
shall have occurred and be continuing, any redemption, repurchase or other
acquisition or retirement of Pari Passu Indebtedness by exchange for, or out of
the net cash proceeds of, a substantially concurrent (x) capital contribution
to the Issuer from any person (other than a Subsidiary or Joint Venture) or (y)
issue and sale of (1) Capital Stock (other than Redeemable Capital Stock) of
the Issuer to any person (other than to a Subsidiary or Joint Venture);
provided, however, that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase or other acquisition or retirement
is excluded from clause (C)(2) of the preceding paragraph; or (2) Indebtedness
of the Issuer issued to any person (other than a Subsidiary or Joint Venture),
so long as such Indebtedness is Subordinated Indebtedness or Pari Passu
Indebtedness which (x) has no Maturity earlier than the 91st day after the
Maturity of the Bonds and (y) has an Average Life to Stated Maturity equal to
or greater than the remaining Average Life to Stated Maturity of the Bonds; (v)
Investments constituting Restricted Payments made as a result of the receipt of
non-cash consideration from any Asset Sale made pursuant to and in compliance
with the covenant described under "--Disposition of Proceeds of Asset Sales"
below; (vi) payments or other actions described in clauses (i) through (vi) in
the next preceding paragraph above that would otherwise be Restricted Payments
in an aggregate amount not to exceed U.S.$10 million (or the foreign currency
equivalent thereof); and (vii) so long as no Default or Event of Default has
occurred and is continuing, repurchases by the Issuer of Common Stock of the
Issuer from employees of the Issuer or any of its Subsidiaries or their
authorized representatives upon the death, disability or termination of
employment of such employees, in an aggregate amount not exceeding U.S.$10
million (or the foreign currency equivalent thereof) in any calendar year. In
computing the amount of Restricted Payments previously made for purposes of
clause (C) of the preceding paragraph, Restricted Payments made under the
preceding clauses (vi), and (vii) shall be included and clauses (i), (ii),
(iii), (iv) and (v) shall not be so included.
(c) Change of Control. Upon the occurrence of a Change of Control, the
Issuer shall be obligated to make an offer to purchase (a "Change of Control
Offer") all of the outstanding Bonds at a purchase price (the "Change of
Control Purchase Price") equal to 106.5 per cent. (if the date of such
redemption occurs on or before June 30, 1998), 113.5 per cent. (if the date of
redemption occurs after such date but on or before June 30, 1999) or 121.0 per
cent. (if the date of redemption occurs after June 30, 1999), as applicable, of
the principal amount thereof plus accrued and unpaid interest, if any, to the
purchase date which shall be no earlier than 60 days and no later than 90 days
from the date the notice of the Change of Control Offer is mailed to the
Bondholders and the Trustee (the "Change of Control Purchase Date"). The Issuer
shall be required to purchase all Bonds properly tendered (or the portions
thereof equal to U.S.$10,000 or increments of U.S.$1,000 in excess thereof that
are so tendered by a Bondholder in the case of a partial tender) into the
Change of Control Offer and not withdrawn on the Change of Control Purchase
Date. The Change of Control Offer is required to remain open for at least 20
Business Days and until the close of business on the Change of Control Purchase
Date.
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In order to effect such Change of Control Offer, the Issuer shall, not
later than the 30th day prior to the occurrence of the Change of Control, give
to each holder of Bonds notice of the proposed Change of Control Offer, which
notice shall govern the terms of the Change of Control Offer and shall state,
among other things, the procedures that holders of Bonds must follow to accept
the Change of Control Offer.
The occurrence of the events constituting a Change of Control under
the Indenture may be prohibited by the terms of or result in an event of
default under or require the consents of holders of Senior Indebtedness of the
Issuer. The Issuer's obligations under its Senior Indebtedness represent
obligations senior in right of payment to the Bonds. Consequently, the
subordination provisions of the Indenture will have the effect of precluding
the purchase of the Bonds by the Issuer in the event of a Change of Control,
absent any required consent of the lenders under Senior Indebtedness or
repayment of all amounts outstanding thereunder or the waiver of any event of
default caused thereunder by such Change of Control (although the failure by
the Issuer to comply with its obligations in the event of a Change of Control
will constitute a Default under the Bonds). There can be no assurance that the
Issuer will have adequate resources to repay or refinance all Indebtedness
owing under the Senior Indebtedness or to fund the purchase of the Bonds upon a
Change of Control.
The Issuer shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Issuer and purchases all
Bonds validly tendered and not withdrawn under such Change of Control Offer.
The Issuer will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that a Change of Control occurs and
the Issuer is required to purchase Bonds as described above.
(d) Disposition of Proceeds of Asset Sales. The Issuer will not, and
will not permit any of its Subsidiaries to, and will to the fullest extent of
the rights available to it under the relevant contractual or organizational
documents not permit its Significant Joint Ventures to, make any Asset Sale
unless (a) the Issuer or such entity, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets sold or otherwise disposed of and (b) at least 75
per cent. of such consideration consists of cash or Cash Equivalents or the
assumption of Indebtedness of the Issuer or such Subsidiary or such Significant
Joint Venture or other obligations relating to such assets and release from all
liability on the Indebtedness or other obligations assumed, or such
consideration consists of (x) property or assets that will be owned by the
Issuer, or a Subsidiary or a Significant Joint Venture and are to be used in a
telecommunications business or in related activities or services that
thereafter will be conducted by the Issuer or such Subsidiary or such
Significant Joint Venture or (y) Capital Stock or other securities issued by a
party to the transaction or an Affiliate thereof, which Capital Stock or other
securities are freely tradeable and which are sold for cash within 90 days of
the consummation of the Asset Sale in connection with which they were acquired.
To the extent the Net Cash Proceeds of any Asset Sale are not required to be
applied to repay, and permanently reduce the commitments under Senior
Indebtedness or Indebtedness of a Subsidiary or Indebtedness of a Significant
Joint Venture or are not so applied, the Issuer or such entity, as the case may
be, within 360 days of such Asset Sale, will apply such Net Cash Proceeds to an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that will be
used in the business of the Issuer and such entities existing on the Issue Date
or in businesses reasonably related thereto ("Replacement Assets"). Any Net
Cash Proceeds from any Asset Sale that are neither used to repay, and
permanently reduce the commitments under Senior Indebtedness or Indebtedness of
a Subsidiary or Indebtedness of a Significant Joint Venture, nor invested in
Replacement Assets within the 360-day period described above constitute "Excess
Proceeds" subject to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds
U.S.$10,000,000, the Issuer shall make an offer to purchase (an "Asset Sale
Offer"), from all holders of the Bonds, on a date not more than 40 Business
Days thereafter, an aggregate principal amount of Bonds equal to such Excess
Proceeds, at a price in cash equal to 100 per cent. of the outstanding
principal amount thereof plus accrued and unpaid interest, if any, to the
purchase date. To the extent that the aggregate principal amount of Bonds
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Issuer may use such excess for general corporate purposes. If the aggregate
principal amount of Bonds validly tendered and not withdrawn by holders thereof
is less than the Excess Proceeds, Bonds to be purchased will be selected on a
pro rata basis. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset to zero.
