EXECUTION COPY
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AXTEL, S.A. de C.V
Issuer
The Subsidiary Guarantors named herein
11% Senior Notes due 2013
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INDENTURE
Dated as of December 16, 2003
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310(a)(1) ........................................ 7.10
(a)(2) ........................................ 7.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(a)(5) ........................................ 7.10
(b) ........................................ 7.08; 7.10
(c) ........................................ N.A.
311(a) ........................................ 7.11
(b) ........................................ 7.11
(c) ........................................ N.A.
312(a) ........................................ 2.05
(b) ........................................ 11.03
(c) ........................................ 11.03
313(a) ........................................ 7.06
(b)(1) ........................................ 7.06
(b)(2) ........................................ 7.06
(c) ........................................ 11.02
(d) ........................................ 7.06
314(a) ........................................ 4.02;
........................................ 4.10;11.02
(b) ........................................ N.A.
(c)(1) ........................................ 11.04
(c)(2) ........................................ 11.04
(c)(3) ........................................ N.A.
(d) ........................................ N.A.
(e) ........................................ 11.05
(f) ........................................ N.A.
315(a) ........................................ 7.01
(b) ........................................ 7.05;11.02
(c) ........................................ 7.01
(d) ........................................ 7.01
(e) ........................................ 6.11
316(a)(last sentence) ................................. 11.06
(a)(1)(A) ........................................ 6.05
(a)(1)(B) ........................................ 6.04
(a)(2) ........................................ N.A.
(b) ........................................ 6.07
(c) ........................................ 9.04
317(a)(1) ........................................ 6.08
(a)(2) ........................................ 6.09
(b) ........................................ 2.04
318(a) ........................................ 11.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
TABLE OF CONTENTS
Page
Article 1
Definitions and Incorporation by Reference
SECTION 1.01 Definitions..................................................1
SECTION 1.02 Other Definitions...........................................27
SECTION 1.03 Incorporation by Reference of Trust Indenture Act...........27
SECTION 1.04 Rules of Construction.......................................27
Article 2
The Securities
SECTION 2.01 Form and Dating.............................................28
SECTION 2.02 Execution and Authentication................................29
SECTION 2.03 Registrar and Paying Agent..................................29
SECTION 2.04 Paying Agent To Hold Money in Trust.........................30
SECTION 2.05 Securityholder Lists........................................30
SECTION 2.06 Transfer and Exchange.......................................30
SECTION 2.07 Replacement Securities......................................30
SECTION 2.08 Outstanding Securities......................................31
SECTION 2.09 Temporary Securities........................................31
SECTION 2.10 Cancellation................................................31
SECTION 2.11 Defaulted Interest..........................................31
SECTION 2.12 CUSIP Numbers...............................................31
SECTION 2.13 Issuance of Additional Securities...........................32
Article 3
Redemption
SECTION 3.01 Notices to Trustee..........................................32
SECTION 3.02 Selection of Securities to Be Redeemed......................32
SECTION 3.03 Notice of Redemption........................................33
SECTION 3.04 Effect of Notice of Redemption..............................33
SECTION 3.05 Deposit of Redemption Price.................................34
SECTION 3.06 Securities Redeemed in Part.................................34
Article 4
Covenants
SECTION 4.01 Payment of Securities.......................................34
SECTION 4.02 SEC Reports.................................................34
ii
SECTION 4.03 Limitation on Indebtedness..................................35
SECTION 4.04 Limitation on Restricted Payments...........................37
SECTION 4.05 Limitation on Restrictions on Distributions from
Restricted Subsidiaries.....................................40
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock..........41
SECTION 4.07 Limitation on Affiliate Transactions........................44
SECTION 4.08 Limitation on Line of Business..............................46
SECTION 4.09 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries.....................................46
SECTION 4.10 Change of Control...........................................47
SECTION 4.11 Limitation on Liens.........................................48
SECTION 4.12 Limitation on Sale/Leaseback Transactions...................48
SECTION 4.13 Future Guarantors...........................................48
SECTION 4.14 Additional Amounts..........................................48
SECTION 4.15 Compliance Certificate......................................51
SECTION 4.16 Further Instruments and Acts................................51
Article 5
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets...................51
Article 6
Defaults and Remedies
SECTION 6.01 Events of Default...........................................53
SECTION 6.02 Acceleration................................................55
SECTION 6.03 Other Remedies..............................................55
SECTION 6.04 Waiver of Past Defaults.....................................56
SECTION 6.05 Control by Majority.........................................56
SECTION 6.06 Limitation on Suits.........................................56
SECTION 6.07 Rights of Holders to Receive Payment........................56
SECTION 6.08 Collection Suit by Trustee..................................57
SECTION 6.09 Trustee May File Proofs of Claim............................57
SECTION 6.10 Undertaking for Costs.......................................57
SECTION 6.11 Waiver of Stay or Extension Laws............................58
Article 7
Trustee
SECTION 7.01 Duties of Trustee...........................................58
SECTION 7.02 Rights of Trustee...........................................59
SECTION 7.03 Individual Rights of Trustee................................60
SECTION 7.04 Trustee's Disclaimer........................................60
iii
SECTION 7.05 Notice of Defaults..........................................60
SECTION 7.06 Reports by Trustee to Holders...............................61
SECTION 7.07 Compensation and Indemnity..................................61
SECTION 7.08 Replacement of Trustee......................................62
SECTION 7.09 Successor Trustee by Merger.................................62
SECTION 7.10 Eligibility; Disqualification...............................63
SECTION 7.11 Preferential Collection of Claims Against Company...........63
SECTION 7.12 Appointment of Co-Trustee...................................63
Article 8
Disharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance............64
SECTION 8.02 Conditions to Defeasance....................................65
SECTION 8.03 Application of Trust Money..................................67
SECTION 8.04 Repayment to Company........................................67
SECTION 8.05 Indemnity for Government Obligations........................67
SECTION 8.06 Reinstatement...............................................67
Article 9
Amendments
SECTION 9.01 Without Consent of Holders..................................68
SECTION 9.02 With Consent of Holders.....................................68
SECTION 9.03 Compliance with Trust Indenture Act.........................69
SECTION 9.04 Revocation and Effect of Consents and Waivers...............70
SECTION 9.05 Notation on or Exchange of Securities.......................70
SECTION 9.06 Trustee To Sign Amendments..................................70
SECTION 9.07 Payment for Consent.........................................70
Article 10
Subsidiary Guaranties
SECTION 10.01 Guaranties..................................................71
SECTION 10.02 Limitation on Liability.....................................73
SECTION 10.03 Successors and Assigns......................................73
SECTION 10.04 No Waiver...................................................73
SECTION 10.05 Modification................................................73
SECTION 10.06 Release of Subsidiary Guarantor.............................73
SECTION 10.07 Contribution................................................74
iv
Article 11
Miscellaneous
SECTION 11.01 Trust Indenture Act Controls................................74
SECTION 11.02 Notices.....................................................74
SECTION 11.03 Communication by Holders with Other Holders.................75
SECTION 11.04 Certificate and Opinion as to Conditions Precedent..........75
SECTION 11.05 Statements Required in Certificate or Opinion...............76
SECTION 11.06 When Securities Disregarded.................................76
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar................76
SECTION 11.08 Legal Holidays..............................................76
SECTION 11.09 Force Majeure...............................................76
SECTION 11.10 Governing Law...............................................77
SECTION 11.11 Consent to Jurisdiction; Appointment of Agent for Service
of Process; Judgment Currency...............................77
SECTION 11.12 WAIVER OF JURY TRIAL........................................79
SECTION 11.13 No Recourse Against Others..................................79
SECTION 11.14 Successors..................................................79
SECTION 11.15 Multiple Originals..........................................79
SECTION 11.16 Table of Contents; Headings.................................79
Rule 144A/Regulation S/IAI Appendix
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange Security
INDENTURE dated as of December 16, 2003, among AXTEL.
S.A. de C.V., a Mexican corporation (the "Company"), the
SUBSIDIARY GUARANTORS named herein and The Bank of New York,
a New York banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the
other parties and for the equal and ratable benefit of the
Holders of the Company's Initial Securities, Exchange
Securities and Private Exchange Securities (collectively,
the "Securities"):
Article 1
Definitions and Incorporation by Reference
SECTION 1.01 Definitions.
"Additional Assets" means (1) any property, plant, equipment or licenses
used in a Related Business; (2) the Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such Capital Stock by
the Company or another Restricted Subsidiary; or (3) Capital Stock constituting
a minority interest in any Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.
"Additional Securities" mean, Securities issued under this Indenture after
the Issue Date and in compliance with Sections 2.13 and 4.03, it being
understood that any Securities issued in exchange for or replacement of any
Initial Security issued on the Issue Date shall not be an Additional Security,
including any such Securities issued in compliance with the Registration Rights
Agreement.
"Adjusted Capital Expenditures" means (1) for any period ending on or
before September 30, 2005, the product obtained by multiplying (A) Eight Quarter
Average Capital Expenditures by (B) the Number of Test Quarters or (2) for any
period ending on or after October 1, 2005, capital expenditures made by the
Company and its Restricted Subsidiaries for such period.
"Adjusted Consolidated Net Income" for any period means Consolidated Net
Income (1) plus, to the extent deducted in calculating such Consolidated Net
Income, depreciation and amortization expense of the Company and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in a
prior period) for such period; and (2) less Adjusted Capital Expenditures for
such period.
2
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other than
directors' qualifying shares or shares required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary
(other than, in the case of clauses(1), (2) and (3) above, (A) a disposition by
a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary; (B) for purposes of Section 4.06 only,
(i) a disposition that constitutes a Restricted Payment (or would constitute a
Restricted Payment but for the exclusions from the definition thereof) and that
is not prohibited by Section 4.04 and (ii) a disposition of all or substantially
all the assets of the Company in accordance with Section 5.01; (C) a disposition
of assets with a fair market value of less than US$500,000; (D) a disposition of
cash or Temporary Cash Investments; and (E) the creation of a Lien (but not the
sale or other disposition of the property subject to such Lien)).
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the Securities, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale/Leaseback Transaction (including any period for which such lease has
been extended); provided, however, that if such Sale/Leaseback Transaction
results in a Capital Lease Obligation,
3
the amount of Indebtedness represented thereby will be determined in accordance
with the definition of "Capital Lease Obligation".
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (1) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of or redemption or similar payment with
respect to such Indebtedness multiplied by the amount of such payment by (2) the
sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty. For purposes of Section 4.11, a Capital Lease Obligation will be deemed
to be secured by a Lien on the property being leased.
"Capital Stock" of any Person means any and all shares, interests
(including partnership interests), rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any Preferred Stock, but excluding any debt
securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(1) prior to the first public offering of common stock of the Company,
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that for purposes of this clause (1) and clause (2) below, (x)
such person shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time and (y) such
person shall not be deemed to have "beneficial ownership" of any shares
solely as a result of a voting or similar agreement entered into in
connection with a merger agreement or asset sale agreement), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock
of the Company; (for purposes of this clause (1) such "person" (the
"specified person") shall be deemed to beneficially own any Voting Stock of
the Company held by any other Person (the "parent entity") so long as such
4
"specified person" beneficially owns (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the Voting
Stock of the parent entity);
(2) after the first public offering of common stock of the Company,
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (1) above), directly or indirectly,
of more than 35% of the total voting power of the Voting Stock of the
Company; provided, however, that Permitted Holders beneficially own (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate a lesser percentage of the total voting power
of the Voting Stock of the Company than such other person and do not have
the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors (for the
purposes of this clause (2), such other person shall be deemed to
beneficially own any Voting Stock of a specified person held by a parent
entity, if such other person is the beneficial owner (as defined in clause
(1) above), directly or indirectly, of more than 35% of the voting power of
the Voting Stock of such parent entity and the Permitted Holders
beneficially own (as defined in this clause (2)), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent entity);
(3) individuals who on the Issue Date constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose appointment or nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors of the Company then still in office who were either directors on
the Issue Date or whose appointment, election or nomination for election
was approved by the Permitted Holders or by directors previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office;
(4) the adoption of a plan relating to the liquidation or dissolution
of the Company; provided, however, that this clause (4) will not be
applicable to (A) a Restricted Subsidiary consolidating with, merging into
or transferring all or part of its properties and assets to the Company or
(B) the Company merging with an Affiliate of the Company solely for the
purpose and with the sole effect of reincorporating the Company in another
jurisdiction; or
(5) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company (determined on a
consolidated basis) to another Person other than a transaction in which
holders of securities that represented 100% of the Voting Stock of the
Company immediately prior to such transaction (or other securities into
which such securities are converted as part of such merger or consolidation
transaction) own directly or indirectly at least a majority of the voting
power of the Voting Stock of the transferee Person or
5
surviving Person in such merger or consolidation transaction immediately
after such transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries.
"Consolidated Leverage Ratio" as of any date of determination means the
ratio of
(a) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries as of such date of determination to
(b) EBITDA for the most recent four consecutive fiscal quarters ending
at least 45 days prior to such date of determination (the "Reference
Period");
provided, however, that:
(1) if the transaction giving rise to the need to calculate the
Consolidated Leverage Ratio is an Incurrence of Indebtedness, the amount of
such Indebtedness shall be calculated after giving effect on a pro forma
basis to such Indebtedness;
(2) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness that was
outstanding as of the end of such fiscal quarter or if any Indebtedness is
to be repaid, repurchased, defeased or otherwise discharged on the date of
the transaction giving rise to the need to calculate the Consolidated
Leverage Ratio (other than, in each case, Indebtedness Incurred under any
revolving credit agreement), the aggregate amount of Indebtedness shall be
calculated on a pro forma basis and EBITDA shall be calculated as if the
Company or such Restricted Subsidiary had not earned the interest income,
if any, actually earned during the Reference Period in respect of cash or
Temporary Cash Investments used to repay, repurchase, defease or otherwise
discharge such Indebtedness;
(3) if since the beginning of the Reference Period the Company or any
Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for
the Reference Period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for the Reference Period, or increased by an amount equal
to the EBITDA (if negative), directly attributable thereto for the
Reference Period;
6
(4) if since the beginning of the Reference Period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, which constitutes all
or substantially all of an operating unit of a business, EBITDA for the
Reference Period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of the Reference Period; and
(5) if since the beginning of the Reference Period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such Reference
Period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment pursuant to
clause (3) or (4) above if made by the Company or a Restricted Subsidiary
during the Reference Period, EBITDA for the Reference Period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of the
Reference Period.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Agreement applicable to
such Indebtedness if such Interest Rate Agreement has a remaining term in excess
of 12 months). If any Indebtedness is Incurred under a revolving credit facility
and is being given pro forma effect, the interest on such Indebtedness shall be
calculated based on the average daily balance of such Indebtedness for the four
fiscal quarters subject to the pro forma calculation to the extent that such
Indebtedness was incurred solely for working capital purposes.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that
(A) subject to the exclusion contained in clause (4) below, the
Company's equity in the net income of any such Person for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period
to the Company or a Restricted Subsidiary as a dividend or other
distribution
7
(subject, in the case of a dividend or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause (3)
below); and (B) the Company's equity in a net loss of any such Person
for such period shall be included in determining such Consolidated Net
Income;
(2) any net income (or loss) of any Person acquired by the
Company or a Subsidiary in a pooling of interests transaction (or any
transaction accounted for in a manner similar to a pooling of
interests) for any period prior to the date of such acquisition;
(3) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that
(A) subject to the exclusion contained in clause (4) below,
the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually
distributed by such Restricted Subsidiary during such period to
the Company or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the
limitation contained in this clause); and
(B) the Company's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(4) any gain (or loss) realized upon the sale or other disposition of
any assets of the Company, its consolidated Subsidiaries or any other
Person (including pursuant to any sale-and-leaseback arrangement) which is
not sold or otherwise disposed of in the ordinary course of business and
any gain (or loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) any net, after-tax, extraordinary or non-recurring gains or losses
or income or expenses; and
(6) the cumulative effect of a change in accounting principles;
in each case, for such period. Notwithstanding the foregoing, for the purpose of
Section 4.04 only, there shall be excluded from Consolidated Net Income any
repurchases, repayments or redemptions of Investments, proceeds realized on the
sale of Investments or return of capital to the Company or a Restricted
Subsidiary to the extent such repurchases, repayments, redemptions, proceeds or
returns increase the amount of Restricted Payments permitted under such Section
pursuant to Section 4.04(a)(3)(D).
