WINSTAR COMMUNICATIONS, INC.,
as Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
----------------------
Senior Subordinated Deferred Interest Notes Indenture
Dated as of October 1, 1997
----------------------
15% Senior Subordinated Deferred Interest Notes Due March 1, 2007
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
ss.310(a)(1)............................................................................ 7.10
(a)(2)............................................................................ 7.10
(b)............................................................................... 7.08
ss.313(c)............................................................................... 7.06; 11.02
ss.314(a)............................................................................... 4.18; 11.02
(a)(4)............................................................................ 4.17; 11.02
(c)(1)............................................................................ 11.03
(c)(2)............................................................................ 11.03
(e)............................................................................... 11.04
ss.315(b)............................................................................... 7.05; 11.02
ss.316(a)(1)(A)......................................................................... 6.05
(a)(1)(B)......................................................................... 6.04
(b)............................................................................... 6.07
ss.317(a)(1)............................................................................ 6.08
(a)(2)............................................................................ 6.09
ss.318(a)............................................................................... 11.01
(c)............................................................................... 11.01
----------
Note:The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY.........................................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.......................................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.................................23
SECTION 1.03. Rules of Construction.............................................................23
SECTION 1.04. Ranking of the Securities.........................................................24
ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating...................................................................24
SECTION 2.02 Execution and Authentication......................................................24
SECTION 2.03. Registrar and Paying Agent........................................................25
SECTION 2.04. Paying Agent to Hold Money in Trust...............................................25
SECTION 2.05. Securityholder Lists..............................................................26
SECTION 2.06. Transfer and Exchange.............................................................26
SECTION 2.07. Replacement Securities............................................................27
SECTION 2.08. Outstanding Securities............................................................27
SECTION 2.09. Temporary Securities..............................................................28
SECTION 2.10. Cancellation......................................................................28
SECTION 2.11. Defaulted Interest................................................................28
SECTION 2.12. CUSIP Numbers.....................................................................28
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption...............................................................29
SECTION 3.02. Notices to Trustee................................................................29
SECTION 3.03. Selection of Securities to Be Redeemed............................................30
SECTION 3.04. Notice of Redemption..............................................................30
ii
SECTION 3.05. Effect of Notice of Redemption....................................................31
SECTION 3.06. Deposit of Redemption Price.......................................................31
SECTION 3.07. Payment of Securities Called for Redemption.......................................31
SECTION 3.08. Securities Redeemed in Part.......................................................32
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.............................................................32
SECTION 4.02. Maintenance of Office or Agency...................................................33
SECTION 4.03. Limitation on Indebtedness........................................................33
SECTION 4.04. Limitation on Senior Subordinated Indebtedness....................................36
SECTION 4.05. Limitation on Restricted Payments.................................................36
SECTION 4.06. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries..............................................39
SECTION 4.07. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries........................................................41
SECTION 4.08. Limitation on Issuances of Guarantees by Restricted
Subsidiaries...................................................................41
SECTION 4.09. Limitation on Transactions with Shareholders and Affiliates.......................42
SECTION 4.10. Limitation on Asset Sales.........................................................43
SECTION 4.11. Repurchase of Securities upon a Change of Control.................................44
SECTION 4.12. Existence.........................................................................45
SECTION 4.13. Payment of Taxes and Other Claims.................................................45
SECTION 4.14. Maintenance of Properties and Insurance...........................................46
SECTION 4.15. Notice of Defaults................................................................46
SECTION 4.16. Compliance Certificates...........................................................46
SECTION 4.17. SEC Reports and Reports to Holders................................................47
SECTION 4.18. Waiver of Stay, Extension or Usury Laws...........................................47
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.......................................................48
SECTION 5.02. Successor Substituted.............................................................49
iii
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.................................................................49
SECTION 6.02. Acceleration......................................................................51
SECTION 6.03. Other Remedies....................................................................52
SECTION 6.04. Waiver of Past Defaults...........................................................52
SECTION 6.05. Control by Majority...............................................................52
SECTION 6.06. Limitation on Suits...............................................................53
SECTION 6.07. Rights of Holders to Receive Payment..............................................53
SECTION 6.08. Collection Suit by Trustee........................................................54