The making of any Asset Sale Offer under the Indenture may be
prohibited by the terms of or result in an event of default under or require
the consents of holders of Senior Indebtedness of the Issuer. The Issuer's
obligations under its Senior Indebtedness represent obligations senior in right
of payment to the Bonds. Consequently, the purchase of the Bonds by the Issuer
pursuant to an Asset Sale Offer will be precluded, absent any required consent
of the lenders under Senior Indebtedness or repayment of all amounts
outstanding thereunder. There can be no assurance that the Issuer will have
adequate resources to repay or refinance all Indebtedness owing under the
Senior Indebtedness or to fund the purchase of the Bonds pursuant to an Asset
Sale Offer.
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The Issuer will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that an Asset Sale occurs and the
Issuer is required to purchase Bonds as described above.
(e) Limitation on Transactions with Interested Persons. The Issuer
will not, and will not permit any of its Subsidiaries to, and will to the
fullest extent of the rights available to it under the relevant contractual or
organizational documents not permit its Significant Joint Ventures to, directly
or indirectly, enter into or suffer to exist any transaction or series of
related transactions (including, without limitation, the sale, transfer,
disposition, purchase, exchange or lease of assets, property or services) with,
or for the benefit of, any Affiliate of the Issuer, any Subsidiary or
Significant Joint Venture or any beneficial owner (determined in accordance
with the Indenture) of 5 percent or more of the Capital Stock or other
ownership interest of any of the foregoing entities at any time outstanding
("each of the foregoing being Interested Persons"), unless (a) such transaction
or series of related transactions is on terms that are no less favorable to the
Issuer or such Subsidiary or Significant Joint Venture, as the case may be,
than those which could have been obtained in a comparable transaction at such
time from persons who are not Affiliates or Interested Persons, (b) with
respect to a transaction or series of transactions involving aggregate payments
or value equal to or greater than U.S.$20,000,000 (or the foreign currency
equivalent thereof), the Issuer has obtained a written opinion from an
Independent Financial Advisor stating that the terms of such transaction or
series of transactions are fair to the Issuer or such Subsidiary or such
Significant Joint Venture, as the case may be, from a financial point of view
and (c) with respect to a transaction or series of transactions involving
aggregate payments or value equal to or greater than U.S.$10,000,000 (or the
foreign currency equivalent thereof), the Issuer shall have delivered an
officer's certificate to the Trustee certifying that such transaction or series
of transactions complies with the preceding clause (a) and, if applicable,
certifying that the opinion referred to in the preceding clause (b) has been
delivered and that such transaction or series of transactions has been approved
by a majority of the disinterested members of the Board of Directors of the
Issuer; provided, however, that this covenant will not restrict the Issuer from
(i) paying dividends in respect of its Capital Stock permitted under the
covenant described under "-- Limitation on Restricted Payments" above, (ii)
paying reasonable and customary fees to directors of the Issuer who are not
employees of the Issuer, (iii) making loans or advances to officers or
employees of the Issuer and its Subsidiaries or Significant Joint Ventures
(including travel and moving expenses) in the ordinary course of business for
bona fide business purposes of the Issuer or such Subsidiary or Significant
Joint Venture not in excess of U.S.$5,000,000 (or the foreign currency
equivalent thereof), in the aggregate at any one time outstanding, (iv)
engaging in any transaction involving the provision of telecommunications
services or related activities between or among the Issuer, any Subsidiary or
any Significant Joint Venture and, provided that such transaction is in the
ordinary course of business and consistent with commercially reasonable
practice, any Joint Venture of the Issuer that is not a Significant Joint
Venture or between any of them or (v) any agreement as in effect as of the
Issue Date or any amendment thereto or any transaction contemplated thereby,
as listed in a schedule to the Indenture (including pursuant to any amendment
thereto so long as any such amendment in the judgment of the Board of Directors
voting to approve the amendment does not have a material adverse effect on the
Bondholders).
(f) Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries and Significant Joint Ventures. The Issuer will not, and will not
permit any of its Subsidiaries to, and will to the fullest extent of the rights
available to it under the relevant contractual or organizational documents not
permit its Significant Joint Ventures to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary or Significant Joint Venture
to (a) pay dividends, in cash or otherwise, or make any other distributions on
or in respect of its Capital Stock or any other interest or participation in,
or measured by, its profits to the Issuer or any Subsidiary or any Significant
Joint Venture, (b) pay any Indebtedness owed to the Issuer or any other
Subsidiary or Significant Joint Venture, (c) make loans or advances to, or any
investment in, the Issuer or any other Subsidiary or Significant Joint Venture,
(d) transfer any of its properties or assets to the Issuer or any other
Subsidiary or Significant Joint Venture or (e) guarantee any Indebtedness of
the Issuer or any Subsidiary or Significant Joint Venture, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) customary nonassignment provisions of any contract or any lease governing
a leasehold interest of the Issuer or any Subsidiary or Significant Joint
Venture, (iii) customary restrictions on transfers of property subject to a
Lien permitted under the Indenture which could not materially adversely affect
the Issuer's ability to satisfy its obligations under the Indenture and the
Bonds, (iv) any agreement or other instrument of a person acquired by the
Issuer or any Subsidiary or Significant Joint Venture (or a Subsidiary of such
person) in existence at the time of such acquisition (but not created in
contemplation thereof), which encumbrance or restriction is not applicable to
any person, or the properties or assets of any person, other than the person,
or the properties or assets of the person, so acquired, (v) provisions
contained in agreements or instruments relating to Indebtedness which prohibit
the transfer of all or substantially all of the assets of the obligor
thereunder unless the transferee shall assume the obligations of the obligor
under such agreement or instrument, (vi) encumbrances and restrictions under
Indebtedness in effect on the Issue Date and encumbrances and restrictions in
permitted refinancings or replacement thereof which are no less favorable to
the holders of the
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Bonds than those contained in the Indebtedness so refinanced or replaced, (vii)
any agreement in existence at the Issue Date or (viii) encumbrances and
restrictions in connection with Subsidiaries acquired after the Issue Date and
Significant Joint Ventures entered into after the Issue Date, including with
respect to any financing thereof, that are no more adverse to the Issuer than
those referred to in (vii) above), (ix) in the case of clause (d) of this
covenant above, arising or agreed to in the ordinary course of business, not
relating to any Indebtedness and that do not individually, or together with all
such encumbrances or restrictions, detract from the value of the property or
assets of the Issuer or any Subsidiary or any Significant Joint Venture in any
manner material to the Issuer or any Subsidiary or any Significant Joint
Venture, (x) contained in the terms of any Indebtedness incurred by Hermes or
any agreement pursuant to which such Indebtedness was issued if the encumbrance
or restriction is not materially more disadvantageous to the Bondholders than
is customary in comparable financings (as determined by the Company) and the
Company determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal payments on the Bonds, (xi)
contained in any stockholders or similar agreement, so long as such encumbrance
or restriction is not more disadvantageous to the Bondholders than the
encumbrances and restrictions contained in comparable agreements entered into
in the past by the Issuer, any of its Subsidiaries or Significant Joint
Ventures, or (xii) contained in any agreement entered into after the Issue
Date, so long as such encumbrance or restriction is not materially more
disadvantageous to the Bondholders than the encumbrances and restrictions
contained in agreements in existence on the Issue Date.