8
"Consolidated Secured Leverage Ratio" means, as of any date of
determination, the ratio of
(1) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries that is secured by Liens as of such date of
determination to
(2) EBITDA for the period of (i) the most recent four consecutive
fiscal quarters ending at least 45 days prior to the date of determination
or (ii) if quarterly information is available for the immediately preceding
fiscal quarter and such financial information is included in the reports
filed or delivered pursuant to Section 4.02, the most recent four
consecutive fiscal quarters, with such pro forma and other adjustments to
each of Indebtedness and EBITDA as are appropriate and consistent with the
pro forma and other adjustment provisions set forth in the definition of
Consolidated Leverage Ratio.
"Consolidated Total Assets" means, as of any date of determinations, the
total assets shown on the consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the most recent date for which such a balance
sheet is available, determined on a consolidated basis in accordance with GAAP
(and, in the case of any determination relating to any Incurrence of
Indebtedness or any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement with respect to currency values.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable at the option of the holder) or upon the
happening of any event:
(1) matures or is mandatorily redeemable (other than redeemable only
for Capital Stock of such Person which is not itself Disqualified Stock)
pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the occurrence
of certain events or otherwise, in whole or in part,
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if (A) the "asset sale" or "change of control"
9
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the terms applicable to the Securities in
Sections 4.06 and 4.10 of this Indenture and (B) any such requirement only
becomes operative after compliance with such terms applicable to the Securities,
including the purchase of any Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to be
determined pursuant to the Indenture; provided, however, that if such
Disqualified Stock could not be required to be redeemed, repaid or repurchased
at the time of such determination, the redemption, repayment or repurchase price
will be the book value of such Disqualified Stock as reflected in the most
recent financial statements of such Person.
"Dollars" means the legal currency of the United States.
"EBITDA" for any period means the sum of Consolidated Net Income, plus the
following to the extent deducted in calculating such Consolidated Net Income:
(1) all expense for income tax or asset tax of the Company and its
consolidated Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation and amortization expense of the Company and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in
a prior period); and
(4) all other non-cash charges of the Company and its consolidated
Restricted Subsidiaries (excluding any such non-cash charge to the extent
that it represents an accrual of or reserve for cash expenditures in any
future period),
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion,
including by reason of minority interests) that the net income or loss of such
Restricted Subsidiary was included in calculating Consolidated Net Income and
only if a corresponding amount would be permitted at the date of determination
to be dividended to the Company by such Restricted Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"Eight Quarter Average Capital Expenditures" means, at any date of
determination, the quotient obtained by dividing (A) the sum of capital
expenditures
10
made by the Company and its Restricted Securities for the eight fiscal quarters
preceding such date through and including the end of the most recent fiscal
quarter ending at least 45 days prior to the date of determination by (B) eight.
"Equity Offering" means any sale of Capital Stock (other than Disqualified
Stock).
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the debt securities of the Company issued pursuant
to this Indenture in exchange for, and in an aggregate principal amount equal
to, the Securities, in compliance with the terms of the Registration Rights
Agreement.
"Foreign Subsidiary" means any Restricted Subsidiary of the Company that is
not organized under the laws of the United States of America or any State
thereof or the District of Columbia.
"GAAP" means generally accepted accounting principles in Mexico as in
effect on the Issue Date.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory
to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the
Company's obligations with respect to the Securities on the terms provided for
in this Indenture.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
11
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) shall be deemed to be Incurred by such Person at the
time it becomes a Restricted Subsidiary. The term "Incurrence" when used as a
noun shall have a correlative meaning.
Solely for purposes of determining compliance with Section 4.03:
(1) amortization of debt discount or the accretion of principal with
respect to a non-interest bearing or other discount security;
(2) the payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or the payment of regularly
scheduled dividends on Capital Stock in the form of additional Capital
Stock of the same class and with the same terms; and
(3) the obligation to pay a premium in respect of Indebtedness arising
in connection with the issuance of a notice of redemption or the making of
a mandatory offer to purchase such Indebtedness,
will not be deemed to be the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, bankers' acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn
12
upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the tenth Business Day following payment on the letter of
credit);
(5) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Capital Stock of such
Person or, any Subsidiary of such Person or that are determined by the
value of such Capital Stock, the principal amount of such Capital Stock to
be determined in accordance with this Indenture;
(6) all obligations of the type referred to in clauses (1) through (5)
of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the type referred to in clauses (1) through (6)
of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition, Hedging
Obligations of such Person.
Notwithstanding the foregoing, in connection with the purchase by the Company or
any Restricted Subsidiary of any business, the term "Indebtedness" will exclude
post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such
payment depends on the performance of such business after the closing; provided,
however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and
determined, the amount is paid within 30 days thereafter.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all obligations as described above;
provided, however, that in the case of Indebtedness sold at a discount, the
amount of such Indebtedness at any time will be the accreted value thereof at
such time.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Independent Qualified Party" means an investment banking firm, accounting
firm or appraisal firm of national standing; provided, however, that such firm
is not an Affiliate of the Company.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement with respect to
exposure to interest rates.
13
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. Except as otherwise provided for
herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value.
For purposes of the definition of "Unrestricted Subsidiary", the definition
of "Restricted Payment" and Section 4.04, "Investment" shall include
(1) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of
such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to
continue to have a permanent "Investment" in an Unrestricted Subsidiary
equal to an amount (if positive) equal to (A) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (B) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors.
"Issue Date" means December 16, 2003.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York or the United
Mexican States.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Mexico" means the United Mexican States.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor to its
rating agency business.
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the
14
acquiring Person of Indebtedness or other obligations relating to such
properties or assets or received in any other non-cash form), in each case net
of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such
Asset Disposition;
(4) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with
the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition; and
(5) any portion of the purchase price from an Asset Disposition placed
in escrow, whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or
otherwise in connection with that Asset Disposition; provided, however,
that upon termination of that escrow, Net Available Cash will be increased
by any portion of funds in the escrow that are released to the Company or
any Restricted Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock
or Indebtedness, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Number of Test Quarters" means, at any date of determination, the number
of completed fiscal quarters after September 30, 2003 ending at least 45 days
prior to the date of determination; provided, however, that such Number of Test
Quarters shall be at least one.
"Obligations" means with respect to any Indebtedness, all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
and other amounts payable pursuant to the documentation governing such
Indebtedness.
"Officer" means the Chairman of the Board, the Chief Executive Officer, any
Vice President, the Chief Financial Officer or the Secretary of the Company.
15
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company.
"Permitted Asset Swap" means the disposition by the Company or its
Restricted Subsidiaries of Telecommunication Assets to another Person or Persons
in exchange for which the Company and the Restricted Subsidiaries receive
Telecommunications Assets having, in the reasonable judgment of the
disinterested members of the Board of Directors, a fair market value
substantially equivalent to or greater than the fair market value of the
Telecommunications Assets so disposed; provided, however, that no such
disposition or series of related dispositions shall constitute Permitted Asset
Swaps to the extent that the aggregate fair market value of the
Telecommunications Assets so disposed, when combined with the fair market value
of all other Telecommunications Assets disposed of in one or more Permitted
Asset Swaps (x) in the twelve calendar months preceding such disposition exceeds
US$15 million or (y) since the Issue Date exceeds US$60 million; provided
further, however, that if the book value of the Telecommunications Assets to be
disposed in a Permitted Asset Swap (or in a series of related Permitted Asset
Swaps) exceeds US$7.5 million, such disposition shall not constitute a Permitted
Asset Swap unless an Independent Qualified Party shall have determined in
writing that the fair market value of the Telecommunications Assets to be
received by the Company and its Restricted Subsidiaries is substantially
equivalent to or greater than the fair market value of the Telecommunications
Assets to be disposed.
"Permitted Holders" means each of the direct shareholders of record of the
Company as of the Issue Date (as identified on Exhibit A of this Indenture), and
any Affiliate thereof and the shareholders of Telinor Telefonia, S. de X.X. de
C.V.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a
Related Business;
(2) another Person if, as a result of such Investment, such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related
Business;
(3) cash and Temporary Cash Investments;
(4) receivables owing to the Company or any Restricted Subsidiary if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that
16
such trade terms may include such concessionary trade terms as the Company
or any such Restricted Subsidiary deems reasonable under the circumstances;
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the non-cash
portion of the consideration received for (A) an Asset Disposition as
permitted pursuant to Section 4.06 or (B) a disposition of assets not
constituting an Asset Disposition;
(9) any Person where such Investment was acquired by the Company or
any of its Restricted Subsidiaries (A) in exchange for any other Investment
or accounts receivable held by the Company or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the issuer of such other Investment
or accounts receivable or (B) as a result of a foreclosure by the Company
or any of its Restricted Subsidiaries with respect to any secured
Investment or other transfer of title with respect to any secured
Investment in default;
(10) any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits made in the
ordinary course of business by the Company or any Restricted Subsidiary;
(11) any Person to the extent such Investments consist of Hedging
Obligations otherwise permitted under Section 4.03;
(12) any Person to the extent such Investment exists on the Issue
Date, and any extension, modification or renewal of any such Investments
existing on the Issue Date, but only to the extent not involving additional
advances, contributions or other Investments of cash or other assets or
other increases thereof (other than as a result of the accrual or accretion
of interest or original issue discount or the issuance of pay-in-kind
securities), in each case, pursuant to the terms of such Investment as in
effect on the Issue Date; and
(13) Persons to the extent such Investments, when taken together with
all other Investments made pursuant to this clause (13) outstanding on the
date such Investment is made, do not exceed US$10 million.
17
"Permitted Liens" means, with respect to any Person:
(1) pledges or deposits by such Person under workers' compensation
laws, unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import duties or for the payment of rent, in each case
Incurred in the ordinary course of business;
(2) Liens imposed by law, such as carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested in
good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such Person
shall then be proceeding with an appeal or other proceedings for review and
Liens arising solely by virtue of any statutory or common law provision
relating to banker's Liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided, however, that (A) such deposit account is
not a dedicated cash collateral account and is not subject to restrictions
against access by the Company in excess of those set forth by regulations
promulgated by the Federal Reserve Board and (B) such deposit account is
not intended by the Company or any Restricted Subsidiary to provide
collateral to the depository institution;
(3) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings;
(4) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that such letters of
credit do not constitute Indebtedness;
(5) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property or Liens
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the
operation of the business of such Person;
(6) Liens securing Indebtedness Incurred to finance the construction,
purchase or lease of, or repairs, improvements or additions to, property,
plant or equipment of such Person; provided, however, that the Lien may not
extend to any other property owned by such Person or any of its Restricted
Subsidiaries at the time the Lien is Incurred (other than assets and
property affixed or
18
appurtenant thereto), and the Indebtedness (other than any interest
thereon) secured by the Lien may not be Incurred more than 180 days after
the later of the acquisition, completion of construction, repair,
improvement, addition or commencement of full operation of the property
subject to the Lien;
(7) Liens existing on the Issue Date;
(8) Liens on property or shares of Capital Stock of another Person at
the time such other Person becomes a Subsidiary of such Person; provided,
however, that the Liens may not extend to any other property owned by such
Person or any of its Restricted Subsidiaries (other than assets and
property affixed or appurtenant thereto);
(9) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such
Person; provided, however, that the Liens may not extend to any other
property owned by such Person or any of its Restricted Subsidiaries (other
than assets and property affixed or appurtenant thereto);
(10) Liens securing Indebtedness or other obligations of a Subsidiary
of such Person owing to such Person or a Wholly Owned Subsidiary of such
Person;
(11) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under
this Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(12) Liens securing directly or indirectly obligations in respect of
term loans or revolving loans or other Indebtedness (including principal,
premium, interest, penalties, fees, indemnifications, reimbursements and
other amounts relating thereto) permitted to be Incurred under this
Indenture; provided, however, that, at the time of the Incurrence of the
Indebtedness so secured and after giving effect thereto, the Consolidated
Secured Leverage Ratio would be no greater than 2 to 1;
(13) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to in
the foregoing clause (6), (7), (8), (9) and (14) below; provided, however,
that(A) such new Lien shall be limited to all or part of the same property
and assets that secured or, under the written agreements pursuant to which
the original Lien arose, could secure the original Lien (plus improvements
and accessions to such property or proceeds or distributions thereof) and
(B) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of (i) the outstanding principal amount or,
if greater, committed amount of the Indebtedness described under clause
(6), (7), (8), (9) or (14) at the time the original Lien became a Permitted
Lien and (ii) an amount necessary to pay any
19
fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement; and
(14) Liens securing Purchase Money Obligations or Capital Lease
Obligations Incurred in compliance with Section 4.03.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clause (6), (8), (9) or (14) above to the extent such Lien applies
to any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to Section 4.06. For purposes of this definition, the term
"Indebtedness" shall be deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Pesos" means the legal currency of the United Mexican States.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Purchase Money Obligations" means any Indebtedness Incurred to finance or
refinance the acquisition, leasing, construction or improvement of property
(real or personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the Capital Stock of any Person owning
such property or assets, or otherwise.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being Refinanced;
20
(2) such Refinancing Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being Refinanced;
(3) such Refinancing Indebtedness has an aggregate principal amount
(or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; and
(4) if the Indebtedness being Refinanced is subordinated in right of
payment to the Securities, such Refinancing Indebtedness is subordinated in
right of payment to the Securities at least to the same extent as the
Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights Agreement
dated December 16, 2003, among the Company, the Subsidiary Guarantors and Credit
Suisse First Boston LLC.
"Related Business" means any business in which the Company or any of the
Restricted Subsidiaries was engaged on the Issue Date and any business related,
ancillary or complementary to such business.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its Capital
Stock (other than (A) dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock), (B) dividends or
distributions payable solely to the Company or a Restricted Subsidiary and
(C) pro rata dividends or other distributions made by a Subsidiary that is
not a Wholly Owned Subsidiary to minority stockholders (or owners of an
equivalent interest in the case of a Subsidiary that is an entity other
than a corporation));
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company held by any Person (other than by
a Restricted Subsidiary) or of any Capital Stock of a Restricted Subsidiary
held by any Affiliate of the Company (other than by a Restricted
Subsidiary), including in connection with any merger or consolidation and
including the exercise of any
21
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment of any Subordinated Obligations
of the Company or any Subsidiary Guarantor (other than (A) from the Company
or a Restricted Subsidiary or (B) the purchase, repurchase, redemption,
defeasance or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of such
purchase, repurchase, redemption, defeasance or other acquisition); or
(4) the making of any Investment (other than a Permitted Investment)
in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to property
owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter
acquired by the Company or a Restricted Subsidiary whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Senior Indebtedness" means with respect to any Person,:
(1) Indebtedness of such Person, whether outstanding on the Issue Date
or thereafter Incurred; and
(2) all other Obligations of such Person (including interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to such Person whether or not post-filing interest is allowed in
such proceeding) in respect of Indebtedness described in clause (1) above,
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such Indebtedness or other Obligations are subordinate in right of payment
to the Securities or the Subsidiary Guaranty of such Person, as the case may be;
provided, however, that Senior Indebtedness shall not include:
(A) any obligation of such Person to the Company or any Subsidiary;
21
(B) any liability for any national, state, local or other taxes owed
or owing by such Person;
(C) any accounts payable or other liability to trade creditors arising
in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities);
(D) any Indebtedness or other Obligation (and any accrued or unpaid
interest in respect thereof) of such Person which is subordinate or junior
in any respect to any other Indebtedness or other Obligation of such
Person; or
(E) that portion of any Indebtedness which at the time of Incurrence
is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Standard & Poor's" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., and any successor to its rating agency business.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any Indebtedness
of such Person (whether outstanding on the Issue Date or thereafter Incurred)
which is subordinate or junior in right of payment to the Securities or a
Subsidiary Guaranty of such Person, as the case may be, pursuant to a written
agreement to that effect.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means Instalaciones y Contrataciones, S.A. de C.V.,
Servicios Axtel, S.A. de C.V. and Inmobiliaria e Impulsora Regional, S.A. de
C.V. and each other Subsidiary of the Company that executes this Indenture as a
guarantor on the Issue Date and each other Subsidiary of the Company that
thereafter guarantees the Securities pursuant to the terms of this Indenture, in
each case unless and until such Subsidiary is released from its obligation under
its Subsidiary Guaranty pursuant to the terms of the Indebtedness.