SECTION 6.09. Trustee May File Proofs of Claim..................................................54
SECTION 6.10. Priorities........................................................................54
SECTION 6.11. Undertaking for Costs.............................................................55
SECTION 6.12. Restoration of Rights and Remedies................................................55
SECTION 6.13. Rights and Remedies Cumulative....................................................55
SECTION 6.14. Delay or Omission Not Waiver......................................................56
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General...........................................................................56
SECTION 7.02. Certain Rights of Trustee.........................................................56
SECTION 7.03. Individual Rights of Trustee......................................................57
SECTION 7.04. Trustee's Disclaimer..............................................................58
SECTION 7.05. Notice of Default.................................................................58
SECTION 7.06. Reports by Trustee to Holders.....................................................58
SECTION 7.07. Compensation and Indemnity........................................................58
SECTION 7.08. Replacement of Trustee............................................................59
SECTION 7.09. Successor Trustee by Merger, Etc..................................................60
SECTION 7.10. Eligibility.......................................................................60
SECTION 7.11. Money Held in Trust...............................................................60
SECTION 7.12. Withholding Taxes.................................................................60
iv
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations..............................................61
SECTION 8.02. Defeasance and Discharge of Indenture.............................................62
SECTION 8.03. Defeasance of Certain Obligations.................................................64
SECTION 8.04. Application of Trust Money........................................................66
SECTION 8.05. Repayment to Company..............................................................66
SECTION 8.06. Reinstatement.....................................................................67
SECTION 8.07. Insiders..........................................................................67
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders........................................................67
SECTION 9.02. With Consent of Holders...........................................................68
SECTION 9.03. Revocation and Effect of Consent..................................................69
SECTION 9.04. Notation on or Exchange of Securities.............................................70
SECTION 9.05. Trustee to Sign Amendments, Etc...................................................70
SECTION 9.06. Conformity with Trust Indenture Act...............................................70
ARTICLE TEN
SUBORDINATION
SECTION 10.01. Securities Subordinate to Senior Indebtedness....................................71
SECTION 10.02. No Payment on Securities in Certain Circumstances................................71
SECTION 10.03. Payment Over of Proceeds Upon Dissolution, Etc...................................72
SECTION 10.04. Subrogation of Holders to Rights of Holders of
Senior Indebtedness...........................................................74
SECTION 10.05. Obligations of Company Unconditional.............................................75
SECTION 10.06. Payments May Be Made Prior to Dissolution........................................75
SECTION 10.07. No Waiver of Subordination Provisions............................................76
v
SECTION 10.08. Authorization to Trustee to Take Action to Effectuate
Subordination.................................................................76
SECTION 10.09. Senior Indebtedness May Be Renewed or Extended,
Etc...........................................................................76
SECTION 10.10. Trustee to Have No Fiduciary Duty to Holders of
Senior Indebtedness...........................................................77
SECTION 10.11. Rights of Trustee as Holder of Senior Indebtedness...............................77
SECTION 10.12. Notice to Trustee................................................................77
SECTION 10.13. Reliance on Judicial Order or Certificate of
.Liquidating Agent............................................................78
SECTION 10.14. Not to Prevent Events of Default.................................................78
SECTION 10.15. Trustee's Compensation Not Prejudiced............................................78
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939......................................................79
SECTION 11.02. Notices..........................................................................79
SECTION 11.03. Certificate and Opinion as to Conditions Precedent...............................80
SECTION 11.04. Statements Required in Certificate or Opinion....................................80
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar......................................81
SECTION 11.06. Payment Date Other Than a Business Day...........................................81
SECTION 11.07. Governing Law....................................................................81
SECTION 11.08. No Adverse Interpretation of Other Agreements....................................81
SECTION 11.09. No Recourse Against Others.......................................................81
SECTION 11.10. Successors.......................................................................82
SECTION 11.11. Duplicate Originals..............................................................82
SECTION 11.12. Separability.....................................................................82
SECTION 11.13. Table of Contents, Headings, Etc.................................................82
EXHIBIT A Form of Security.................................................................EA-1
Rule 144A Regulation S Appendix.................................................................A-1
INDENTURE, dated as of October 1, 1997, between WINSTAR
COMMUNICATIONS, INC., a Delaware corporation, as issuer (the "Company") and
UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the "Trustee").
RECITALS OF THE COMPANY
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 15%
Senior Subordinated Deferred Interest Notes Due 2007 (the "Initial Securities")
and, if and when issued pursuant to a registered exchange for Initial
Securities, the Company's 15% Senior Subordinated Deferred Interest Notes Due
2007 (the "Exchange Securities") and, if and when issued pursuant to a private
exchange for Initial Securities, the Company's 15% Senior Subordinated Deferred
Interest Notes Due 2007 (the "Private Exchange Securities", together with the
Exchange Securities and the Initial Securities, the "Securities"):
2
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Accumulated Amount" means, as of any date (the "Specified
Date"), the amount provided below for each $1,000 principal amount of the
Securities.