(g) Limitation on Sale-Leaseback Transactions. The Issuer will not,
and will not permit any of its Subsidiaries to, and will to the fullest extent
of the rights available to it under the relevant contractual or organizational
documents not permit its Significant Joint Ventures to, enter into any
Sale-Leaseback Transaction with respect to any property of the Issuer or any of
its Subsidiaries or Significant Joint Ventures other than a Sale-Leaseback
Transaction between the Issuer, a Subsidiary or Significant Joint Venture or
between any of them. Notwithstanding the foregoing, the Issuer and its
Subsidiaries or Significant Joint Ventures may enter into Sale-Leaseback
Transactions involving Telecommunications Assets; provided that (i) the Issuer,
or such Subsidiary or Significant Joint Venture, as the case may be, would be
entitled to create or incur a Lien to secure Indebtedness pursuant to the
provisions of the "Negative Pledge" covenant equal in amount to the
Attributable Value of the Sale-Leaseback Transaction without equally and
ratably securing the Bonds and (ii) the Sale-Leaseback Transaction is treated
as an Asset Sale and the provisions of the "Disposition of Proceeds of Asset
Sales" covenant are satisfied with respect to such Sale-Leaseback Transaction.
(h) Limitation on Guarantees by Subsidiaries. The Issuer will not
permit any Subsidiary to, and will to the fullest extent of the rights
available to it under the relevant contractual or organizational documents not
permit its Significant Joint Ventures to, directly or indirectly, assume,
guarantee or in any other manner become liable with respect to any Indebtedness
of the Issuer which is Subordinated Indebtedness or Parri Passu Indebtedness
unless such Subsidiary or Significant Joint Venture, as the case may be,
simultaneously executes and delivers a supplemental indenture to the Indenture,
pursuant to provisions in form and substance satisfactory to the Trustee,
providing for a guarantee of payment of the Bonds by such Subsidiary or
Significant Joint Venture and (A) if any such assumption, guarantee or other
liability is subordinated, the guarantee under such supplemental indenture
shall be subordinated to the same extent as the Bonds are subordinated to
Senior Indebtedness of the Issuer under the Indenture and (B) any such
assumption, guarantee or other liability of such Subsidiary or Significant
Joint Venture with respect to Subordinated Indebtedness shall be subordinated
to such Subsidiary's assumption, guarantee or other liability with respect to
the Bonds to the same extent as such Subordinated Indebtedness is subordinated
or junior to the Bonds under the Indenture.
(i) Merger, Sale of Assets, Etc. The Issuer will not, in any
transaction or series of transactions, merge or consolidate with or into, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets as an entirety to, any person or
persons, and the Issuer will not permit any of its Subsidiaries to, and will to
the fullest extent of the rights available to it under the relevant contractual
or organizational documents not permit its Significant Joint Ventures to, enter
into any such transaction or series of transactions if such transaction or
series of transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the respective properties and assets of the Issuer and its Subsidiaries and
Significant Joint Ventures on a combined basis, to any other person or persons,
unless at the time of and after giving effect thereto (a) either (i) if the
transaction or series of transactions is a merger or consolidation, the Issuer
shall be the surviving person of such merger or consolidation, or (ii) the
person formed by such consolidation or into which the Issuer or such Subsidiary
or Significant Joint Venture is merged or to which the properties and assets of
the issuer and its Subsidiaries and Significant Joint Ventures are transferred
(any such surviving person or transferee person being the "Surviving Entity")
shall be a corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia or the United
Kingdom, the Federal Republic of Germany, France or Italy and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the Issuer
under the Bonds and the Indenture, and in each case, the Indenture shall remain
in full force and effect; (b) immediately before and immediately after
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giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series
of transactions), no Default or Event of Default shall have occurred and be
continuing and the Issuer or the Surviving Entity, as the case may be, after
giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series
of transactions), could incur $1.00 of additional Indebtedness pursuant to the
first paragraph of the covenant described under "-- Limitation on Indebtedness"
above (assuming a market rate of interest with respect to such additional
Indebtedness); (c) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), the Consolidated Net
Worth of the Issuer or the Surviving Entity, as the case may be, is at least
equal to the Consolidated Net Worth of the Issuer immediately before such
transaction or series of transactions: (d) such consolidation, merger,
conveyance, transfer, lease or other disposition does not adversely affect the
validity or enforceability of the Bonds; and (e) if the Surviving Entity is
organized in a jurisdiction other than the United States of America, any state
thereof or the District of Columbia, such entity appoints CT Corporation
System, New York, New York, as its agent for service of process in any suit,
action or proceeding with respect to the Indenture or the Bonds issued
thereunder and for actions brought under federal or state securities laws
brought in any federal or state court located in the Borough of Manhattan in
The City of New York and submits to such jurisdiction, waives forum non
conveniens, waives or is not subject to immunity from suit and any judgments
brought against such entity in respect of the Indenture and the Bonds may be
recognized and enforced in such jurisdiction of its organization.
In connection with any consolidation, merger, transfer, lease,
assignment or other disposition contemplated hereby, the Issuer shall deliver,
or cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an officer's certificate and an opinion of
counsel, each stating that, such consolidation, merger, transfer, lease,
assignment or other disposition and the supplemental indenture in respect
thereof comply with the foregoing requirements; provided, however, that solely
for purposes of computing amounts described in subclause (C) of the covenant
described under "-- Limitation on Restricted Payments" above, any such successor
person shall only be deemed to have succeeded to and be substituted for the
Issuer with respect to periods subsequent to the effective time of such merger,
consolidation or transfer of assets.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer in accordance with the foregoing,
in which the Issuer is not the continuing corporation, the successor
corporation formed by such a consolidation or into which the Issuer is merged
or to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under the Indenture with the
same effect as if such successor corporation had been named as the Issuer
therein.
(j) Anti-Layering. The Company will not create, incur, assume,
guarantee or in any other manner become liable with respect to any Indebtedness
that is subordinate in right of payment to any Senior Indebtedness unless such
Indebtedness is also pari passu with, or subordinate in right of payment to,
the Bonds.