23
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Securities.
"Telecommunications Assets" means any property, including licenses and
applications, bids and agreements to acquire licenses, or other authority to
provide telecommunications services, used or intended for use primarily in
connection with a Related Business.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof;
(2) investments in demand and time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any State thereof or any
foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of US$50 million (or the foreign currency equivalent thereof) and
has outstanding debt which is rated "A" (or such similar equivalent rating)
or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to Standard and Poor's;
(5) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's or "A" by Moody's;
(6) "Certificados de la Tesoreria de la Federacion (Cetes), Bonos de
Desarrollo del Gobierno Federal (Bondes) or Bonos Ajustables del Gobierno
Federal (Adjustabonos), in each case, issued by the government of the
United Mexican States;
24
(7) any other instruments issued or guaranteed by the government of
the United Mexican States and denominated and payable in pesos;
(8) investments in money market funds that invest substantially all
their assets in securities of the types described in clauses (1) through
(7) above; and
(9) demand deposits, certificates of deposit, time deposits and
bankers' acceptances maturing not more than 180 days (or 365 days in the
case of clause (A)(I) or (B)(I)) after the acquisition thereof (A)
denominated in pesos and issued by (I) any of the five top-rated banks (as
evaluated by any internationally recognized rating agency) organized under
the laws of the United Mexican States or any other state thereof, or (II)
any such bank which at the date of acquisition is a lender to or has made
available a line of credit to (in each case in an amount equal to or
greater than the amount of the proposed acquisition), the Company or any of
its Restricted Subsidiaries, (B) in any jurisdiction other than the United
Mexican States where the Company or any of its Restricted Subsidiaries
conducts business and (I) issued by one of the three largest banks doing
business in such jurisdiction, or (II) any such bank in such jurisdiction
which at the date of acquisition is a lender to or has made available a
line of credit to (in each case in an amount equal to or greater than the
amount of the proposed acquisition), the Company or any of its Restricted
Subsidiaries; or (C) issued by any bank which at the date of acquisition is
a lender to or has made available a line of credit to the Company or any of
its Restricted Subsidiaries and which is not under intervention,
receivership or any similar arrangement at the time of acquisition;
provided that the aggregate amount of all such demand deposits,
certificates of deposit, time deposits and bankers' acceptances acquired in
accordance with this clause (C) does not exceed US$50 million at any one
time or (D) issued by any bank which at the date of acquisition has an
outstanding loan to the Company or any of its Restricted Subsidiaries in an
aggregate principal amount at least equal to the aggregate principal amount
of such demand deposit, certificate of deposit, time deposit or banker's
acceptance.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Indenture Act or TIA" means the Trust Indenture Act of 1939 (15
U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the Issue Date.
"Trust Officer" means , when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.
25
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of determination
shall be designated an Unrestricted Subsidiary by the Board of Directors in
the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or owns or holds any Lien on any property
of, the Company or any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of US$1,000 or less or (B) if
such Subsidiary has assets greater than US$1,000, such designation would be
permitted under Section 4.04.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (A) the Company could Incur US$1.00 of additional
Indebtedness under Section 4.03(a) and (B) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced to
the Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
"U.S. Dollar Equivalent" means with respect to any monetary amount in a
currency other than U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase of U.S.
dollars with the applicable foreign currency as published in The Wall Street
Journal in the "Exchange Rates" column under the heading "Currency Trading" on
the date two Business Days prior to such determination.
Except as described in Section 4.03, whenever it is necessary to determine
whether the Company has complied with any covenant in this Indenture or a
Default has occurred and an amount is expressed in a currency other than U.S.
dollars, such amount will be treated as the U.S. Dollar Equivalent determined as
of the date such amount is initially determined in such currency.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
26
"Voting Stock" of a Person means all classes of Capital Stock of such
Person then outstanding and normally entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned, directly or
indirectly, by the Company or one or more other Wholly Owned Subsidiaries.
27
SECTION 1.02 Other Definitions.
Term Defined in
Section
"Affiliate Transaction"................................. 4.07(a)
"Bankruptcy Law"........................................ 6.01
"Change of Control Offer"............................... 4.10(b)
"covenant defeasance option"............................ 8.01(b)
"Custodian"............................................. 6.01
"Event of Default"...................................... 6.01
"Initial Lien".......................................... 4.11
"legal defeasance option"............................... 8.01(b)
"Offer"................................................. 4.06(b)
"Offer Amount".......................................... 4.06(c)(2)
"Offer Period".......................................... 4.06(c)(2)
"Paying Agent".......................................... 2.03
"Purchase Date"......................................... 4.06(c)(1)
"Registrar"............................................. 2.03
"Successor Company"..................................... 5.01(a)(1)
SECTION 1.03 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities and the Subsidiary Guarantees;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company, each Subsidiary
Guarantor and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
28
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) secured Indebtedness shall not be deemed to be subordinate or
junior to any other secured Indebtedness merely because it has a junior
priority with respect to the same collateral;
(8) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(9) the principal amount of any Preferred Stock shall be (A) the
maximum liquidation value of such Preferred Stock or (B) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(10) all references to the date the Securities were originally issued
shall refer to the Issue Date.
Article 2
The Securities
SECTION 2.01 Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S/IAI Appendix attached hereto (the
"Appendix") which is hereby incorporated in, and expressly made part of, this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in, and expressly made a part of, this Indenture.
The Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
29
SECTION 2.02 Execution and Authentication. Two Officers who are duly
empowered for acts of administration ("actos de administracion") and to execute
negotiable instruments ("titulos de credito") shall sign the Securities for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
US$175,000,000 of 11% Senior Notes Due 2013 and, at any time and from time to
time thereafter, the Trustee shall authenticate and deliver Securities for
original issue in an aggregate principal amount specified in such order, in each
case upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company. Such
order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and, in
the case of an issuance of Additional Securities pursuant to Section 2.13 after
the Issue Date, shall certify that such issuance is in compliance with Section
4.03.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03 Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The term "Registrar"
includes any co-registrar.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within The
United States of America may act as Paying Agent, Registrar, co-registrar or
transfer agent.
30
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
SECTION 2.04 Paying Agent To Hold Money in Trust. Prior to each due date of
the principal and interest on any Security, the Company shall deposit in Dollars
with the Paying Agent a sum sufficient to pay such principal and interest when
so becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.05 Securityholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee, in writing at least five Business Days
before each interest payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
SECTION 2.06 Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of this Indenture and Section
8-401(1) of the Uniform Commercial Code are met. When Securities are presented
to the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met.
SECTION 2.07 Replacement Securities. If a mutilated Security is surrendered
to the Registrar or if the Holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405 of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Trustee to protect the Company, the Trustee, the Paying
Agent, the Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional Obligation of the Company.
31
SECTION 2.08 Outstanding Securities. Securities outstanding at any time are
all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, then on and
after that date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
SECTION 2.09 Temporary Securities. Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10 Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel and
dispose of (subject to the record retention requirements of the Exchange Act)
all Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such disposal to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11 Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date and shall
promptly mail to each Securityholder and the Trustee a notice that states the
special record date, the payment date and the amount of defaulted interest to be
paid.
SECTION 2.12 CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
32
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 2.13 Issuance of Additional Securities. The Company shall be
entitled, subject to its compliance with Section 4.03, to issue Additional
Securities under this Indenture which shall have identical terms as the Initial
Securities issued on the Issue Date, other than with respect to the date of
issuance and issue price. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Company shall set forth in a
resolution of the Board of Directors and an Officers' Certificate, a copy of
each of which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number of such
Additional Securities; provided, however, that no Additional Securities may
be issued at a price that would cause such Additional Securities to have
"original issue discount" within the meaning of Section 1273 of the Code;
and
(3) whether such Additional Securities shall be Transfer Restricted
Securities and issued in the form of Initial Securities as set forth in the
Appendix to this Indenture or shall be issued in the form of Exchange
Securities as set forth in Exhibit A.
Article 3
Redemption
SECTION 3.01 Notices to Trustee. If the Company elects to redeem Securities
pursuant to paragraph 5 or 6 of the Securities, it shall notify the Trustee in
writing of the redemption date, the principal amount of Securities to be
redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 35 but no more than 60 days before the redemption date unless
the Trustee consents to a shorter period. Such notice shall be accompanied by an
Officers' Certificate and an Opinion of Counsel from the Company to the effect
that such redemption will comply with the conditions herein.
SECTION 3.02 Selection of Securities to Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and
33
securities exchange requirements, if any, and that the Trustee in its sole
discretion shall deem to be fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than US$1,000. Securities
and portions of them the Trustee selects shall be in principal amounts of
US$1,000 or a whole multiple of US$1,000. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions of Securities
called for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption. At least 30 days but not more than 60
days before a date for redemption of Securities, the Company shall mail a notice
of redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request upon reasonable prior notice, the
Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. In such event, the Company shall provide the Trustee with the
information required by this Section.
SECTION 3.04 Effect of Notice of Redemption. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date).
34
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05 Deposit of Redemption Price. Prior to the redemption date, the
Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary
is the Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued interest on all Securities to be redeemed on
that date other than Securities or portions of Securities called for redemption
which have been delivered by the Company to the Trustee for cancellation.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
Article 4
Covenants
SECTION 4.01 Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities in Dollars on the dates and in the
manner provided in the Securities and in this Indenture. Principal and interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02 SEC Reports. The Company will furnish to the Securityholders
and the Trustee and make available to securities analysts and prospective
investors upon request: (i) within 120 days from the end of each fiscal year, an
annual report on Form 20-F containing the information required to be contained
therein for such fiscal year and (ii) within 45 days after the end of each of
the first three fiscal quarters in each fiscal year, quarterly reports on Form
6-K containing all the information that would be required to be contained in a
filing with the SEC on Form 10-Q if the Company were required to file such Form,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations". All reports required by this paragraph will be prepared
in all material respects in accordance with all the rules and regulations
applicable to the relevant Form, which for purposes of filings on Form 6-K will
require including all the information required to be included in such Form 6-K
by the preceding sentence. In addition, whether or not the Company is subject to
the periodic reporting requirements of the Exchange Act, the Company will file a
copy of each of the reports with the SEC for public availability within the time
periods specified above (unless the SEC will not accept such a filing). The
Company agrees that it will not take any action for the purpose of causing the
SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC
will not accept the Company's filings for any reason, the Company
35
will post the reports referred to in this paragraph on its website within the
time periods specified above.
At any time that any of the Company's Subsidiaries are Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.
In addition, the Company will furnish to the Holders of the Securities and
to prospective investors, upon the requests of such Holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so
long as the Securities are not freely transferable under the Securities Act. The
Company also shall comply with the other provisions of TIA ss. 314(a).
SECTION 4.03 Limitation on Indebtedness. (a) The Company shall not, and
shall not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness; provided, however, that the Company and the Subsidiary
Guarantors shall be entitled to Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto on a pro forma basis, no Default has
occurred and is continuing and the Consolidated Leverage Ratio would be less
than 4 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company and the
Restricted Subsidiaries shall be entitled to Incur any or all of the following
Indebtedness:
(1) Indebtedness owed to and held by the Company or a Wholly
Owned Subsidiary; provided, however, that (A) any subsequent issuance
or transfer of any Capital Stock which results in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the obligor thereon,
(B) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all obligations with respect to the Securities, and (C) if a
Subsidiary Guarantor is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all obligations of such obligor with respect to its Subsidiary
Guaranty;
(2) the Securities (other than any Additional Securities);
(3) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1) or (2) of this Section 4.03(b));
36
(4) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (2) or (3) of this
Section 4.03(b) or this clause (4);
(5) Hedging Obligations consisting of Interest Rate Agreements
directly related to Indebtedness permitted to be Incurred by the
Company and the Restricted Subsidiaries pursuant to this Indenture;
(6) Obligations in respect of performance, bid and surety bonds
and completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business;
(7) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within two
Business Days of its Incurrence;
(8) Purchase Money Obligations and Capital Lease Obligations, in
an aggregate principal amount at any time outstanding not exceeding an
amount equal to 5% of the Consolidated Total Assets at any time
outstanding;
(9) Indebtedness consisting of the Subsidiary Guaranty of a
Subsidiary Guarantor and any Guarantee by a Subsidiary Guarantor of
Indebtedness Incurred pursuant to paragraph (a) of this Section 4.03
or pursuant to clause (1), (2), (3) above or pursuant to clause (4)
above to the extent the Refinancing Indebtedness Incurred thereunder
directly or indirectly Refinances Indebtedness Incurred pursuant to
paragraph (a) or pursuant to clause (2) or (3); and
(10) Indebtedness of the Company or any of its Restricted
Subsidiaries in an aggregate principal amount which, when taken
together with all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (1) through (9) of this Section
4.03(b) or Section 4.03(a)), does not exceed US$15 million.
(c) Notwithstanding the foregoing, neither the Company nor any Subsidiary
Guarantor shall Incur any Indebtedness pursuant to Section 4.03(b) if the
proceeds thereof are used, directly or indirectly, to Refinance any Subordinated
Obligations of the Company or any Subsidiary Guarantor unless such Indebtedness
shall be subordinated to the Securities or to the applicable Subsidiary Guaranty
to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (1) in
the event that an item of Indebtedness (or any portion thereof) meets the
criteria of more than one of the types of Indebtedness described herein, the
Company, in its sole discretion, shall classify such item of Indebtedness (or
any portion thereof) at the time of Incurrence and shall only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(2) the Company shall be entitled to divide
37
and classify an item of Indebtedness in more than one of the types of
Indebtedness described herein.
(e) For purposes of determining compliance with any U.S. dollar denominated
restriction on the Incurrence of Indebtedness where the Indebtedness Incurred is
denominated in a different currency, the amount of such Indebtedness shall be
the U.S. Dollar Equivalent determined on the date of the Incurrence of such
Indebtedness; provided, however, that if any such Indebtedness denominated in a
different currency is subject to a Currency Agreement with respect to U.S.
dollars covering all principal, premium, if any, and interest payable on such
Indebtedness, the amount of such Indebtedness expressed in U.S. dollars shall be
as provided in such Currency Agreement. The principal amount of any Refinancing
Indebtedness Incurred in the same currency as the Indebtedness being Refinanced
shall be the U.S. Dollar Equivalent of the Indebtedness Refinanced, except to
the extent that (1) such U.S. Dollar Equivalent was determined based on a
Currency Agreement, in which case the Refinancing Indebtedness shall be
determined in accordance with the preceding sentence, and (2) the principal
amount of the Refinancing Indebtedness exceeds the principal amount of the
Indebtedness being Refinanced, in which case the U.S. Dollar Equivalent of such
excess shall be determined on the date such Refinancing Indebtedness is
Incurred.