Registration Rights
Prior to the Issue Date, the Issuer shall have entered into a
registration rights agreement with the Trustee, amongst others, for the benefit
of the holders of the Bonds whereby the Issuer, at its expense, will cause a
shelf registration statement covering the issuance and resale of a sufficient
number of GTS Shares that may be issuable upon conversion of the Bonds to be
declared effective under the Securities Act prior to the first date on which
any of such GTS Shares may be issued upon such conversion. The Issuer is
required to use its best efforts to maintain the effectiveness of such shelf
registration statement until the earliest of (i) the expiration of the time
period referred to in Rule 144(k) under the Securities Act with respect to all
beneficial holders of GTS Shares that are not affiliates of the Issuer within
the meaning of the Securities Act, (ii) such time as all the GTS Shares covered
by such registration statement have been sold pursuant to such registration
statement and (iii) such time as the Bonds are no longer outstanding. The
Issuer will provide to each Bondholder and each holder of GTS Shares into
which Bonds are converted with copies of the prospectus that is part of such
registration statement, notify such holders of the effectiveness of such
registration statement and take all other action required to permit
unrestricted resales of such GTS Shares. A holder who sells the GTS Shares
pursuant to the shelf registration statement generally will be required to be
named as a selling stockholder in the related prospectus and to deliver a
prospectus to purchasers and will be bound by the provisions of the
Registration Rights Agreement which are applicable to such holder (including
certain indemnification provisions). If a shelf registration statement covering
the GTS Shares is not effective, the GTS Shares may not be sold or otherwise
transferred except in accordance with the provisions set forth under "Transfer
Restrictions."
Each holder will be required to provide the Issuer with all
information with respect to such holder required by the Securities Act prior to
the effectiveness of the shelf registration statement and must notify the
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Issuer not later than three Business Days prior to any proposed sale by
such holder of GTS Shares pursuant to the shelf registration statement, which
notice shall be effective for five Business Days. The Issuer may, upon written
notice to such holder, suspend such holder's use of the prospectus (which is
part of the shelf registration statement) for up to two periods not to exceed
45 consecutive days but not more than 60 days in any 365-day period if the
issuer in its reasonable judgment believes it may posses material non-public
information the disclosure of which would have an adverse effect on the Issuer
or any of its Subsidiaries or any Significant Joint Venture. Each holder, by its
acceptance of a Bond, agrees to hold any communication by the Issuer in
response to a notice of a proposed sale under the shelf registration statement
in confidence.
If a shelf registration statement has not been filed and does not
remain effective with the Commission as required by the Registration Rights
Agreement (a "Registration Default"), additional interest ("Liquidated
Damages") will accrue on the Bonds from and including the day following such
Registration Default to but excluding the day on which such Registration
Default has been cured. Liquidated Damages will be paid semi-annually in
arrears, with the first semi-annual payment due on the first Interest Payment
Date, as applicable, following the date on which such Liquidated Damages begin
to accrue and will accrue at a rate per annum of one quarter of one per cent.
(.25%) of the principal amount, to and including the 90th day following such
Registration Default and at a rate per annum of one half of one per cent. (.5%)
thereof from and after the 91st day following such Registration Default. In no
event will Liquidated Damages accrue at a rate per annum exceeding one half of
one per cent. (.5%).
The specific provisions relating to the registrations described above
will be contained in the Registration Rights Agreement to be entered into on or
prior to the Closing Date of this offering.
RESERVATION OF GTS SHARES
The Issuer shall at all times reserve and keep available out of its
authorized common stock, solely for the purpose of issuance or delivery upon
conversion of the Bonds, the number of GTS Shares that it reasonably believes
will be required to be delivered in connection with such conversion pursuant to
the terms of the Indenture.
GOVERNING LAW
The Indenture and the Bonds will be governed by the internal laws of
the State of New York, without regard to the principles of conflicts of law.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means, with respect to any specified person,
(i) Indebtedness of any other person at the time such other person merged
with or into or became a Subsidiary or Significant Joint Venture of such
specified person, and (ii) Indebtedness encumbering any asset acquired by such
specified person.
"Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition to any person other than the Issuer or a Wholly-Owned
Subsidiary of the Issuer, in one or a series of related transactions, of (a) any
Capital Stock of any Subsidiary or Significant Joint Venture (other than in
respect of director's qualifying shares or investments by foreign nationals
mandated by applicable law); (b) all or substantially all of the properties and
assets of any division or line of business of the Issuer or any Subsidiary or
Significant Joint Venture; or (c) any other properties or assets of the Issuer
or any Subsidiary or Significant Joint Venture other than in the ordinary
course of business. For the purposes of this definition, the term "Asset Sale"
shall not include (i) any sale, transfer or other disposition of equipment,
tools or other assets (including Capital Stock or other equity of any
Subsidiary or Significant Joint Venture) by the Issuer or any of its
Subsidiaries or Significant Joint Ventures in one or a series of related
transactions in respect of which the Issuer or such Subsidiary or Significant
Joint Venture receives cash or property with an aggregate Fair Market Value of
U.S.$10,000,000 (or the foreign currency equivalent thereof) or less; (ii) any
sale, issuance, conveyance, transfer, lease or other disposition of properties
or assets that is governed by the provisions described under "--Merger, Sale of
Assets, Etc." above and (iii) any direct or indirect sale, transfer or other
disposition of shares of Capital Stock of Hermes so long as after such sale,
transfer or other disposition the Issuer owns or controls at least 51 per cent.
of the Voting Stock of Hermes.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years (or any
fraction thereof) from such date to the date or dates of each successive
schedule principal payment (including, without limitation, any sinking fund
requirements) of such Indebtedness multiplied by (b) the amount of each such
principal payment by (ii) the sum of all such principal payments.
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"Capital Research Notes" means the aggregate $30 million of notes
issued pursuant to (i) the Senior Note Purchase Agreement, dated as of February
2, 1996, as amended, between GTS and Emerging Markets Growth Fund, Inc. and
(ii) the Senior Note Purchase Agreement, dated as of February 2, 1996, as
amended, between GTS and Capital International Emerging Markets Funds.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of the Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof
at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any evidence of Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than U.S.$500,000,000 (or the foreign currency equivalent
thereof); (iii) certificates of deposit with a maturity of 180 days or less of
any financial institution that is not organized under the laws of the United
States, any state thereof or the District of Columbia that are rated at least
A-1 by S&P or at least P-1 by Xxxxx'x or at least an equivalent rating category
of another nationally recognized securities agency; (iv) repurchase agreements
and reverse repurchase agreements relating to marketable direct obligations
issued or unconditionally guaranteed by the government of the United States of
America or issued by any agency thereof and backed by the full faith and credit
of the United States of America, in each case maturing within 180 days from the
date of acquisition; provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions With Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Permitted Holders, is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening
of an event or otherwise), directly or indirectly, of more than 40 per cent. of
the total Voting Stock of the Issuer (50.1 per cent. in the case of a Strategic
Investor); (b) the Issuer consolidates with, or merges with or into, another
person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any person, or any person consolidates
with, or merges with or into, the Issuer, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Issuer is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (i) the outstanding Voting Stock of the Issuer is converted
into or exchanged for (1) Voting Stock (other than Redeemable Capital Stock) of
the surviving or transferee corporation or (2) cash, securities and other
property in an amount which could then be paid by the Issuer as a Restricted
Payment under the Indenture, or a combination thereof, and (ii) immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 50 per cent. of the total Voting Stock of
the surviving or transferee corporation; (c) at any time during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors of the Issuer (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Issuer was approved by a vote of 66 2/3 per cent. of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Issuer then in office; or (d) the Issuer is liquidated or
dissolved or adopts a plan of liquidation.
"Chatterjee Notes" means the aggregate $40 million of notes issued
pursuant to (i) the Senior Note Purchase Agreement, dated as of January 19,
1996, as amended, among GTS, The Open Society Institute and Chatterjee Fund
Management, L.P. and (ii) the Senior Note Purchase Agreement, dated as of June
6, 1996, as amended, among the Company, The Open Society Institute, Winston
Partners II LDC and Winston Partners II LDC.
"Common Stock" means, with respect to any person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such person's common
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stock, whether outstanding at the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Closing Price" means the closing price of the GTS Shares on a Qualifying
Stock Exchange or if the GTS Shares are listed on more than one such exchange
the average of such closing prices on all such exchanges.
"Complying Public Equity Conditions" means the following conditions: (i)
the Issuer has made public sales of GTS Shares with a cumulative public offering
price of at least US$100,000,000 to an aggregate of not less than 50 purchasers;
(ii) the GTS Shares have been listed or shall be listed in connection with the
offering on either the New York Stock Exchange, the London Stock Exchange, the
American Stock Exchange or the Nasdaq National Market; and (iii) the Issuer
shall have registered additional GTS Shares from Private Equity Offerings with a
market value of at least U.S.$100,000,000 calculated using the offering price in
the Complying Public Equity Offering.
"Complying Public Equity Offering" means a public offering of GTS Shares
where, immediately following completion thereof, (a) the Complying Public Equity
Conditions have been met and (b) the aggregate number of GTS Shares sold
thereby, together with any GTS Shares sold in any prior public offerings plus
the number of GTS Shares into which the Bonds may be converted (calculated as if
such conversion were to be effected on the date of determination) does not
exceed 50 percent of the total GTS Shares outstanding on a fully diluted basis.
"Consolidated Net Worth" means, with respect to any person at any date,
the consolidated stockholders' equity of such person less the amount of such
stockholders' equity attributable to Redeemable Capital Stock of such person
and its subsidiaries, as determined in accordance with GAAP.
"Conversion Date" means the earliest date possible after the listing of
the GTS Shares on the New York Stock Exchange, London Stock Exchange, the
American Stock Exchange or the Nasdaq National Market that the Issuer may
deliver GTS Shares to converting Bondholders.
"Covenant Defeasance" means the 123rd day after (i) the Issuer has
irrevocably deposited with the Trustee, in trust, for the benefit of the
Bondholders, cash in U.S. dollars, non-callable U.S. Government Obligations, or
a combination thereof, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accounts selected by the
Issuer, to pay the principal of and premium, if any, on the outstanding Bonds at
their Maturity or on the applicable optional redemption date, as the case may
be, of such principal or installment of principal of, or premium, if any, on
the outstanding Bonds; (ii) the Issuer must have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the holders of the outstanding Bonds will not recognize income,
gain or loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred; (iii) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or insofar as
Events of Default from bankruptcy or insolvency events are concerned, at any
time in the period ending on the 91st day after the date of deposit; (iv) such
Covenant Defeasance will not result in a breach or violation of, or constitute a
default under any material agreement or instrument (other than the Indenture)
to which the Issuer or any of its Subsidiaries or Significant Joint Ventures is
a party or by which the Issuer or any of its Subsidiaries or Significant Joint
Ventures is bound; (v) the Issuer must have delivered to the Trustee an opinion
of counsel to the effect that after the 123rd day (or such other applicable
date) following the deposit of the instruments referred to in (i), the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and the creation of the defeasance trust does not violate the
Investment Company Act of 1940, as amended; (vi) the Issuer must have delivered
to the Trustee an Officers' Certificate of the Issuer stating that the deposit
was not made by the Issuer with the intent of preferring the Bondholders over
the other creditors of the Issuer with the intent of defeating, hindering,
delaying or defrauding creditors of the Issuer or others; and (vii) the Issuer
must have delivered to the Trustee an Officers' Certificate of the Issuer and
an opinion of counsel in the United States acceptable to the Trustee, each
stating that all conditions precedent provided for relating to the Covenant
Defeasance have been complied with.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Issuer or any Subsidiary or any Significant Joint Venture against fluctuations
in currency values.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means Senior Indebtedness permitted under
the Indenture, the principal amount of which is $30 million (or the foreign
currency equivalent) or more and has been designated by the Issuer as
Designated Senior Indebtedness (which includes the Chatterjee Notes and the
Capital Research Notes).
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"Eligible Joint Venture" means a Joint Venture (other than a Subsidiary)
(i) that is formed with respect to the construction, development, acquisition,
servicing, ownership, improvement, operation or management of a
telecommunications business, (ii) in which the Issuer, directly or indirectly,
owns at least 25 per cent. of the Capital Stock or other ownership interest
therein and (iii) in respect of which the Issuer, directly or indirectly,
either (a) controls, by voting power, membership on the board of directors or
management committee or other similar governing body, or through the provisions
of any applicable partnership, joint venture, shareholder or other similar
agreement or under an operating, maintenance or management agreement or
otherwise, the management and operation of the Joint Venture and any
telecommunications project of such Joint Venture or (b) otherwise has the right
to control or veto material acts and decisions with respect to the management
or operation of the Joint Venture that, taken as a whole, are substantially
similar to the rights of the Issuer with respect to the Existing Joint Ventures
as of the Issue Date.
"Event of Default" has the meaning set forth under "Events of Default"
herein.
"Existing Joint Venture" means any of PrymTelefon, Bancomsvyaz,
TeleCommunications of Moscow, Hermes Europe Railtel B.V., LvNet-Telport, GTS
Monaco Access X.X.X., Sovam Teleport Kiev Division L.L.C., EDN Sovintel, all
the entities in which SPMT-Rusnet, Inc. currently has an interest, all the
entities in which Vostok Mobile b.v. currently has an interest and their
respective successors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any assets, the price, as
determined by the Board of Directors of the Issuer, acting in good faith which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under
pressure or compulsion to complete the transaction; provided, however, that,
with respect to any transaction or related series of transactions which
involves an asset or assets in excess of U.S.$10,000,000 (or the foreign
currency equivalent thereof); in the aggregate, such determination shall be
evidenced by resolutions of the majority of disinterested members of the Board
of Directors of the Issuer delivered to the Trustee.
"Fixed Charge Coverage Ratio" of the Issuer means, for any period, the
ratio of (a) the sum of Pro rata Combined Adjusted Net Income, Pro rata Combined
Interest Expense, Pro rata Combined Tax Expense and Pro rata Combined Non-cash
Charges deducted in computing Pro rata Combined Adjusted Net Income, in each
case, for such period to (b) Pro rata Combined Interest Expense for such period.
"GAAP" means, generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable from time to
time and are consistently applied.