SECTION 4.04 Limitation on Restricted Payments. (a) The Company shall not,
and shall not permit any Restricted Subsidiary, directly or indirectly, to make
a Restricted Payment if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not entitled to Incur an additional US$1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (without
duplication):
(A) 50% of the Adjusted Consolidated Net Income accrued during
the period (treated as one accounting period) from October 1, 2003 to
the end of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such
Adjusted Consolidated Net Income shall be a deficit, minus 100% of
such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company and other than an
issuance or sale to an employee stock ownership plan or to a trust
established by the
38
Company or any of its Subsidiaries for the benefit of their employees)
and 100% of any cash capital contribution received by the Company from
its shareholders subsequent to the Issue Date; plus
(C) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary of the Company) subsequent to the Issue Date of
any Indebtedness of the Company convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash, or the fair value of any other property,
distributed by the Company upon such conversion or exchange);
provided, however, that the foregoing amount shall not exceed the Net
Cash Proceeds received by the Company or any Restricted Subsidiary
from the sale of such Indebtedness (excluding Net Cash Proceeds from
sales to a Subsidiary of the Company or to an employee stock ownership
plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees); plus
(D) an amount equal to the sum of (i) the net reduction in the
Investments (other than Permitted Investments) made by the Company or
any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment and proceeds representing the
return of capital (excluding dividends and distributions), in each
case received by the Company or any Restricted Subsidiary, and (ii) to
the extent such Person is an Unrestricted Subsidiary, the portion
(proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing sum shall
not exceed, in the case of any such Person or Unrestricted Subsidiary,
the amount of Investments (excluding Permitted Investments) previously
made (and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary. (b)
The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of the
substantially concurrent sale of, or made by exchange for, Capital Stock of
the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) or a substantially
concurrent cash capital contribution received by the Company from its
shareholders; provided, however, that (A) such Restricted Payment shall be
excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale or such cash capital
39
contribution (to the extent so used for such Restricted Payment) shall be
excluded from the calculation of amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company or a Subsidiary Guarantor made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Indebtedness of such
Person which is permitted to be Incurred pursuant to Section 4.03;
provided, however, that such purchase, repurchase, redemption, defeasance
or other acquisition or retirement for value shall be excluded in the
calculation of the amount of Restricted Payments;
(3) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this Section 4.04; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or
result therefrom); provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the Company
or any of its Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of
Directors under which such individuals purchase or sell or are granted the
option to purchase or sell, shares of such Capital Stock; provided,
however, that the aggregate amount of such repurchases and other
acquisitions (excluding amounts representing cancellation of Indebtedness)
shall not exceed US$2 million in any calendar year; provided further,
however, that such repurchases and other acquisitions shall be excluded in
the calculation of the amount of Restricted Payments;
(5) payments of dividends on Disqualified Stock issued pursuant to
Section 4.03; provided, however, that such dividends shall be excluded in
the calculation of the amount of Restricted Payments;
(6) repurchases of Capital Stock deemed to occur upon exercise of
stock options if such Capital Stock represents a portion of the exercise
price of such options; provided, however, that such Restricted Payments
shall be excluded in the calculation of the amount of Restricted Payments;
(7) cash payments in lieu of the issuance of fractional shares in
connection with the exercise of warrants, options or other securities
convertible into or exchangeable for Capital Stock of the Company;
provided, however, that any such cash payment shall not be for the purpose
of evading the limitation of this Section 4.04 (as determined in good faith
by the Board of Directors);
40
provided further, however, that such payments shall be excluded in the
calculation of the amount of Restricted Payments;
(8) in the event of a Change of Control, and if no Default shall have
occurred and be continuing, the payment, purchase, redemption, defeasance
or other acquisition or retirement of Subordinated Obligations of the
Company or any Subsidiary Guarantor, in each case, at a purchase price not
greater than 101% of the principal amount of such Subordinated Obligations,
plus any accrued and unpaid interest thereon; provided, however, that prior
to such payment, purchase, redemption, defeasance or other acquisition or
retirement, the Company (or a third party to the extent permitted by this
Indenture) has made a Change of Control Offer with respect to the
Securities as a result of such Change of Control and has repurchased all
Securities validly tendered and not withdrawn in connection with such
Change of Control Offer; provided further, however, that such repurchase
and other acquisitions shall be included in the calculation of the amount
of Restricted Payments;
(9) payments of intercompany subordinated Indebtedness, the Incurrence
of which was permitted under Section 4.03(b)(3); provided, however, that no
Default has occurred and is continuing or would otherwise result therefrom;
provided further, however, that such payments shall be excluded in the
calculation of the amount of Restricted Payments; or
(10) Restricted Payments in an amount which, when taken together with
all Restricted Payments made pursuant to this Section 4.04(b)(10), does not
exceed US$10 million; provided, however, that (A) at the time of each such
Restricted Payment, no Default shall have occurred and be continuing (or
result therefrom) and (B) such dividends shall be included in the
calculation of the amount of Restricted Payments.
SECTION 4.05 Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to
the Company, (b) make any loans or advances to the Company or (c) transfer any
of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c),
(A) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(B) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness
Incurred by such Restricted Subsidiary on or prior to the date on
which such
41
Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired
by the Company) and outstanding on such date;
(C) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in Section 4.05(1)(A) or (B) or this clause (C)
or contained in any amendment to an agreement referred to in Section
4.05(1)(A) or (B) or this clause (C); provided, however, that the
encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such refinancing agreement or amendment
are no less favorable to the Securityholders than encumbrances and
restrictions with respect to such Restricted Subsidiary contained in
such predecessor agreements; and
(D) any encumbrance or restriction with respect to a Restricted
Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all the Capital Stock or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition; and
(2) with respect to clause (c) only,
(A) any encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to
the extent such provisions restrict the transfer of the lease or the
property leased thereunder; and
(B) any encumbrance or restriction contained in security
agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such encumbrance or restriction restricts the
transfer of the property subject to such security agreements or
mortgages.
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to
the fair market value (including as to the value of all non-cash
consideration), as determined in good faith by the Board of Directors,
of the shares and assets subject to such Asset Disposition;
(2) except in the case of a Permitted Asset Swap, at least 75% of
the consideration thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents; and
42
(3) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)
(A) first, to the extent the Company elects (or is required
by the terms of any Indebtedness), to prepay, repay, redeem,
purchase, defease or otherwise acquire Senior Indebtedness of the
Company or Indebtedness (other than any Disqualified Stock) of a
Wholly Owned Subsidiary (in each case other than Indebtedness
owed to the Company or an Affiliate of the Company) within one
year from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A),
to the extent the Company elects, to acquire Additional Assets
within one year from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; and
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses (A)
and (B), to make an Offer to the holders of the Securities (and
to holders of other Senior Indebtedness of the Company designated
by the Company) to purchase Securities (and such other Senior
Indebtedness of the Company) pursuant to and subject to the
conditions of this Section 4.06; provided, however, that in
connection with any prepayment, repayment, purchase, redemption,
defeasance or other acquisition of Indebtedness pursuant to
clause (A) or (C) above, the Company or such Restricted
Subsidiary shall permanently retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently
reduced in an amount equal to the principal amount so prepaid,
repaid, purchased, redeemed, defeased or otherwise acquired.
Notwithstanding the foregoing provisions of this Section 4.06, the Company
and the Restricted Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.06(a) except to the extent that the
aggregate Net Available Cash from all Asset Dispositions which is not applied in
accordance with this Section 4.06(a) exceeds US$5 million. Pending application
of Net Available Cash pursuant to this Section 4.06(a), such Net Available Cash
shall be invested in Temporary Cash Investments or applied to temporarily reduce
revolving credit indebtedness.
For the purposes of this Section 4.06(a), the following are deemed to be
cash or cash equivalents: (i) the assumption of Indebtedness of the Company
(other than Obligations in respect of Disqualified Stock of the Company) or any
Restricted Subsidiary (other than Obligations in respect of Disqualified Stock
or Preferred Stock of a Subsidiary Guarantor) and the release of the Company or
such Restricted Subsidiary from all liability on such Indebtedness in connection
with such Asset Disposition and (ii) securities received by the Company or any
Restricted Subsidiary from the transferee
43
that are promptly converted by the Company or such Restricted Subsidiary into
cash, to the extent of the cash received in that conversion.
(b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Indebtedness of the Company) pursuant to Section
4.06(a)(3)(C), the Company shall purchase Securities tendered pursuant to an
offer by the Company for the Securities (and such other Senior Indebtedness)
(the "Offer") at a purchase price of 100% of their principal amount (or, in the
event such other Senior Indebtedness of the Company was issued with significant
original issue discount, 100% of the accreted value thereof), without premium,
plus accrued but unpaid interest (or, in respect of such other Senior
Indebtedness of the Company, such lesser price, if any, as may be provided for
by the terms of such Senior Indebtedness) in accordance with the procedures
(including prorating in the event of oversubscription) set forth in Section
4.06(c). If the aggregate purchase price of Securities tendered pursuant to the
Offer exceeds the Net Available Cash allotted to their purchase, the Company
shall select the Securities to be purchased on a pro rata basis but in round
denominations, which in the case of the Securities will be denominations of
US$1,000 principal amount or multiples thereof. The Company shall not be
required to make an Offer to purchase Securities (and other Senior Indebtedness
of the Company) pursuant to this Section 4.06 if the Net Available Cash
available therefor is less than US$2 million (which lesser amount shall be
carried forward for purposes of determining whether such an Offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
Upon completion of such an Offer, Net Available Cash shall be deemed to be
reduced by the aggregate amount of such Offer.
(c) (1) Promptly, and in any event within 10 days after the Company becomes
obligated to make an Offer, the Company shall deliver to the Trustee and send,
by first-class mail to each Holder, a written notice stating that the Holder may
elect to have his Securities purchased by the Company either in whole or in part
(subject to prorating as described in Section 4.06(b) in the event the Offer is
oversubscribed) in integral multiples of US$1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain such information concerning the business of the Company
which the Company in good faith believes will enable such Holders to make an
informed decision.
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to
the Trustee an Officers' Certificate as to (A) the amount of the Offer (the
"Offer Amount"), including information as to any other Senior Indebtedness
included in the Offer, (B) the allocation of the Net Available Cash from
the Asset Dispositions pursuant to which such Offer is being made and (C)
the compliance of such allocation with the provisions of Section 4.06(a)
and (b). On such date, the Company shall also irrevocably deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust) in Temporary Cash Investments,
maturing on the last day prior to the Purchase Date or on the Purchase Date
if funds are immediately available by open
44
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. If the Offer includes other
Senior Indebtedness, the deposit described in the preceding sentence may be
made with any other paying agent pursuant to arrangements satisfactory to
the Trustee. Upon the expiration of the period for which the Offer remains
open (the "Offer Period"), the Company shall deliver to the Trustee for
cancellation the Securities or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Trustee shall, on
the Purchase Date, mail or deliver payment (or cause the delivery of
payment) to each tendering Holder in the amount of the purchase price. In
the event that the aggregate purchase price of the Securities delivered by
the Company to the Trustee is less than the Offer Amount applicable to the
Securities, the Trustee shall deliver the excess to the Company immediately
after the expiration of the Offer Period.
(3) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business
Day prior to the Purchase Date, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which
was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased. Holders whose
Securities are purchased only in part shall be issued new Securities equal
in principal amount to the unpurchased portion of the Securities
surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor
to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities
pursuant to this Section 4.06. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section
4.06, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under
this Section 4.06 by virtue of its compliance with such securities laws or
regulations.
SECTION 4.07 Limitation on Affiliate Transactions. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with, or for the benefit of, any Affiliate of the Company (an "Affiliate
Transaction") unless:
45
(1) the terms of the Affiliate Transaction are no less favorable to
the Company or such Restricted Subsidiary than those that could be obtained
at the time of the Affiliate Transaction in arm's-length dealings with a
Person who is not Affiliate;
(2) if such Affiliate Transaction involves an amount in excess of US$1
million, the terms of the Affiliate Transaction are set forth in writing
and two Officers of the Company have certified that the criteria set forth
in this Section 4.07(a)(1) are satisfied in an Officers' Certificate;
(3) if such Affiliate Transaction involves an amount in excess of US$5
million, a majority of the directors of the Company disinterested with
respect to such Affiliate Transaction have determined in good faith that
the criteria set forth in this Section 4.07(a)(1) are satisfied and have
approved the relevant Affiliate Transaction as evidenced by a resolution of
the Board of Directors; provided, however, that a director will not be
deemed disinterested with respect to transactions between the Company or a
Restricted Subsidiary on the one hand and an immediate family member of
such director or an entity affiliated with such immediate family member on
the other hand; and
(4) if such Affiliate Transaction involves an amount in excess of US$10
million, the Board of Directors shall also have received a written
opinion from an Independent Qualified Party to the effect that such
Affiliate Transaction is fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries or is not less favorable to the
Company and its Restricted Subsidiaries than could reasonably be
expected to be obtained at the time in an arm's-length transaction with
a Person who was not an Affiliate.
(b) The provisions of Section 4.07(a) shall not prohibit:
(1) any Investment (other than a Permitted Investment) or other
Restricted Payment, in each case permitted to be made pursuant to Section
4.04 (but only to the extent included in the calculation of the amount of
Restricted Payments made pursuant to Section 4.04(a)(3));
(2) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors;
(3) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Company or its Restricted
Subsidiaries, but in any event not to exceed US$2 million in the aggregate
outstanding at any one time;
(4) the payment of reasonable fees to directors of the Company and its
Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries;
46
(5) any transaction with a Restricted Subsidiary or joint venture or
similar entity which would constitute an Affiliate Transaction solely
because the Company or a Restricted Subsidiary owns an equity interest in
or otherwise controls such Restricted Subsidiary, joint venture or similar
entity;
(6) the issuance or sale of any Capital Stock (other than Disqualified
Stock) of the Company; and
(7) transactions entered into in the ordinary course of business,
consistent with past practices, on terms that are substantially similar to
those that could be obtained at the time of such transactions in arm's
length dealings with a Person who is not an Affiliate.
SECTION 4.08 Limitation on Line of Business. The Company shall not, and
shall not permit any Restricted Subsidiary, to engage in any business other than
a Related Business.
SECTION 4.09 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company:
(1) shall not, and shall not permit any Restricted Subsidiary to,
sell, lease, transfer or otherwise dispose of any Capital Stock of any
Restricted Subsidiary to any Person (other than to the Company or a Wholly
Owned Subsidiary); and
(2) shall not permit any Restricted Subsidiary to issue any of its
Capital Stock (other than, if necessary, shares of its Capital Stock
constituting directors' or other legally required qualifying shares) to any
Person (other than to the Company or a Wholly Owned Subsidiary) unless
(A) immediately after giving effect to such issuance, sale or
other disposition, neither the Company nor any of its Subsidiaries own
any Capital Stock of such Restricted Subsidiary; or
(B) immediately after giving effect to such issuance, sale or
other disposition, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect thereto is treated as a new Investment
by the Company and such Investment would be permitted to be made under
Section 4.04 if made on the date of such issuance, sale or other
disposition.
For purposes of this Section 4.09, the creation of a Lien on any Capital
Stock of a Restricted Subsidiary to secure Indebtedness of the Company or any of
its Restricted Subsidiaries will not be deemed to be a violation of this
covenant; provided, however, that any sale or other disposition by the secured
party of such Capital Stock following foreclosure of its Lien will be subject to
this Section 4.09.
47
SECTION 4.10 Change of Control. (a) Upon the occurrence of a Change of
Control, each Holder shall have the right to require that the Company repurchase
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the terms contemplated in Section
4.10(b).
(b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof on the
date of purchase, plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record
date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
cash flow and capitalization, in each case after giving effect to such
Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by the Company, consistent with
this Section 4.10, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing his election to have
such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under
this Section shall be delivered by the Company to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.10, the
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and
48
otherwise in compliance with the requirements set forth in this Section 4.10
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.10. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.10, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.10 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.11 Limitation on Liens. The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, Incur or permit to
exist any Lien (the "Initial Lien") of any nature whatsoever on any of its
properties (including Capital Stock of a Restricted Subsidiary), whether owned
at the Issue Date or thereafter acquired securing any Indebtedness, other than
Permitted Liens, without effectively providing that the Securities shall be
secured equally and ratably with (or prior to) the obligations so secured for so
long as such obligations are so secured. Any Lien created for the benefit of the
Holders of the Securities pursuant to the foregoing sentence shall provide by
its terms that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien.