"Indebtedness" means, with respect to any person, without duplication, (a)
all liabilities of such person for borrowed money or for the deferred purchase
price of property or services, excluding any (1) trade payables and (2) other
accrued current liabilities incurred in the ordinary course of business,
including, without limitation, all obligations, contingent or otherwise, of
such person in connection with any letters of credit, banker's acceptance or
other similar credit transaction, (b) all obligations of such person evidenced
by bonds, debentures or other similar instruments, (c) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such person, (e) all Indebtedness referred to in the preceding
clauses of other persons and all dividends of other persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned
by such person, even though such person has not assumed or become liable for
the payment of such Indebtedness (the amount of such obligation being deemed
to be the lesser of the value of such property or asset or the amount of the
obligation so secured), (f) all guarantees of Indebtedness referred to in this
definition by such person, (g) all Redeemable Capital Stock of such person
valued at the greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued dividends, (h) all obligations under or in respect of
Currency Agreements and Interest Rate Protection Obligations of such person,
(i) any Preferred Stock of the Issuer that provides for payments of
liquidation value by way of a sinking fund, or by way of a mandatory
redemption, defeasance, retirement, repurchase or otherwise, or allows the
holder the option to redeem, in each case prior to the 91st day prior to the
Maturity of the Bonds (valued at the sum of (without duplication)(A) the
liquidation preference thereof, (B) any mandatory redemption payment
obligations in respect thereof and (C) accrued dividends thereon), and (j) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (a) through (i) above.
For purposes hereof, the "maximum fixed repurchase price" of any Redeemable
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with
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the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the fair market value of such Redeemable Capital Stock, such fair
market value shall be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a material
direct or indirect financial interest in the Issuer any Subsidiary or
Significant Joint Venture and (ii) which, in the judgment of the Board of
Directors of the Issuer, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Interest Rate Protection Agreement" means any arrangement with any
other person whereby, directly or indirectly, such person is entitled to
receive from time to time periodic payments calculated by applying either a
floating or a fixed rate of interest on a stated notional amount in exchange
for periodic payments made by such person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include without
limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any
person pursuant to an Interest Rate Protection Agreement.
"Investment" means, with respect to any person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such person of any Capital Stock, bonds, debentures or other securities or
evidences of Indebtedness issued by, any other person. "Investments" shall
exclude extensions of trade credit in the ordinary course of business in
accordance with normal trade practices.
"Issue Date" means the closing date for the sale and issuance of the
Bonds under the Indenture.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether corporation, partnership or other legal form where the
Issuer or one or more Subsidiaries or by the Issuer and one or more
Subsidiaries has, directly or indirectly, less than a majority of the Voting
Stock or other ownership interest.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance upon or with respect to any property of any
kind; provided that in no event shall an operating lease be deemed to
constitute a Lien. A person shall be deemed to own subject to a Lien any
property which such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Material Joint Venture" means a Joint Venture that, as of the end of
the most recent four-quarter period, had (i) total assets which exceeded 10 per
cent. of the total combined assets of the Issuer for such period or (ii) total
revenues which exceeded 15 per cent. of the total combined revenues of the
Issuer for such period.
"Material Subsidiary" means a Subsidiary that, as of the end of the
most recent four-quarter period, had (i) total assets which exceeded 10 per
cent. of the total combined assets of the Issuer for such period or (ii) total
revenues which exceed 15 per cent. of the total combined revenues of the Issuer
for such period.
"Maturity" means, (i) when used with respect to the Bonds, June 30,
2000 and (ii) when used with respect to any Indebtedness other than the Bonds,
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse) net of (i) brokerage commissions and other fees and expenses
(including, without limitation, fees and expenses of legal counsel and
investment bankers) related to such Asset Sale, (ii) provisions for all taxes
payable as a result of such Asset Sale, (iii) amounts required to be paid to
any person (other than the Issuer or any Subsidiary) owning a beneficial
interest in the assets subject to the Asset Sale and (iv) appropriate amounts
to be provided by the Issuer or any Subsidiary, as the case may be, as a
reserve required in accordance with GAAP against any liabilities associated
with such Asset Sale and retained by the Issuer or any Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee.
"Non-Complying Equity Offering" means (i) a private offering of GTS
Shares or (ii) a public offering of GTS Shares that is not a Complying Public
Equity Offering.
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"Non-Complying Public Equity Offering" means a public equity offering
of GTS Shares that satisfies all the Complying Public Equity Conditions, except
that the cumulative public offering price is less than US$100,000,000.
"Pari Passu Indebtedness" means Indebtedness of the Issuer which ranks
pari passu in right of payment with the Bonds.
"Permitted Holder" means (A) Xxxx X. Xxxxxx and any entity controlled
by him, (B) one or more of Xxxxxx Xxxxx, Xxxxx Fund Management LLC, Xxxxxxxx
Xxxxxxxxxx or Chatterjee Management Company or affiliates of any of the
foregoing, and any person or entity for which any such person or entity acts as
investment advisor or investment manager and (C) any person that acquires the
capital stock of the Issuer in a Strategic Equity Offering.
"Permitted Investments" means any of the following: (i) Investments in
any Subsidiary or Significant Joint Venture; (ii) Investments in any person
that is merged or consolidated with or into, or transfers or conveys all or
substantially all of its assets to, the Issuer or any Subsidiary or Significant
Joint Venture of the Issuer at the time such Investment is made; (iii)
Investments in cash or Cash Equivalents; (iv) Investments in deposits with
respect to leases or utilities provided to third parties in the ordinary course
of business; (v) Investments in the Bonds; (vi) Investments in Currency
Agreements on commercially reasonable terms entered into by the Issuer or any
of its Subsidiaries or Significant Joint Ventures in the ordinary course of
business in connection with the operations of the business of the Issuer or its
Subsidiaries or Significant Joint Ventures to hedge against fluctuations in
foreign exchange rates; (vii) loans or advances to officers, employees of the
Issuer and its Subsidiaries or Significant Joint Ventures in the ordinary
course of business for bona fide business purposes of the Issuer and its
Subsidiaries or Significant Joint Ventures (including travel and moving
expenses) not in excess of U.S.$5,000,000 (or the foreign currency equivalent)
in the aggregate at any one time outstanding; (viii) Investments in evidences
of Indebtedness, securities or other property received from another person by
the Issuer or any of its Subsidiaries or Significant Joint Ventures in
connection with any bankruptcy proceeding or by reason of a composition or
readjustment of debt or a reorganization of such person or as a result of
foreclosure, perfection or enforcement of any Lien in exchange for evidences of
Indebtedness, securities or other property of such person held by the Issuer or
any of its Subsidiaries or Significant Joint Ventures, or for other liabilities
or obligations of such other person to the Issuer or any of its Subsidiaries or
Significant Joint Ventures that were created, in accordance with the terms of
the Indenture; (ix) Investments in Interest Rate Protection Agreements on
commercially reasonable terms entered into by the Issuer or any of its
Subsidiaries or Significant Joint Ventures in the ordinary course of business
in connection with the operations of the business of the Issuer or its
Subsidiaries or Significant Joint Ventures to hedge against fluctuations in
interest rates; and (x) Investments in entities that are not Subsidiaries or
Significant Joint Ventures, to finance the construction, installation,
improvement, acquisition or operation of Telecommunications Assets, provided
that such Investments do not exceed in the aggregate, the greater of
U.S.$25,000,000 (or the foreign currency equivalent) or 10 per cent. of the pro
rata combined assets of the Issuer or, individually, the greater of
U.S.$5,000,000 (or the foreign currency equivalent) or 2 per cent. of the pro
rata combined assets of the Issuer.
"person" means any individual, corporation, limited liability company
partnership, joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"PORTAL" means the PORTAL trading system of the NASD.
"Private Equity Offering" means a private offering of GTS Shares
pursuant to an exemption from registration under the Securities Act.
"Pro rata Combined Adjusted Net Income" means, for any period, the pro
rata combined net income (or loss) of the Issuer and its Subsidiaries and
Significant Joint Ventures for such period, adjusted by excluding, without
duplication, (a) any net after-tax extraordinary gains or losses (less all fees
and expenses relating thereto), (b) any net after-tax gains or losses (less all
fees and expenses relating thereto) attributable to asset dispositions other
than in the ordinary course of business, and (c) the portion of net income (or
loss) of any person (other than the Issuer or a Subsidiary or a Significant
Joint Venture of the Issuer), in which the Issuer or any such Subsidiary or
Significant Joint Venture has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to the Issuer or
any Subsidiary or any such Significant Joint Venture in cash dividends or
distributions during such period.
"Pro rata Combined Interest Expense" means, for any period, without
duplication, the sum of (a) the pro rata interest expense of the Issuer and all
Subsidiaries and all Significant Joint Ventures of the Issuer for such period,
including, without limitation, (i) amortization of debt discount, (ii) the net
cost of Interest Rate Protection Agreements (including amortization of
discounts), (iii) the interest portion of any deferred payment obligation and
(iv) amortization of debt issuance costs, plus (b) the pro rata interest
component of Capitalized Lease Obligations of the Issuer, its Subsidiaries and
Significant Joint Ventures during such period, less (c) pro rata interest
income of the Issuer and all Subsidiaries and all Significant Joint Ventures,
in each case as
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determined on a pro rata combined basis; provided that (x) the Pro rata
Combined Interest Expense attributable to interest on any Indebtedness computed
on a pro forma basis and (A) bearing a floating interest rate shall be computed
as if the rate in effect on the date of computation had been the applicable
rate for the entire period and (B) which was not outstanding during the period
for which the computation is being made but which bears, at the option of the
Issuer, a fixed or floating rate of interest, shall be computed by applying at
the option of the Issuer, either the fixed or floating rate, and (y) in making
such computation, the Pro rata Combined Interest Expense attributable to
interest on any Indebtedness under a revolving credit facility computed on a
pro forma basis shall be computed based upon the average daily balance of such
Indebtedness during the applicable period; provided further that,
notwithstanding the foregoing, the interest rate with respect to any
Indebtedness covered by any Interest Rate Protection Agreement shall be deemed
to be the effective interest rate with respect to such Indebtedness after
taking into account such Interest Rate Protection Agreement.
"Pro rata Combined Income Tax Expense" means, for any period the
provision for federal, state, local and foreign income taxes of the Issuer and
all Subsidiaries and all Significant Joint Ventures of the Issuer for such
period as determined on a pro rata combined basis.
"Pro rata Combined Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Issuer and its
Subsidiaries and Significant Joint Ventures reducing Pro rata Combined Adjusted
Net Income for such period, determined on a pro rata combined basis (excluding
any such non-cash charge that requires an accrual of or reserve for cash
charges for any future period).
"Qualifying Stock Exchange" means the New York Stock Exchange, the
American Stock Exchange, the London Stock Exchange or the Nasdaq National
Market.
"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock, that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any Bond
or is redeemable at the option of the holder thereof at any time prior to any
such Stated Maturity Date, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity.
"Sale-Leaseback Transaction" of any person means an arrangement with any
lender or investor or to which such lender or investor is a party providing for
the leasing by such person of any property or asset of such person which has
been or is being sold or transferred by such person after the acquisition
thereof or the completion of construction or commencement of operation thereof
to such lender or investor or to any person to whom funds have been or are to
be advanced by such lender or investor on the security of such property or
asset. The stated maturity of such arrangement shall be the date of the last
payment of rent or any other amount due under such arrangement prior to the
first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Senior Indebtedness" means the principal of, premium, if any, and
interest on any Indebtedness of the Issuer, whether outstanding on the Issue
Date or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Bonds.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a)
Indebtedness evidenced by the Bonds, (b) Indebtedness that is pursuant to the
instrument creating such Indebtedness expressly subordinate or junior in right
of payment to any Indebtedness of the Issuer, (c) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to the Issuer, (d) Indebtedness which
is represented by Redeemable Capital Stock, (e) Indebtedness for goods,
materials or services purchased in the ordinary course of business or
Indebtedness consisting of trade payables or other current liabilities, (f)
Indebtedness of or amounts owed by the Issuer for compensation to employees or
for services rendered to the Issuer, (g) any liability for federal, state,
local or other taxes owed or owing by the Issuer, (h) Indebtedness of the
Issuer to a Wholly-Owned Subsidiary of the Issuer or any other Affiliate of the
Issuer or any of such Affiliate's Wholly-Owned Subsidiaries, (i) that portion
of any Indebtedness which is incurred by the Issuer in violation of the
Indenture and (j) amounts owing under leases (other than Capitalized Lease
Obligations).
"Significant Joint Venture" means any Existing Joint Venture or any
Eligible Joint Venture.
"S&P" means Standard & Poor's Corporation, and its successors.
"Strategic Equity Offering" means a private sale of more than 10 per cent.
and less than 30 per cent. (calculated on a fully-diluted basis after giving
effect to such offering) of GTS Shares to a Strategic Investor.
"Strategic Investor" means an entity that has a total market
capitalization of at least $3,000,000,000 or a rating of at least BBB- from S&P
and/or a rating of Baa3 from Moody's, and is engaged in the business of
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providing telecommunications services or in the manufacture and sale of
telecommunications equipment, or any Subsidiary of such person.
"Subordinated Indebtedness" means Indebtedness of the Issuer which is
by its terms subordinated in right of payment to the Bonds.
"Subsidiary" means, with respect to the Issuer, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
the Issuer, by one or more Subsidiaries of the Issuer or by the Issuer and one
or more Subsidiaries and (ii) any other person (other than a corporation),
including, without limitation, a joint venture, in which the Issuer, one or
more Subsidiaries or the Issuer and one or more Subsidiaries, directly or
indirectly, at the date of determination thereof, has at least majority
ownership interest entitled to vote in the election of directors, managers or
trustees thereof (or other person performing similar functions). For purposes
of this definition, and directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
"Telecommunications Assets" means, with respect to any person, any
tangible or intangible asset (including the capital stock of another person)
that is utilized by such person, directly or indirectly, for the design,
development, installation, integration, management or provision of
telecommunications systems and/or services, including without limitation, any
business or services in which the Issuer, or any Subsidiary or any Significant
Joint Venture of the Issuer is engaged at the Issue Date.
"Trading Days" means, with respect to a securities exchange or
automated quotation system, a day on which such exchange or system is open for
a full day of trading.