SECTION 4.12 Limitation on Sale/Leaseback Transactions. The Company shall
not, and shall not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with respect to any property unless:
(1) the Company or such Restricted Subsidiary would be entitled to (A)
Incur Indebtedness in an amount equal to the Attributable Debt with respect
to such Sale/Leaseback Transaction pursuant to Section 4.03 and (B) create
a Lien on such property securing such Attributable Debt without equally and
ratably securing the Securities pursuant to Section 4.11;
(2) the net proceeds received by the Company or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at least
equal to the fair value (as determined by the Board of Directors) of such
property; and
(3) the Company applies the proceeds of such transaction in compliance
with Section 4.06.
SECTION 4.13 Future Guarantors. The Company shall cause each Restricted
Subsidiary that Incurs any Indebtedness to, at the same time, execute and
deliver to the Trustee a Guaranty Agreement pursuant to which such Restricted
Subsidiary will Guarantee payment of the Securities on the same terms and
conditions as those set forth in this Indenture.
SECTION 4.14 Additional Amounts. The Company and the Subsidiary Guarantors
shall make all payments under or with respect to the Securities free and clear
49
of and without withholding or deduction for or on account of any present or
future tax, duty, levy, impost, assessment or other governmental charge
(including penalties, interest and other liabilities related thereto)
(hereinafter "Taxes") imposed or levied by any jurisdiction in which the payor
is organized or incorporated or resident for tax purposes or any jurisdiction
from or through which any such payment is made (each a "Relevant Taxing
Jurisdiction"), unless the Company or such Subsidiary Guarantor is required to
withhold or deduct Taxes by law.
If the Company or any Subsidiary Guarantor is so required to withhold or
deduct any amount for or on account of Taxes imposed by a Relevant Taxing
Jurisdiction from any payment made under or with respect to the Securities, the
Company or such Subsidiary Guarantor will be required to pay such additional
amounts ("Additional Amounts") as may be necessary so that the net amount
received by the Holders (including Additional Amounts) after such withholding or
deduction will not be less than the amount the Holders would have received if
such Taxes had not been withheld or deducted; provided, however, no additional
amounts will be paid for or on account of:
(1) Taxes that would not have been imposed but for the fact that:
(A) the Securityholder has or had a present or former connection
(or imputed connection) with the Relevant Taxing Jurisdiction
(including being resident, domiciled or a national of, or engaging in
business or maintaining a permanent establishment in, or being
physically present in, the Relevant Taxing Jurisdiction) other than by
merely owning, or receiving payment under, the Securities;
(B) the Securityholder presented the Securities more than 30 days
after the payment in question first became due and payable or the date
on which payment thereof is duly provided for, whichever is later,
except to the extent the Holder would have been entitled to the
Additional Amounts if it had presented the Securities for payment
during that 30 day period;
(2) estate, inheritance, gift, sales, excise, transfer, personal
property or similar Taxes;
(3) Taxes payable otherwise than by withholding or deduction from
payments of, or in respect of, principal of, or any premium or interest on,
the Securities;
(4) Taxes imposed or withheld because the Holder failed to comply with
the Company's or such Subsidiary Guarantor's reasonable request:
(A) to provide information concerning the nationality, residence,
identity or address of the Holder; or
(B) to make any declaration or similar claim or satisfy any
information or reporting requirement, required by law, regulation, or
other
50
practice of the Relevant Taxing Jurisdiction as a precondition to any
exemption from all or part of any Taxes, but only to the extent the
Holder is legally entitled to such exemption; or
(5) any combination of these Tax matters above.
Furthermore, the Company and the Subsidiary Guarantors shall not be
required to pay any Additional Amounts with respect to any payment under the
Securities to any Holder who is a fiduciary or partnership or any person other
than the sole beneficial owner of the payment, to the extent the payment would,
under the laws of the Relevant Taxing Jurisdiction, be treated as being derived
or received for tax purposes by a beneficiary or settlor with respect to the
fiduciary or a member of the partnership or a beneficial owner who would not
have been entitled to the Additional Amounts had it been the Securityholder.
Upon request, the Company shall provide the Trustee with official receipts
or other documentation satisfactory to the Trustee evidencing the payment of the
Taxes with respect to which Additional Amounts are paid.
Whenever in this Indenture there is mentioned, in any context:
(1) the payment of principal;
(2) purchase prices in connection with a purchase of Securities;
(3) interest; or
(4) any other amount payable on or with respect to any of the
Securities,
such reference shall be deemed to include payment of Additional Amounts as
required by this Section 4.14 to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof.
The Company shall pay any present or future stamp, documentary or other
similar excise taxes, governmental charges or levies that arise in any
jurisdiction from the execution, delivery, enforcement or registration of the
Securities, this Indenture or any other document or instrument related to them
(including any such taxes that are referred to as "court" or "property" taxes)
excluding such taxes, charges or levies imposed by any jurisdiction outside of
the United Mexican States and the jurisdiction of incorporation of any
Subsidiary Guarantor, the jurisdiction of incorporation of any successor of the
Company or any jurisdiction in which a paying agent of the Company, a successor
or a Subsidiary Guarantor (as the case may be) is located, and the Company shall
indemnify the Holders for any such taxes paid by such Holders.
The obligations of the Company and the Subsidiary Guarantors in this
Section 4.14 shall survive any termination, defeasance or discharge of this
Indenture and will apply mutatis mutandis to any jurisdiction in which any
successor Person to the
51
Company or any Subsidiary Guarantor is organized or any political subdivision or
taxing authority or agency thereof or therein.
SECTION 4.15 Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss. 314(a)(4).
SECTION 4.16 Further Instruments and Acts. Upon request of the Trustee, the
Company will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
Article 5
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets. (a) The Company
shall not consolidate with or merge with or into, or convey, transfer or lease,
in one transaction or a series of transactions, directly or indirectly, all or
substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United Mexican States or the laws of any political subdivision thereof, the
laws of the United States of America, any State thereof or the District of
Columbia, or the European Union or any if its member nations and the
Successor Company (if not the Company) shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the predecessor
Company under the Securities and this Indenture;
(2) immediately after giving pro forma effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Subsidiary at the time of such
transaction), no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction, the
Successor Company would be able to Incur an additional US$1.00 of
Indebtedness pursuant to Section 4.03(a);
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation,
52
merger or transfer and such supplemental indenture (if any) comply with
this Indenture;
(5) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders will not recognize income, gain or
loss for U.S. Federal income tax purposes as a result of such transaction
and will be subject to U.S. Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
transaction had not occurred; and
(6) the Company shall have delivered an Opinion of Counsel in the
United Mexican States to the effect that the holders of the Securities will
not recognize income, gain or loss for income tax purposes of such
jurisdiction as a result of such transaction and will be subject to income
tax in such jurisdiction on the same amounts, in the same manner and at the
same times as would have been the case if such transaction had not
occurred;
provided, however, that clause (3) will not be applicable to (A) a Restricted
Subsidiary consolidating with, merging into or transferring all or part of its
properties and assets to the Company or (B) the Company merging with an
Affiliate of the Company solely for the purpose and with the sole effect of
reincorporating the Company in another jurisdiction.
For purposes of this Section 5.01(a), the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, and the predecessor Company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
series of transactions, all or substantially all of its assets to any Person
unless:
(1) except in the case of a Subsidiary Guarantor (x) that has been
disposed of in its entirety to another Person (other than to the Company or
an Affiliate of the Company), whether through a merger, consolidation or
sale of Capital Stock or assets or (y) that, as a result of a disposition
of all or a portion of its Capital Stock, ceases to be a Subsidiary, the
resulting, surviving or transferee Person (if not such Subsidiary) shall be
a Person organized and existing under the laws of the jurisdiction under
which such Subsidiary was organized or under the
53
laws of the United States of America, or any State hereof or the District
of Columbia or the United Mexican States, and such Person shall expressly
assume, by a Guaranty Agreement, in a form satisfactory to the Trustee, all
the obligations of such Subsidiary, if any, under its Subsidiary Guaranty;
(2) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the resulting, surviving or transferee Person as a
result of such transaction as having been issued by such Person at the time
of such transaction), no Default shall have occurred and be continuing; and
(3) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such Guaranty Agreement, is legal, valid and binding and is
enforceable against the successor Subsidiary Guarantor and complies with
this Indenture.
Article 6
Defaults and Remedies
SECTION 6.01 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest or any Additional
Amounts on any Security when the same becomes due and payable, and such
default continues for a period of 30 days;
(2) the Company (A) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
optional redemption (including for redemption for changes in withholding
taxes), upon declaration of acceleration or otherwise, or (B) fails to
purchase Securities when required pursuant to this Indenture or the
Securities;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 or 4.14 (other than a
failure to purchase Securities when required under Section 4.06 or 4.10)
and such failure continues for 30 days after the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply with any
of its agreements in the Securities or this Indenture (other than those
referred to in clause (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company, any Subsidiary Guarantor or any
Significant Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a
default and the total
54
amount of such Indebtedness unpaid or accelerated exceeds US$10 million, or
its foreign currency equivalent at the time;
(7) the Company, a Subsidiary Guarantor or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company, a Subsidiary Guarantor or
any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company, a Subsidiary Guarantor
or any Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the Company, a
Subsidiary Guarantor or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess of US$10
million or its foreign currency equivalent at the time is entered against
the Company, a Subsidiary Guarantor or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such judgment or
decree and is not discharged, waived or the execution thereof stayed; or
(10) a Subsidiary Guaranty ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guaranty) or a
Subsidiary Guarantor denies or disaffirms its obligations under its
Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
55
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, the "Ley de
Concursos Mercantiles" of Mexico, or any similar Federal or state law for the
relief of debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian, "sindico", "visitador", "conciliador" or similar official
under any Bankruptcy Law.
A Default under clauses (4) or (5) is not an Event of Default until the
Trustee or the holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Securities by notice to the Company and the
Trustee, may declare the principal of and accrued but unpaid interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
56
SECTION 6.04 Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of the
principal of or interest on a Security (b) a Default arising from the failure to
redeem or purchase any Security when required pursuant to this Indenture or (c)
a Default in respect of a provision that under Section 9.02 cannot be amended
without the consent of each Securityholder affected. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05 Control by Majority. The Holders of a majority in principal
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any action
hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06 Limitation on Suits. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Securityholder
may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders and, if requested, offer to the Trustee
reasonable security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and, if requested, the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of
57
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee. If an Event of Default specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or a Subsidiary Guarantor for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company or any Subsidiary Guarantor,
its creditors or its property and, unless prohibited by law or applicable
regulations, may vote on behalf of the Holders in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
Priorities. If the Trustee collects any money or property pursuant to
this Article 6, it shall pay out the money or property in the following
order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.10 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.
58
SECTION 6.11 Waiver of Stay or Extension Laws. The Company (to the extent
it may lawfully do so) shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
Article 7
Trustee
SECTION 7.01 Duties of Trustee. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
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(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 7.02 Rights of Trustee. (a) The Trustee may rely and shall be
protected in acting or refraining from acting on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, bad faith or negligence.
(e) The Trustee may consult with counsel of its selection, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
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(f) Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture, unless such Holders shall have offered to
the Trustee security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction.
(g) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder.
(h) The Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Trust Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the corporate trust office of the Trustee, and such notice
references the Securities and this Indenture.
(i) In no event shall the Trustee be responsible or liable for special,
indirect, or consequential loss or damage of any kind whatsoever (including, but
not limited to, loss of profit) irrespective of whether the Trustee has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
(j) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication.
SECTION 7.05 Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the Default within 90 days after it occurs. Except in the case of a
Default in payment of principal of or interest on any Security (including
payments pursuant to the
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mandatory redemption provisions of such Security, if any), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06 Reports by Trustee to Holders. As promptly as practicable
after each October 15 beginning with the October 15 following the date of this
Indenture, and in any event prior to December 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of October 15 that complies
with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee and each of its directors,
officers, employees and agents against any and all loss, damage, claims,
liability or expense (including attorneys' fees) incurred by it, in the absence
of negligence, bad faith or willful misconduct on the part of the Trustee, in
connection with the administration of this trust and the performance of its
duties hereunder including the costs and expenses of defending itself against
any claim (whether asserted by the Company, any Holder or any other Person). The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee may have separate counsel and the Company shall pay the fees and
expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, damage, claims, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, bad faith or negligence.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
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The Company's payment obligations pursuant to this Section shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(7) or (8) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the resignation, removal or replacement of the Trustee
pursuant to this Section, the Company's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.
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In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA ss. 310(a). The Trustee shall have a combined
capital and surplus of at least US$50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company. The Trustee
shall comply with TIA ss. 311(a), excluding any creditor relationship listed in
TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to
TIA ss. 311(a) to the extent indicated.
SECTION 7.12 Appointment of Co-Trustee. It is the purpose of this Indenture
that there shall be no violation of any law of any jurisdiction denying or
restricting the right of banking corporations or associations to transact
business as trustee in such jurisdiction. It is recognized that in case of
litigation under this Indenture, and in particular in case of the enforcement
thereof on default, or in the case the Trustee deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the powers,
rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted or take any action which may be
desirable or necessary in connection therewith, it may be necessary that the
Trustee appoint an individual or institution as a separate or co-trustee. The
following provisions of this Section are adopted to these ends.
In the event that the Trustee appoints an additional individual or
institution as a separate or co-trustee, each and every remedy, power, right,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be exercised by or vested in or
conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-trustee but only to the extent necessary to enable such
separate or co-trustee to exercise such powers, rights and remedies, and only to
the extent that the Trustee by the laws of any jurisdiction is incapable of
exercising such powers, rights and remedies and every covenant and obligation
necessary to the exercise thereof by such separate or co-trustee shall run to
and be enforceable by either of them.
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Should any instrument in writing from the Company be required by the
separate or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to it such properties, rights, powers, trusts, duties
and obligations, any and all such instruments in writing shall, on request, be
executed, acknowledged and delivered by the Company; provided, that if an Event
of Default shall have occurred and be continuing, if the Company does not
execute any such instrument within fifteen (15) days after request therefor, the
Trustee shall be empowered as an attorney-in-fact for the Company to execute any
such instrument in the Company's name and stead. In case any separate or
co-trustee or a successor to either shall die, become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts,
duties and obligations of such separate or co-trustee, so far as permitted by
law, shall vest in and be exercised by the Trustee until the appointment of a
new trustee or successor to such separate or co-trustee.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(1) all rights and powers, conferred or imposed upon the Trustee shall
be conferred or imposed upon and may be exercised or performed by such
separate trustee or co-trustee; and
(2) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Indenture and the conditions
of this Article.