"U.S. Government Obligations" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligations or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of principal of or interest on the U.S. Government Obligations evidenced by
such depository receipt.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof are ordinarily entitled to vote in the election of
directors, managers or trustees of any person (irrespective of whether or not,
at the time, Capital Stock of any other class or classes shall have, or might
have, voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means any Subsidiary of the Issuer of which
100 per cent. of the outstanding Capital Stock is owned by the Issuer or by one
or more Wholly-Owned Subsidiaries of the Issuer or by the Issuer and one or
more Wholly-Owned Subsidiaries of the Issuer. For purposes of this definition,
any directors' qualifying shares or investments by foreign nationals mandated
by applicable law shall be disregarded in determining the ownership of a
Subsidiary.
ENFORCEMENT
At any time after the Bonds shall have become due and payable, the
Trustee may, at its discretion and without further notice, take such
proceedings against the Issuer as it may think fit to enforce repayment of the
Bonds together with premium (if any) and accrued interest and to enforce the
provisions of the Indenture, but it shall not be bound to take any such
proceedings unless (a) it shall have been so directed in writing by the holders
of at least 25 per cent. in principal amount of the Bonds then outstanding, and
(b) it shall have been indemnified to its satisfaction. No Bondholder shall be
entitled to proceed directly against the Issuer unless the Trustee, having
become bound so to proceed, fails to do so within a reasonable period and such
failure shall be continuing.
NOTICES
Notices to Bondholders shall be validly given if (i) mailed to them at
their respective addresses in the register and (ii) published in an English
language newspaper of general circulation in Europe approved by the Trustee,
currently expected to be the Financial Times, and, so long as the Bonds are
listed on the Luxembourg Stock Exchange, published in a newspaper of general
circulation in Luxembourg approved by the Trustee, currently expected to be the
Luxemburger Wort. Any such notices shall be deemed to have been given on the
first date on which both conditions shall have been met.
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MEETINGS OF BONDHOLDERS, MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of Bondholders
to consider any matter affecting their interests, including any modification
of, or arrangement in respect of, the terms and conditions of the Bonds or of
the provisions of the Indenture. Certain special quorum provisions apply for
meetings of Bondholders convened for the purpose of amending certain terms
concerning, inter alia, the amounts payable on and the currency of payment of
the Bonds and the Conversion Rights. Any resolution duly passed at any such
meeting will be binding on all Bondholders, whether present or not.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Bonds, as expressly provided for in the Indenture) as to all outstanding Bonds
when (i) either (a) all the Bonds theretofore authenticated and delivered
(except lost, stolen or destroyed Bonds which have been replaced or repaid and
Bonds for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Bonds not theretofore delivered to the Trustee for
cancellation (except lost, stolen or destroyed Bonds which have been replaced
or paid) have been called for redemption pursuant to the terms of the Bonds or
have otherwise become due and payable and the Issuer has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount sufficient to pay
and discharge the entire Indebtedness on the Bonds not theretofore delivered to
the Trustee for cancellation, for principal of, premium, if any, and interest
on the Bonds to the date of deposit together with irrevocable instructions from
the Issuer directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be; (ii) the Issuer has paid all other
sums payable under the Indenture by the Issuer; (iii) there exists no Default
or Event of Default under the Indenture; and (iv) the Issuer has delivered to
the Trustee an officers' certificate and an opinion of counsel stating that
all conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.
AMENDMENTS AND WAIVERS
From time to time, the Issuer, when authorized by a resolution of its
Board of Directors, and the Trustee may, without the consent of the holders of
any outstanding Bonds, amend, waive or supplement the Indenture or the Bonds
for certain specified purposes, including, among other things, (a) curing
ambiguities, defects or inconsistencies, (b) qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act of 1939, (c)
evidencing the succession of another Person to the Issuer or any other obligor
on the Bonds, and the assumption by any such successor of the covenants of the
Issuer or such obligor in the Indenture and in the Bonds in accordance with the
"Merger, Sale of Assets, Etc." covenant; (d) adding to the covenants of the
Issuer or any other obligor upon the Bonds for the benefit of the holders of
the Bonds or surrendering any right or power conferred upon the Issuer or any
other obligor upon the Bonds, as applicable, in the Indenture or in the Bonds;
(e) evidencing the replacement of the Trustee by a trustee that is appointed to
so act pursuant to the terms of the Indenture; and (f) evidencing or making any
other change that does not adversely affect the rights of any holder of Bonds;
provided, however, that the Issuer has delivered to the Trustee an opinion of
counsel stating that such change does not adversely affect the rights of any
holder of Bonds.
Other amendments and modifications of the Indenture or the Bonds may be
made by the Issuer and the Trustee with the consent of the holders of not less
than a majority of the aggregate principal amount of the outstanding Bonds;
provided, however, that no such modification or amendment may, without the
consent of the holder of each outstanding Bond affected thereby, (i) reduce the
principal amount of, extend the fixed maturity of or alter the redemption
provisions of, the Bonds, (ii) change the currency in which any Bonds or any
premium or the interest thereon is payable or make the principal of, premium,
if any, or interest on any Bond payable in money other than that stated in the
Bond, (iii) reduce the percentage in principal amount of outstanding Bonds that
must consent to an amendment, supplement or waiver or consent to take any
action under the Indenture or the Bonds, (iv) impair the right to institute
suit for the enforcement of any payment on or with respect to the Bonds, (v)
waive a default in payment with respect to the Bonds, (v) amend, change or
modify the obligations of the Issuer to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate the offer with
respect to any Asset Sale or modify any of the provisions or definitions with
respect thereto, (vii) reduce or change the rate or time for payment of
interest on the Bonds, or (viii) modify or change any provision of the
Indenture affecting the subordination or ranking of the Bonds in a manner
adverse to the holders of the Bonds, or (ix) take any other action otherwise
prohibited by the Indenture to be taken without the consent of each Bondholder
affected thereby.
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THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Trustee may, without the consent of the Bondholders:
(i) agree to any modification of the provisions of the Indenture or the
Bonds which, in the opinion of the Trustee, is of a formal, minor or
technical nature, is made to correct a manifest error or to comply with
mandatory provisions of law or is not materially prejudicial to the
interests of the Bondholders;
(ii) waive or authorize any breach or proposed breach by the Issuer of
the provisions of the Indenture or the Bonds, or determine that the
occurrence of any Event of Default shall not be treated as such, which, in
the opinion of the Trustee, is not materially prejudicial to the interests
of the Bondholders.
Any such modification, waiver or authorization shall be binding on the
Bondholders and, if the Trustee so requires, such modification shall be notified
by the Issuer to the Bondholders as soon as possible.
INDEMNIFICATION OF THE TRUSTEE
The Indenture contains provisions for the indemnification of the Trustee
and for its relief from responsibility, including provisions relieving it from
taking proceedings to enforce repayment or taking steps to enforce the
Conversion Rights unless indemnified to its satisfaction. The Trustee is
entitled to enter into business transactions with the Issuer or any entity
related to it without accounting for any profit.
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