Any separate trustee or co-trustee may at any time appoint the Trustee as
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Indenture on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Article 8
Discharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance. (a) When (1)
the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for cancellation or (2) all
outstanding Securities have become due and payable, whether at maturity or on a
redemption date as a result of the mailing of a notice of redemption pursuant to
Article 3 hereof and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or
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upon redemption all outstanding Securities, including interest thereon to
maturity or such redemption date (other than Securities replaced pursuant to
Section 2.07), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 8.01(c),
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (1) all its obligations under the Securities and this Indenture
("legal defeasance option") or (2) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.13 and the operation
of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries and Subsidiary Guarantors) and the limitation contained in Sections
5.01(a)(3) ("covenant defeasance option"). The Company may exercise its legal
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(4) (except an Event of Default attributable to a breach of Section
4.14), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries and
Subsidiary Guarantors) or because of the failure of the Company to comply with
Section 5.01(a)(3). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Subsidiary Guarantor, if any, shall be released
from all its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02 Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and interest
on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the
66
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (B) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such 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 defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders 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; and
(8) the Company delivers to the Trustee (A) an Opinion of Counsel to
the effect that Securityholders will not recognize income, gain or loss for
U.S. Federal income tax purposes as a result of such deposit and defeasance
and will be subject to U.S. Federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal
defeasance only, such Opinion of Counsel must be based on a ruling of the
Internal Revenue Service or other change in applicable U.S. Federal income
tax law) and (B) an Opinion of Counsel in the United Mexican States to the
effect that Securityholders will not recognize income, gain or loss for
income tax purposes of such jurisdiction as a result of such deposit and
defeasance and will be subject to income tax of such jurisdiction on the
same amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred; and
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(9) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
SECTION 8.03 Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities
SECTION 8.04 Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05 Indemnity for Government Obligations. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06 Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article 8
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and each Subsidiary Guarantor's obligations
under this Indenture, each Subsidiary Guaranty and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article 8 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with this Article 8;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
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Article 9
Amendments
SECTION 9.01 Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities, including any
Subsidiary Guaranties, or to secure the Securities;
(5) to add to the covenants of the Company or any Subsidiary Guarantor
for the benefit of the Holders or to surrender any right or power herein
conferred upon the Company or any Subsidiary Guarantor;
(6) to make any change that does not adversely affect the rights of
any Securityholder;
(7) to comply with any requirements of the SEC in connection with the
qualification, or maintaining the qualification of, this Indenture under
the TIA; or
(8) to make any amendment to the provisions of this Indenture relating
to the form, authentication, transfer and legending of Securities;
provided, however, that (a) compliance with this Indenture as so amended
would not result in Securities being transferred in violation of the
Securities Act or any other applicable securities law and (b) such
amendment does not materially affect the rights of Holders to transfer
Securities.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02 With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding
(including consents
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obtained in connection with a tender offer or exchange for the Securities).
However, without the consent of each Securityholder affected thereby, an
amendment or waiver may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or change the Stated Maturity of any
Security;
(4) change the provisions applicable to the redemption of any Security
contained in Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in, the amendment provisions which require each
Holder's consent or in the waiver provisions;
(7) make any changes in the ranking or priority of any Security that
would adversely affect the Securityholders;
(8) make any change in Section 6.04 or 6.07 or the second sentence of
this Section;
(9) make any change in, or release other than in accordance with this
Indenture, any Subsidiary Guaranty that would adversely affect the
Securityholders; or
(10) make any change in Section 4.14 that adversely affects the rights
of any Securityholder or amend the terms of the Securities or this
Indenture in a way that would result in the loss of an exemption from any
of the Taxes described therein.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.03 Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
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SECTION 9.04 Revocation and Effect of Consents and Waivers. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
or waiver is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent or waiver as to such Holder's Security or portion
of the Security if the Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an amendment or waiver becomes
effective, it shall bind every Securityholder. An amendment or waiver becomes
effective upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05 Notation on or Exchange of Securities. If an amendment changes
the terms of a Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee. The Trustee may place an appropriate notation on the
Security regarding the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms. Failure to make the appropriate notation or to issue
a new Security shall not affect the validity of such amendment.
SECTION 9.06 Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07 Payment for Consent. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
71
Article 10
Subsidiary Guaranties
SECTION 10.01 Guaranties. Each Subsidiary Guarantor hereby unconditionally
and irrevocably guarantees, jointly and severally, to each Holder and to the
Trustee and its successors and assigns (a) the full and punctual payment of
principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture and the Securities and (b) the full and
punctual performance within applicable grace periods of all other obligations of
the Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
part, without notice or further assent from such Subsidiary Guarantor and that
such Subsidiary Guarantor will remain bound under this Article 10
notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Subsidiary Guarantor waives notice of any default
under the Securities or the Obligations. The obligations of each Subsidiary
Guarantor hereunder shall not be affected by (1) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person (including any Subsidiary Guarantor)
under this Indenture, the Securities or any other agreement or otherwise; (2)
any extension or renewal of any thereof; (3) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (4) the release of any security held by any
Holder or the Trustee for the Obligations or any of them; (5) the failure of any
Holder or the Trustee to exercise any right or remedy against any other
guarantor of the Obligations; or (6) except as set forth in Section 10.06, any
change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guaranty
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
Each Subsidiary Guarantor hereby acknowledges that this Indenture and each
Subsidiary Guaranty shall be governed by the laws of the State of New York and
hereby expressly and irrevocably waives the benefit of "orden", "excusion",
"division", "quita", "novacion", "espera", "modificacion" and all other rights
provided for in Articles 2813, 2814, 2816, 2817, 2818, 2820, 2821, 2822, 2823,
2827, 2836, 2840, 2842, 2845, 2846, 2847, 2848 and 2849 of the Federal Civil
Code (and the corresponding Articles under the Civil Codes in effect for each of
the States of Mexico and the Federal District), which Articles are not
reproduced herein inasmuch as each Subsidiary Guarantor hereby represents that
it has read and is familiar with the contents thereof.
72
Except as expressly set forth in Sections 8.01(b), 10.02 and 10.06, the
obligations of each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of such Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any other Obligation, each Subsidiary Guarantor hereby promises to
and shall, upon receipt of written demand by the Trustee, forthwith pay, or
cause to be paid, in cash, to the Holders or the Trustee an amount equal to the
sum of (A) the unpaid amount of such Obligations, (B) accrued and unpaid
interest on such Obligations (but only to the extent not prohibited by law) and
(C) all other monetary Obligations of the Company to the Holders and the
Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
Obligations Guaranteed hereby may be accelerated as provided in Article 6 for
the purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6, such Obligations (whether or not due and payable) shall forthwith
become due and payable by such Subsidiary Guarantor for the purposes of this
Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section.
73
SECTION 10.02 Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed
the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 10.03 Successors and Assigns. This Article 10 shall be binding upon
each Subsidiary Guarantor and its successors and assigns and shall enure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 10.04 No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 10 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 10 at law,
in equity, by statute or otherwise.
SECTION 10.05 Modification. No modification, amendment or waiver of any
provision of this Article 10, nor the consent to any departure by any Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 10.06 Release of Subsidiary Guarantor. A Subsidiary Guarantor shall
be released from its obligations under this Article 10 (other than any
obligation that shall have arisen under Section 10.07):
(1) upon the sale (including any sale pursuant to any exercise of
remedies by a holder of Indebtedness of the Company or of such Subsidiary
Guarantor) or other disposition (including by way of consolidation or
merger) of a Subsidiary Guarantor;
(2) upon the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor;
(3) upon the designation of such Subsidiary Guarantor as an
Unrestricted Subsidiary in accordance with the terms of this Indenture;
74
(4) at such time as such Subsidiary Guarantor does not have any
Indebtedness outstanding that would have required such Subsidiary Guarantor
to enter into a Guaranty Agreement pursuant to Section 4.13, and the
Company provides an Officer's Certificate to the Trustee certifying that no
such Indebtedness is outstanding and that the Company elects to have such
Subsidiary Guarantor released; or
(5) upon defeasance of the Securities;
provided, however, that in the case of clauses (1) and (2) above, (i) such sale
or other disposition is made to a Person other than the Company or an Affiliate
and (ii) such sale or disposition is otherwise permitted by this Indenture. At
the request of the Company, the Trustee shall execute and deliver an appropriate
instrument evidencing such release.
SECTION 10.07 Contribution. Each Subsidiary Guarantor that makes a payment
under its Subsidiary Guaranty shall be entitled upon payment in full of all
guarantied obligations under this Indenture to a contribution from each other
Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor's pro
rata portion of such payment based on the respective net assets of all the
Subsidiary Guarantors at the time of such payment determined in accordance with
GAAP.
Article 11
Miscellaneous
SECTION 11.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.02 Notices. Any notice or communication required to be delivered
hereunder shall be in English and in writing and delivered in person or mailed
by first-class mail addressed as follows:
if to the Company or any Subsidiary Guarantor:
Axtel, S.A. de C.V.
Blvd. Xxxx Xxxxx km. 3.33 No. L-1
Col. Unidad San Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
Mexico, CP 66215
Telephone: x00 (00) 0000-0000
Facsimile: x00(00) 0000-0000
Attention: Chief Financial Officer
75
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
if to the Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Trust Administration - Global Finance Unit
The Company, any Subsidiary Guarantor or the Trustee by notice
to the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it; provided that any notice or
communication delivered to the Trustee shall be deemed effective upon actual
receipt thereof.
SECTION 11.03 Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA ss. 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, any
Subsidiary Guarantor, the Trustee, the Registrar and anyone else shall have the
protection of TIA ss. 312(c).
SECTION 11.04 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
76
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06 When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar. The Trustee may
make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.08 Legal Holidays. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 11.09 Force Majeure. In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations under
this Indenture arising out of or caused by, directly or indirectly, forces
beyond its reasonable control, including without limitation strikes, work
stoppages, accidents, acts of war or terrorism, civil or military disturbances,
nuclear or natural catastrophes or acts
77
of god, and interruptions, loss or malfunctions of utilities, communications or
computer (software or hardware) services.
SECTION 11.10 Governing Law. This Indenture and the Securities shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 11.11 Consent to Jurisdiction; Appointment of Agent for Service of
Process; Judgment Currency. (a) each of the Company and the Subsidiary
Guarantors, by the execution and delivery of this Indenture, irrevocably agrees
that service of process may be made upon CT Corporation System ("CT
Corporation"), with offices at 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or its successors as agent for service of process), in the County, City
and State of New York, United States of America, in any suit or proceeding
against it instituted by the Trustee, based on or arising under this Indenture
or the Securities and the transactions contemplated hereby in any federal or
state court in the State of New York, County of New York, and each of the
Company and the Subsidiary Guarantors hereby irrevocably consents and submits to
the exclusive jurisdiction of, any such court and to the courts of its own
corporate domicile in respect of actions brought against it as a defendant
generally and unconditionally in respect of any such suit or proceeding.
(b) each of the Company and the Subsidiary Guarantors further, by the
execution and delivery of this Indenture, irrevocably designates, appoints and
empowers CT Corporation, with offices at 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as its designee, appointee and authorized agent to receive for
and on its behalf service (i) of any and all legal process, summons, notices and
documents that may be served in any action, suit or proceeding brought against
it with respect to its obligations, liabilities or any other matter arising out
of or in connection with this Indenture or the Securities and the transactions
contemplated hereby and (ii) that may be made on such designee, appointee and
authorized agent in accordance with legal procedures prescribed for such courts,
and it being understood that the designation and appointment of CT Corporation
as such authorized agent shall become effective immediately without any further
action on its part. Each of the Company and the Subsidiary Guarantors represents
to the Trustee that it has notified CT Corporation of such designation and
appointment and that CT Corporation has accepted the same, and that CT
Corporation has been paid its full fee for such designation, appointment and
related services through the date that is one year from the date of this
Indenture. Each of the Company and the Subsidiary Guarantors further agrees
that, to the extent permitted by law, service of process upon CT Corporation (or
its successors as agent for service of process) and written notice of said
service to the Company or a Subsidiary Guarantor, as applicable, pursuant to
Section 11.02 of this Indenture, shall be deemed in every respect effective
service of process upon it in any such suit or proceeding. If for any reason
such designee, appointee and agent hereunder shall cease to be available to act
as such, each of the Company and the Subsidiary Guarantors agrees to designate a
new designee, appointee and agent in The City of New York, New York on the terms
and for the purposes of this Section reasonably satisfactory to the Trustee.
Each of the Company and the Subsidiary Guarantors further hereby irrevocably
consents and agrees to the service of any and all legal process, summons,
notices and documents in any such action, suit or proceeding
78
against the it by serving a copy thereof upon the relevant agent for service of
process referred to in this Section (whether or not the appointment of such
agent shall for any reason prove to be ineffective or such agent shall accept or
acknowledge such service) and by mailing copies thereof by registered or
certified air mail, postage prepaid, to the it at its address specified in or
designated pursuant to this Indenture. Each of the Company and the Subsidiary
Guarantors agrees that the failure of any such designee, appointee and agent to
give any notice of such service to it shall not impair or affect in any way the
validity of such service or any judgment rendered in any action or proceeding
based thereon. Nothing herein shall in any way be deemed to limit the ability of
the Trustee to serve any such legal process, summons, notices and documents in
any other manner permitted by applicable law. Each of the Company and the
Subsidiary Guarantors hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of venue of any of the aforesaid actions, suits or proceedings
arising out of or in connection with this Indenture brought in federal or state
court in the State of New York, County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
(c) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder into any currency other than United States
dollars, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase United
States dollars with the other currency in New York City on the business day
preceding that on which final judgment is given. The obligation of any party
hereto in respect of any sum due from it to the Trustee shall, notwithstanding
any judgment in a currency other than United States dollars, not be discharged
until the first business day, following receipt by the Trustee of any sum
adjudged to be so due in the other currency, on which (and only to the extent
that) the Trustee may in accordance with normal banking procedures purchase
United States dollars with the other currency; if the United States dollars so
purchased are less than the sum originally due to the Trustee hereunder, such
party agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Trustee against the loss. If the United States dollars so
purchased are greater than the sum originally due to the Trustee hereunder, the
Trustee agrees to pay to such party an amount equal to the excess of the dollars
so purchased over the sum originally due to the Trustee hereunder.
(d) To the extent that any of the Company or the Subsidiary Guarantors may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity, to the fullest extent
permitted by law.
(e) The provisions of this Section shall survive any termination of this
Indenture, in whole or in part.
79
SECTION 11.12 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE SUBSIDIARY
GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 11.13 No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or any Subsidiary Guarantor shall not have
any liability for any obligations of the Company under the Securities or this
Indenture or of such Subsidiary Guarantor under its Subsidiary Guaranty or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 11.14 Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Subsidiary
Guarantors shall bind their respective successors. All agreements of the Trustee
in this Indenture shall bind its successors.
SECTION 11.15 Multiple Originals. The parties may sign any number of copies
of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 11.16 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
AXTEL, S.A. DE C.V.,
By
/S/ Xxxx Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title:
SERVICIOS AXTEL, S.A. DE C.V.,
By
/S/ Xxxx Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title:
IMPULSORA E INMOBILIARIA REGIONAL, S.A. DE C.V.,
By
/S/ Xxxx Xxxxxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title:
INSTALACIONES Y CONTRATACIONES, S.A., DE C.V.
By
/S/ Xxxx Xxxxxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx Xxxxxxx
Title:
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed
as of the date first written above.
THE BANK OF NEW YORK,
By
/S/ Xxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Assistant Vice President
EXHIBIT A
SHAREHOLDERS OF RECORD
Telinor Telefonia, S. de X.X. de X.X.
Xxxxxxxxxx Capital Partners III Merchant Banking Fund X.X.
Xxxxxxxxxx Offshore Capital Partners III X.X.
Xxxxxxxxxx Family Investment Partnership III X.X.
Xxxx Canada International (Mexico Telecom) Ltd
New Hampshire Insurance Company
Tapazeca sprl
LAIF X sprl
WorldTel Mexico Telcom Ltd
Nortel Network Ltd
RULE 144A/REGULATION S/IAI APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Temporary Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depository for such a Temporary
Regulation S Global Security, to the extent applicable to such transaction and
as in effect from time to time.
"Definitive Security" means a certificated Initial Security or Exchange
Security or Private Exchange Security bearing, if required, the appropriate
restricted securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Distribution Compliance Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Securities are first offered to Persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the issue date with respect to such Securities.
"Exchange Securities" means (1) the 11% Senior Notes Due 2013 issued
pursuant to the Indenture in connection with a Registered Exchange Offer
pursuant to a Registration Rights Agreement and (2) Additional Securities, if
any, issued pursuant to a registration statement filed with the SEC under the
Securities Act.
"IAI" means an institutional "accredited investor," as defined in Rule
501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act.
"Initial Purchaser" means (1) with respect to the Initial Securities issued
on the Issue Date, Credit Suisse First Boston Corporation, and (2) with respect
to each issuance of Additional Securities, the Persons purchasing such
Additional Securities under the related Purchase Agreement.
"Initial Securities" means (1) US$175,000,000 aggregate principal amount of
11% Senior Notes Due 2013 issued on the Issue Date and (2) Additional
Securities, if any, issued in a transaction exempt from the registration
requirements of the Securities Act.
2
"Private Exchange" means the offer by the Company, pursuant to a
Registration Rights Agreement, to the Initial Purchaser to issue and deliver to
the Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 11% Senior Notes Due 2013 issued in
connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial Securities
issued on the Issue Date, the Purchase Agreement dated December 9, 2003, among
the Company, the Subsidiary Guarantors and the Initial Purchaser, and (2) with
respect to each issuance of Additional Securities, the purchase agreement or
underwriting agreement among the Company, the Subsidiary Guarantors and the
Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to a
Registration Rights Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Rights Agreement" means (1) with respect to the Initial
Securities issued on the Issue Date, the Registration Rights Agreement dated
December 16, 2003, among the Company, the Subsidiary Guarantors and the Initial
Purchaser and (2) with respect to each issuance of Additional Securities issued
in a transaction exempt from the registration requirements of the Securities
Act, the registration rights agreement, if any, among the Company and the
Persons purchasing such Additional Securities under the related Purchase
Agreement.
"Rule 144A Securities" means all Securities offered and sold to QIBs in
reliance on Rule 144A.
"Securities" means the Initial Securities, the Exchange Securities and the
Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository), or any successor Person thereto and
shall initially be the Trustee.
"Shelf Registration Statement" means the registration statement issued by
the Company in connection with the offer and sale of Initial Securities or
Private Exchange Securities pursuant to a Registration Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or are required
to bear the legend set forth in Section 2.3(b) hereto.
3
1.2 Other Definitions
Defined in
Term Section:
Agent Members 2.1(b)
Global Securities 2.1(a)
IAI Global Security 2.1(a)
Permanent Regulation S Global Security 2.1(a)
Regulation S 2.1(a)
Regulation S Global Security 2.1(a)
Rule 144A 2.1(a)
Rule 144A Global Security 2.1(a)
Temporary Regulation S Global Security 2.1(a)
2. The Securities.
2.1. (a) Form and Dating. The Initial Securities will be offered and
sold by the Company pursuant to a Purchase Agreement. The Initial Securities
will be resold initially only to (i) QIBs in reliance on Rule 144A under the
Securities Act ("Rule 144A") and (ii) Persons other than U.S. Persons (as
defined in Regulation S) in reliance on Regulation S under the Securities Act
("Regulation S"). Initial Securities may thereafter be transferred to, among
others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to the
restrictions on transfer set forth herein. Initial Securities initially resold
pursuant to Rule 144A shall be issued initially in the form of one or more
permanent global Securities in definitive, fully registered form (collectively,
the "Rule 144A Global Security"); Initial Securities initially resold to IAIs
shall be issued initially in the form of one or more permanent global Securities
in definitive, fully registered form (collectively, the "IAI Global Security");
and Initial Securities initially resold pursuant to Regulation S shall be issued
initially in the form of one or more temporary global securities in fully
registered form (collectively, the "Temporary Regulation S Global Security"), in
each case without interest coupons and with the global securities legend and the
applicable restricted securities legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Securities Custodian and registered in the name of
the Depository or a nominee of the Depository, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. Except as set forth
in this Section 2.1(a), beneficial ownership interests in the Temporary
Regulation S Global Security will not be exchangeable for interests in the Rule
144A Global Security, the IAI Global Security, a permanent global security (the
"Permanent Regulation S Global Security", and together with the Temporary
Regulation S Global Security, the "Regulation S Global Security") or any other
Security prior to the expiration of the Distribution Compliance Period and then,
after the expiration of the Distribution Compliance Period, may be exchanged for
interests in a Rule 144A Global Security, an IAI Global Security or the
Permanent Regulation S Global Security only upon certification in form
reasonably satisfactory to the Trustee that (i) beneficial ownership interests
in such Temporary Regulation S Global Security are owned either by non-U.S.
persons or U.S. persons who purchased such interests in a transaction that did
not require registration under the Securities Act and (ii) in the case of an
exchange for an
4
IAI Global Security, certification that the interest in the Temporary Regulation
S Global Security is being transferred to an institutional "accredited investor"
under the Securities Act that is an institutional accredited investor acquiring
the securities for its own account or for the account of an institutional
accredited investor.
Beneficial interests in Temporary Regulation S Global Securities or IAI
Global Securities may be exchanged for interests in Rule 144A Global Securities
if (1) such exchange occurs in connection with a transfer of Securities in
compliance with Rule 144A and (2) the transferor of the beneficial interest in
the Temporary Regulation S Global Security or the IAI Global Security, as
applicable, first delivers to the Trustee a written certificate (in a form
satisfactory to the Trustee) to the effect that the beneficial interest in the
Temporary Regulation S Global Security or the IAI Global Security, as
applicable, is being transferred to a Person (a) who the transferor reasonably
believes to be a QIB, (b) purchasing for its own account or the account of a QIB
in a transaction meeting the requirements of Rule 144A, and (c) in accordance
with all applicable securities laws of the States of the United States and other
jurisdictions.
Beneficial interests in Temporary Regulation S Global Securities and Rule
144A Global Securities may be exchanged for an interest in IAI Global Securities
if (1) such exchange occurs in connection with a transfer of the securities in
compliance with an exemption under the Securities Act and (2) the transferor of
the Regulation S Global Security or Rule 144A Global Security, as applicable,
first delivers to the Trustee a written certificate (substantially in the form
of Exhibit 2) to the effect that (A) the Regulation S Global Security or Rule
144A Global Security, as applicable, is being transferred (a) to an "accredited
investor" within the meaning of 501(a) (1), (2), (3) or (7) under the Securities
Act that is an institutional investor acquiring the securities for its own
account or for the account of such an institutional accredited investor, in each
case in a minimum principal amount of Securities of US$250,000, for investment
purposes and not with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act and (B) in accordance with all
applicable securities laws of the States of the United States and other
jurisdictions.
Beneficial interests in a Rule 144A Global Security or an IAI Global
Security may be transferred to a Person who takes delivery in the form of an
interest in a Regulation S Global Security, whether before or after the
expiration of the Distribution Compliance Period, only if the transferor first
delivers to the Trustee a written certificate (in the form provided in the
Indenture) to the effect that such transfer is being made in accordance with
Rule 903 or 904 of Regulation S or Rule 144 (if applicable).
The Rule 144A Global Security, the IAI Global Security, the Temporary
Regulation S Global Security and the Permanent Regulation S Global Security are
collectively referred to herein as "Global Securities". The aggregate principal
amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depository or its
nominee as hereinafter provided.
5
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global Securities
that (a) shall be registered in the name of the Depository for such Global
Security or Global Securities or the nominee of such Depository and (b) shall be
delivered by the Trustee to such Depository or pursuant to such Depository's
instructions or held by the Trustee as custodian for the Depository.
Members of, or participants in, the Depository ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depository or by the Trustee as the custodian of the Depository or
under such Global Security, and the Company, the Trustee and any agent of the
Company or the Trustee shall be entitled to treat the Depository as the absolute
owner of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices of
such Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Definitive Securities. Except as provided in this Section 2.1 or
Section 2.3 or 2.4, owners of beneficial interests in Restricted Global
Securities shall not be entitled to receive physical delivery of Definitive
Securities.
2.2. Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, an aggregate principal amount of US$175,000,000 11% Senior Notes
Due 2013, (2) any Additional Securities for an original issue in an aggregate
principal amount specified in the written order of the Company pursuant to
Section 2.02 of the Indenture and (3) Exchange Securities or Private Exchange
Securities for issue only in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to a Registration Rights Agreement, for a like principal
amount of Initial Securities, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of any issuance of Additional
Securities pursuant to Section 2.13 of the Indenture, shall certify that such
issuance is in compliance with Section 4.03 of the Indenture.
2.3. Transfer and Exchange.
(a). Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
6
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or its attorney duly authorized in
writing; and
(ii) if such Definitive Securities are required to bear a restricted
securities legend, they are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act, pursuant to
Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred (x)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (y) in
reliance upon another exemption from the requirements of the
Securities Act: (i) a certification to that effect (in the form set
forth on the reverse of the Security) and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Rule 144A Global Security, an IAI Global Security or a
Permanent Regulation S Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being
transferred to a QIB in accordance with Rule 144A, (B) being
transferred to an IAI or (C) being transferred after expiration of the
Distribution Compliance Period by a Person who initially purchased
such Security in reliance on Regulation S to a buyer who elects to
hold its interest in such Security in the form of a beneficial
interest in the Permanent Regulation S Global Security; and
7
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books
and records with respect to such Rule 144A Global Security (in the
case of a transfer pursuant to clause (b)(i)(A)), IAI Global Security
(in the case of a transfer pursuant to clause (b)(1)(B)) or Permanent
Regulation S Global Security (in the case of a transfer pursuant to
clause (b)(i)(C)) to reflect an increase in the aggregate principal
amount of the Securities represented by the Rule 144A Global Security,
IAI Global Security or Permanent Regulation S Global Security, as
applicable, such instructions to contain information regarding the
Depository account to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Rule 144A Global
Security, IAI Global Security or Permanent Regulation S Global Security, as
applicable, to be increased by the aggregate principal amount of the Definitive
Security to be exchanged and shall credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the Rule
144A Global Security, IAI Global Security or Permanent Regulation S Global
Security, as applicable, equal to the principal amount of the Definitive
Security so canceled. If no Rule 144A Global Securities, IAI Global Securities
or Permanent Regulation S Global Securities, as applicable, are then
outstanding, the Company shall issue and the Trustee shall authenticate, upon
written order of the Company in the form of an Officers' Certificate of the
Company, a new Rule 144A Global Security, IAI Global Security or Permanent
Regulation S Global Security, as applicable, in the appropriate principal
amount.
(c) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depository, in
accordance with this Indenture (including applicable restrictions on
transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in
accordance with the Depository's procedures containing information
regarding the participant account of the Depository to be credited
with a beneficial interest in the Global Security. The Registrar
shall, in accordance with such instructions, instruct the Depository
to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Security and to debit the account
of the Person making the transfer the beneficial interest in the
Global Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in another
Global Security, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the Global
Security to which such interest is being transferred in an amount
equal to the principal amount of the interest to be so transferred,
and the Registrar shall reflect on its books and records the date and
a corresponding
8
decrease in the principal amount of the Global Security from which
such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global
Security may not be transferred as a whole except by the Depository to
a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository
or any such nominee to a successor Depository or a nominee of such
successor Depository.
(iv) In the event that a Global Security is exchanged for
Definitive Securities pursuant to Section 2.4 of this Appendix, prior
to the consummation of a Registered Exchange Offer or the effectiveness
of a Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as
are substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of
the Securities intended to ensure that such transfers comply with Rule
144A, Regulation S or another applicable exemption under the Securities
Act, as the case may be) and such other procedures as may from time to
time be adopted by the Company.
(d) Restrictions on Transfer of Temporary Regulation S Global Securities.
During the Distribution Compliance Period, beneficial ownership interests in
Temporary Regulation S Global Securities may only be sold, pledged or
transferred in accordance with the Applicable Procedures and only (i) to the
Company, (ii) in an offshore transaction in accordance with Regulation S (other
than a transaction resulting in an exchange for an interest in a Permanent
Regulation S Global Security) or (iii) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any State of the United States.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Security certificate evidencing the Global Securities
(and all Securities issued in exchange therefor or in substitution
thereof), in the case of Securities offered otherwise than in reliance
on Regulation S, shall bear a legend in substantially the following
form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED
THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION
FROM THE
9
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS
AN INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
SECURITIES OF US$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, (IV) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904
UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES
(I) THROUGH (VI), IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
Each certificate evidencing a Security offered in reliance on Regulation S
shall, in addition to the foregoing, bear a legend in substantially the
following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS
USED
10
ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE
SECURITIES ACT.
Each Definitive Security shall also bear the following additional
legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, the Registrar
shall permit the transferee thereof to exchange such Transfer
Restricted Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security, if the transferor thereof certifies
in writing to the Registrar that such sale or transfer was made in
reliance on Rule 144 (such certification to be in the form set forth
on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities pursuant to and during the period of the
effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends on such Initial Security or
such Private Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private Exchange Security
issued to certain Holders be issued in global form will cease to
apply, and a certificated Initial Security or Private Exchange
Security or an Initial Security or Private Exchange Security in global
form, in each case without restrictive transfer legends, will be
available to the transferee of the Holder of such Initial Securities
or Private Exchange Securities upon exchange of such transferring
Holder's certificated Initial Security or Private Exchange Security or
directions to transfer such Holder's interest in the Global Security,
as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders
be issued in global form will still apply with respect to Holders of
such Initial Securities that do not exchange their Initial Securities,
and Exchange Securities in certificated or global form, in each case
without the restricted securities legend set forth in Exhibit 1 hereto
will be available to Holders that exchange such Initial Securities in
such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to
the Initial Securities, all requirements pertaining to such Initial
11
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities, and
Private Exchange Securities in global form with the global securities
legend and the applicable restricted securities legend set forth in
Exhibit 1 hereto will be available to Holders that exchange such
Initial Securities in such Private Exchange.
(f) Cancellation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, purchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for Definitive Securities, redeemed, purchased
or canceled, the principal amount of Securities represented by such Global
Security shall be reduced and an adjustment shall be made on the books and
records of the Trustee (if it is then the Securities Custodian for such Global
Security) with respect to such Global Security, by the Trustee or the Securities
Custodian, to reflect such reduction.
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant
in the Depository or other Person with respect to the accuracy of the
records of the Depository or its nominee or of any participant or
member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depository) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and procedures
of the Depository. The Trustee may rely and shall be fully protected
in relying upon information furnished by the Depository with respect
to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depository participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
12
2.4 Certificated Securities.
(a) A Global Security deposited with the Depository or with the Trustee as
Securities Custodian for the Depository pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 hereof and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security and the Depository fails to appoint a successor depository or if at any
time such Depository ceases to be a "clearing agency" registered under the
Exchange Act and, in either case, a successor depositary is not appointed by the
Company within 90 days of such notice, or (ii) an Event of Default has occurred
and is continuing or (iii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive Securities
under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depository to
the Trustee located at its principal corporate trust office in the Borough of
Manhattan, The City of New York, to be so transferred, in whole or from time to
time in part, without charge, and the Trustee shall authenticate and deliver,
upon such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section 2.4 shall be
executed, authenticated and delivered only in denominations of US$1,000
principal amount and any integral multiple thereof and registered in such names
as the Depository shall direct. Any Definitive Security delivered in exchange
for an interest in the Transfer Restricted Security shall, except as otherwise
provided by Section 2.3(e) hereof, bear the applicable restricted securities
legend and definitive note legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b) hereof, the registered
Holder of a Global Security shall be entitled to grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(d) In the event of the occurrence of one of the events specified in
Section 2.4(a) hereof, the Company shall promptly make available to the Trustee
a reasonable supply of Definitive Securities in definitive, fully registered
form without interest coupons. In the event that the Definitive Securities are
not issued to each such beneficial owner promptly after the Registrar has
received a request from the Holder of a Global Security to issue such
Certificated Security, the Company expressly acknowledges, with respect to the
right of any Holder to pursue a remedy pursuant to Article 6 of the Indenture,
the right of any beneficial holder of Securities to pursue such remedy with
respect to the portion of the Global Security that represents such beneficial
holder's Securities as if such Certificated Securities had been issued.
EXHIBIT 1
to
RULE 144A/REGULATION S/IAI APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE LATER OF
COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES
WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY
VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR
SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Securities Legend for Securities Offered
Otherwise than in Reliance on Regulation S]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY
2
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I)
TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (III) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
OF SECURITIES OF US$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Restricted Securities Legend for Securities Offered in
Reliance on Regulation S.]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN
TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE
PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN
INTEREST IN THE SECURITIES REPRESENTED HEREBY
3
WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE
EXPIRATION OF THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING OF
RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON
CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH
BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO
PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD,
BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY
MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF
INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY
PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN
APPLICABLE.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL
INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR
INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN
CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE 144A AND
(2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS TO THE
TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE
EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO A
PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL
INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE EXCHANGED FOR
INTERESTS IN AN IAI GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE OCCURS IN
CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH AN EXEMPTION
UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL
SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM
ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL
SECURITY IS BEING
4
TRANSFERRED (A) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
OF SECURITIES OF US$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL
SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN
INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE
EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR
FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO
THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE
WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
5
No. US$
CUSIP No.
ISIN No.
11% Senior Notes due 2013
Axtel, S.A. de C.V., a Mexican corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum of United States
Dollars on December 15, 2013.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: December 16, 2003
SIGNATURE PAGE FOLLOWS
6
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: December 16, 2003
AXTEL, S.A. de C.V.
By
-------------------------------------------
Name:
Title:
By
-------------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By
-----------------------------------------------------
Authorized Signatory
7
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11% Senior Notes due 2013
1. Interest
Axtel, S.A. de C.V., a Mexican corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above; provided, however, that if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.25% per annum
(increasing by an additional 0.25% per annum after each consecutive 90-day
period that occurs after the date on which such Registration default occurs up
to a maximum additional interest rate of 1.00%) from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured. The Company will pay interest
semiannually on June 15 and December 15 of each year, commencing June 15, 2004.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 16, 2003.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company will pay interest on overdue principal at the rate borne by
this Security plus 1.0% per annum, and it will pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on the June 1 or December 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion). Payments made, whether by wire
transfer or check, will be due and payable outside of Mexico.
8
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of December
16, 2003 ("Indenture"), among the Company, the Subsidiary Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture. The Indenture contains covenants that limit the ability of the
Company and its subsidiaries to incur additional indebtedness; pay dividends or
distributions on, or redeem or repurchase capital stock; make investments; issue
or sell capital stock of subsidiaries; engage in transactions with affiliates;
create liens on assets; transfer or sell assets; guarantee indebtedness;
restrict dividends or other payments of subsidiaries; consolidate, merge or
transfer all or substantially all of its assets and the assets of its
subsidiaries; and engage in sale/leaseback transactions. These covenants are
subject to important exceptions and qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled to redeem the
Securities.
On and after December 15, 2008, the Company shall be entitled
at its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued interest
to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date),
1
if redeemed during the 12-month period commencing on December 15 of the
years set forth below:
Redemption
Period Price
2008 105.500%
2009 103.667%
2010 101.833%
2011 and thereafter 100.000%
In addition, prior to December 15, 2006, the Company shall be entitled at
its option on one or more occasions to redeem Securities (which includes
Additional Securities, if any) in an aggregate principal amount not to exceed
35% of the aggregate principal amount of the Securities (which includes
Additional Securities, if any) originally issued at a redemption price
(expressed as a percentage of principal amount) of 111%, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds from one or more
Equity Offerings; provided, however, that (1) at least 65% of such aggregate
principal amount of Securities (which includes Additional Securities, if any)
remains outstanding immediately after the occurrence of each such redemption
(other than Securities held, directly or indirectly, by the Company or its
Affiliates); and (2) each such redemption occurs within 60 days after the date
of the related Public Equity Offering.
6. Redemption for Changes in Withholding Taxes
The Company shall be entitled to redeem the Securities in whole, but not in
part, upon giving not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's registered address, at 100% of their principal
amount, plus accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) and including Additional Amounts payable
in respect of such payment, if (i) the Company certifies to the Trustee
immediately prior to the giving of such notice that as a result of any change in
or amendment to the laws, regulations, general rules or treaties of any Relevant
Taxing Jurisdiction, or any change in the application or official interpretation
of such laws, regulations, general rules or treaties, which change or amendment
became effective after the Issue Date, the Company has become or will become
obligated to pay Additional Amounts with respect to the Securities in excess of
the Additional Amounts that would be payable were payments of interest or
discounts deemed to be interest on the Securities subject to a 10% withholding
tax ("Excessive Additional Amounts") and (ii) such obligations cannot be avoided
by the Company taking reasonable measures available to it; provided, however,
that (a) no such notice of redemption will be given earlier than 60 days prior
to the earliest date on which the Company would be obligated to pay such
Excessive Additional Amounts and (b) at the time such notice is given, the
Company's obligation to pay such Additional Amounts (including any Excessive
Additional Amounts) remains in effect. Prior to giving of any notice of
redemption described in this paragraph, the Company will deliver to the Trustee
2
an Officers' Certificate stating that the Company is entitled to effect such
redemption in accordance with the terms set forth in this Security and setting
forth in reasonable detail a statement of the facts relating thereto (together
with a written Opinion of Counsel to the effect that the Company has become
obligated to pay such Excessive Additional Amounts as a result of a change or
amendment described above and that the Company cannot avoid payment of such
Excessive Additional Amounts by taking reasonable measures available to it and
that all governmental approvals necessary for the Company to effect such
redemption have been obtained and are in full force and effect or specifying any
such necessary approvals that as of the date of such opinion have not been
obtained).
7. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than US$1,000
principal amount may be redeemed in part but only in whole multiples of
US$1,000. If money sufficient to pay the redemption price of and accrued
interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right to
cause the Company to purchase all or any part of the Securities of such Holder
at a purchase price equal to 101% of the principal amount of the Securities to
be purchased plus accrued interest to the date of purchase (subject to the right
of Holders of record on the relevant record date to receive interest due on the
related interest payment date) as provided in, and subject to the terms of, the
Indenture.
9. Guaranty
The payment by the Company of the principal of, and premium and interest
on, the Securities is fully and unconditionally guaranteed on a joint and
several senior basis by each of the Subsidiary Guarantors to the extent set
forth in the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
US$1,000 principal amount and whole multiples of US$1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
3
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall be entitled to
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (a) the Indenture
and the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (b) any
default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, the Subsidiary Guarantors and
the Trustee shall be entitled to amend the Indenture or the Securities to cure
any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of
the Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or the Subsidiary Guarantors, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make any change
that does not adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (a) default for 30 days in
payment of interest on the Securities; (b) default in payment of principal on
the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the
Securities, upon acceleration or otherwise, or failure by the Company to redeem
or purchase Securities when required; (c) failure by the Company or any
Subsidiary Guarantor to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (d) certain
accelerations (including failure to pay within any grace period
4
after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds US$10 million; (e) certain events of
bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; (f) certain judgments or decrees for the payment of money in
excess of US$10 million; and (g) certain defaults with respect to Subsidiary
Guaranties. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security satisfactory to it.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
5
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including the obligations
of the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.
22. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Securityholder upon written request and
without charge to the Security holder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Axtel, S.A. de C.V.
Blvd. Xxxx Xxxxx km. 3.33 No. L-1
Col. Unidad San Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
Mexico, CP 66215
Telephone: x00 (00) 0000-0000
Facsimile: x00(00) 0000-0000
Attention: Chief Financial Officer
1
--------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date: Your Signature:
-------------------------- -----------------------------
--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) |_| inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act of 1933) that purchases for its
own account or for the account of a qualified
institutional buyer to whom notice is given that such
transfer is being made in reliance on Rule 144A, in
each case pursuant to and in compliance with Rule
144A under the Securities Act of 1933; or
(4) |_| outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933;
2
(5) |_| pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933; or
(6) |_| to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933) that has furnished to the
Trustee a signed letter containing certain
representations and agreements.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4), (5) or
(6) is checked, the Trustee shall be entitled to require, prior to registering
any such transfer of the Securities, such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933.
-----------------------------
Signature
Signature Guarantee:
------------------------------------------------ -----------------------------
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
--------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:
------------------------------ -----------------------------------
Notice: To be executed by
an executive officer
4
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
Date of Amount of decrease Amount of increase Principal amount of Signature of
Exchange in Principal amount in Principal amount this Global Security authorized officer
of this Global of this Global following such of Trustee or
Security Security decrease or increase Securities Custodian
5
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.10 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.10 of the Indenture, state the amount in
principal amount: US$$
Dated: Your Signature:
---------------------- ---------------------------------
(Sign exactly as your
name appears on the
other side of this
Security.)
Signature Guarantee: -----------------------------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
EXHIBIT A
FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY
*/ [If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".]
**/.[If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.]
2
No. US$
CUSIP No.
ISIN No.
11% Senior Notes due 2013
Axtel, S.A. de C.V., a Mexican corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum of United States Dollars on December
15, 2013.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: December 16, 2003
SIGNATURE PAGE FOLLOWS
3
IN WITNESS WHEREOF, the company has caused this instrument to be duly
executed.
Date: December 16, 2003
AXTEL, S.A. de C.V.
By
-------------------------------------------
Name:
Title:
By
-------------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of new York
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------------------------------
Authorized Signatory
4
FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY
11% Senior Notes Due 2013
1. Interest
Axtel, S.A. de C.V., a Mexican corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above; provided, however, that if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.25% per annum
(increasing by an additional 0.25% per annum after each consecutive 90-day
period that occurs after the date on which such Registration default occurs up
to a maximum additional interest rate of 1.00%) from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured. The Company will pay interest
semiannually on June 15 and December 15 of each year, commencing June 15, 2004.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 16, 2003.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company will pay interest on overdue principal at the rate borne by
this Security plus 1.0% per annum, and it will pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on the June `1 or December 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion). Payments made, whether by wire
transfer or check, will be due and payable outside of Mexico.
5
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-registrar without notice. The Company
or any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
December 16, 2003 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. xx.xx. 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.13 of the
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture. The Indenture contains covenants that limit the ability of the
Company and its subsidiaries to incur additional indebtedness; pay dividends or
distributions on, or redeem or repurchase capital stock; make investments; issue
or sell capital stock of subsidiaries; engage in transactions with affiliates;
create liens on assets; transfer or sell assets; guarantee indebtedness;
restrict dividends or other payments of subsidiaries; consolidate, merge or
transfer all or substantially all of its assets and the assets of its
subsidiaries; and engage in sale/leaseback transactions. These covenants are
subject to important exceptions and qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled to redeem the
Securities.
On and after December 15, 2008, the Company shall be entitled at its option
to redeem all or a portion of the Securities upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed in percentages of principal
amount, on the redemption date) plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date),
6
if redeemed during the 12-month period commencing on December 15 of the
years set forth below:
Redemption
Period Price
2008 105.500%
2009 103.667%
20010 101.833%
20011 and thereafter 100.000%
In addition, prior to December 15, 2006, the Company shall be entitled at
its option on one or more occasions to redeem Securities (which includes
Additional Securities, if any) in an aggregate principal amount not to exceed
35% of the aggregate principal amount of the Securities (which includes
Additional Securities, if any) originally issued at a redemption price
(expressed as a percentage of principal amount) of 111%, plus accrued and unpaid
interest to the redemption date, with the net cash proceeds from one or more
Equity Offerings; provided, however, that (1) at least 65% of such aggregate
principal amount of Securities (which includes Additional Securities, if any)
remains outstanding immediately after the occurrence of each such redemption
(other than Securities held, directly or indirectly, by the Company or its
Affiliates); and (2) each such redemption occurs within 60 days after the date
of the related Public Equity Offering.
6. Redemption for Changes in Withholding Taxes
The Company shall be entitled to redeem the Securities in whole, but not in
part, upon giving not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's registered address, at 100% of their principal
amount, plus accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date) and including Additional Amounts payable
in respect of such payment, if (i) the Company certifies to the Trustee
immediately prior to the giving of such notice that as a result of any change in
or amendment to the laws, regulations, general rules or treaties of any Relevant
Taxing Jurisdiction, or any change in the application or official interpretation
of such laws, regulations, general rules or treaties, which change or amendment
became effective after the Issue Date, the Company has become or will become
obligated to pay Additional Amounts with respect to the Securities in excess of
the Additional Amounts that would be payable were payments of interest or
discounts deemed to be interest on the Securities subject to a 10% withholding
tax ("Excessive Additional Amounts") and (ii) such obligations cannot be avoided
by the Company taking reasonable measures available to it; provided, however,
that (a) no such notice of redemption will be given earlier than 60 days prior
to the earliest date on which the Company would be obligated to pay such
Excessive Additional Amounts and (b) at the time such notice is given, the
Company's obligation to pay such Additional Amounts (including any Excessive
Additional Amounts) remains in effect. Prior to giving of any notice of
redemption described in this paragraph, the Company will deliver to the Trustee
an Officers'
7
Certificate stating that the Company is entitled to effect such redemption in
accordance with the terms set forth in this Security and setting forth in
reasonable detail a statement of the facts relating thereto (together with a
written Opinion of Counsel to the effect that the Company has become obligated
to pay such Excessive Additional Amounts as a result of a change or amendment
described above and that the Company cannot avoid payment of such Excessive
Additional Amounts by taking reasonable measures available to it and that all
governmental approvals necessary for the Company to effect such redemption have
been obtained and are in full force and effect or specifying any such necessary
approvals that as of the date of such opinion have not been obtained).
7. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than US$1,000
principal amount may be redeemed in part but only in whole multiples of
US$1,000. If money sufficient to pay the redemption price of and accrued
interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right to
cause the Company to purchase all or any part of the Securities of such Holder
at a purchase price equal to 101% of the principal amount of the Securities to
be purchased plus accrued interest to the date of purchase (subject to the right
of Holders of record on the relevant record date to receive interest due on the
related interest payment date) as provided in, and subject to the terms of, the
Indenture.
9. Guaranty
The payment by the Company of the principal of, and premium and interest
on, the Securities is fully and unconditionally guaranteed on a joint and
several senior basis by each of the Subsidiary Guarantors to the extent set
forth in the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
US$1,000 principal amount and whole multiples of US$1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
8
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall be entitled to
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the Securities to redemption or
maturity, as the case may be.
14. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (1) the Indenture
and the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (2) any
default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, the Subsidiary Guarantors and
the Trustee shall be entitled to amend the Indenture or the Securities to cure
any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of
the Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or the Subsidiary Guarantors, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make certain
changes in the subordination provisions, or to make any change that does not
adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (a) default for 30 days in
payment of interest on the Securities; (b) default in payment of principal on
the Securities at maturity, upon redemption pursuant to paragraph 5 or 6 of the
Securities, upon acceleration or otherwise, or failure by the Company to redeem
or purchase Securities when required; (c) failure by the Company or any
Subsidiary Guarantor to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (d) certain
accelerations (including failure to pay within any grace period
9
after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds US$10 million; (e) certain events of
bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; (f) certain judgments or decrees for the payment of money in
excess of US$10 million; and (g) certain defaults with respect to Subsidiary
Guaranties. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities may declare all
the Securities to be due and payable immediately. Certain events of bankruptcy
or insolvency are Events of Default which will result in the Securities being
due and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security satisfactory to it.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
10
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
21. Holders' Compliance with Registration Rights Agreement
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including the obligations
of the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.
22. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
The Company will furnish to any Securityholder upon written request and
without charge to the Security holder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Axtel, S.A. de C.V.
Blvd. Xxxx Xxxxx km. 3.33 No. L-1
Col. Unidad San Xxxxx
San Xxxxx Xxxxx Xxxxxx, X.X.
Mexico, CP 66215
Telephone: x00 (00) 0000-0000
Facsimile: x00(00) 0000-0000
Attention: Chief Financial Officer
11
--------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
--------------------------------------------------------------------------------
Date: Your Signature:
-------------------------- ------------------------------
--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.10 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.10 of the Indenture, state the amount in
principal amount: US$$
Dated: Your Signature:
---------------- -----------------------------------------
(Sign exactly as your name
appears on the other side of
this Security.)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