(i) If the Specified Date occurs on one of the following dates
(each, a "SemiAnnual Interest Accrual Date"), the Accumulated Amount
will equal the amount set forth below for such SemiAnnual Interest
Accrual Date:
SemiAnnual Interest Accrual Date Accumulated Amount
March 1, 1998..................................... $1060.000
September 1, 1998................................. 1139.500
March 1, 1999..................................... 1224.963
September 1, 1999................................. 1316.835
March 1, 2000..................................... 1415.597
September 1, 2000................................. 1521.767
March 1, 2001..................................... 1635.900
September 1, 2001................................. 1758.592
March 1, 2002..................................... 1890.486
(ii) if the Specified Date occurs before the first SemiAnnual
Interest Accrual Date, the Accumulated Amount will equal the sum of (A)
$1,000 and (B) an amount equal to the product of (1) the Accumulated
Amount for the first SemiAnnual Interest Accrual Date less $1,000
multiplied by (2) a fraction, the numerator of which is the number of
days elapsed from the Issue Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is the
number of days from the Issue Date to the first SemiAnnual Interest
Accrual Date, using a 360 day year of twelve 30-day months;
(iii) if the Specified Date occurs between two SemiAnnual Interest
Accrual Dates, the Accumulated Amount will equal the sum of (A) the
Accumulated Amount for the SemiAnnual Interest Accrual Date immediately
preceding such Specified Date and (B) an amount equal to the product of
(1) the Accumulated Amount for the immediately following SemiAnnual
Interest Accrual Date less
3
the Accumulated Amount for the immediately preceding SemiAnnual
Interest Accrual Date multiplied by (2) a fraction, the numerator of
which is the number of days elapsed from the immediately preceding
SemiAnnual Interest Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the last SemiAnnual
Interest Accrual Date, the Accumulated Amount will equal $1890.486.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided, however, that the
following items shall be excluded in computing Adjusted Consolidated Net Income
(without duplication): (i) the net income of any Person (other than net income
attributable to a Restricted Subsidiary) in which any Person (other than the
Company or any of its Restricted Subsidiaries) has a joint interest and the net
income of any Unrestricted Subsidiary, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by such other Person, including, without limitation, an
Unrestricted Subsidiary during such period; (ii) solely for the purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 4.05 (and in such case, except to
the extent includable pursuant to clause (i) above), the net income (or loss) of
any Person accrued prior to the date it becomes a Restricted Subsidiary or is
merged into or consolidated with the Company or any of its Restricted
Subsidiaries or all or substantially all of the property and assets of such
Person are acquired by the Company or any of its Restricted Subsidiaries; (iii)
the net income of any Restricted Subsidiary to the extent that the declaration
or payment of dividends or similar distributions by such Restricted Subsidiary
of such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Restricted Subsidiary; (iv) any
gains or losses (on an after-tax basis) attributable to Asset Sales; (v) except
for purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of Section 4.05, any amount paid
as, or accrued for, cash dividends on Preferred Stock of the Company or any
Restricted Subsidiary owned by Persons other than the Company and any of its
Restricted Subsidiaries; and (vi) all extraordinary gains and extraordinary
losses.
"Adjusted Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in
4
conformity with GAAP), after deducting therefrom (i) all current liabilities of
the Company and its Restricted Subsidiaries (excluding intercompany items) and
(ii) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles (other than licenses issued by the FCC),
all as set forth on the quarterly or annual consolidated balance sheet of the
Company and its Restricted Subsidiaries, prepared in conformity with GAAP and
most recently filed with the SEC pursuant to Section 4.17; provided, however,
that the value of any licenses issued by the FCC shall, in the event of an
auction for similar licenses, be equal to the fair market value ascribed thereto
in good faith by the Board of Directors and evidenced by a Board Resolution. As
used in this Indenture, references to financial statements of the Company and
its Restricted Subsidiaries shall be adjusted to exclude Unrestricted
Subsidiaries if the context requires.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, authenticating
agent or co-Registrar.
"Asset Acquisition" means (i) an investment by the Company or
any of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or shall be merged
into or consolidated with the Company or any of its Restricted Subsidiaries or
(ii) an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property or assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of
5
Article Five; provided, however, that the following shall not be included within
the meaning of "Asset Sale": (A) sales or other dispositions of inventory,
receivables and other current assets; (B) sales or other dispositions of
equipment that has become worn out, obsolete or damaged or otherwise unsuitable
for use in connection with the business of the Company or its Restricted
Subsidiaries and (C) a substantially simultaneous exchange of, or a sale or
disposition (other than 85% or more for cash or cash equivalents) by the Company
or any of its Restricted Subsidiaries of, licenses issued by the FCC or
applications or bids therefor; provided, however, that the consideration
received by the Company or any such Restricted Subsidiary in connection with
such exchange, sale or disposition shall be equal to the fair market value of
licenses so exchanged, sold or disposed of, as determined by the Board of
Directors; and (D) except for purposes of the definition of "Indebtedness to
EBITDA Ratio", any sale or other disposition of securities of an Unrestricted
Subsidiary.
"August 1997 Equipment Note Guarantee" means the Guarantee of
the August 1997 Equipment Notes by the Company pursuant to Article Ten of the
August 1997 Equipment Notes Indenture.
"August 1997 Equipment Notes" means the 12 1/2% Guaranteed
Senior Secured Notes Due 2004 of WinStar Equipment II Corp., issued pursuant to
the indenture dated as of August 1, 1997 among WinStar Equipment II Corp., as
issuer, the Company, as guarantor, and United States Trust Company of New York,
as trustee.
"August 1997 Equipment Notes Indenture" means the indenture
relating to the August 1997 Equipment Notes, as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental thereto entered into pursuant to the applicable provisions thereof.
"Average Life" means, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of (a) the number of years from such date of determination to the
dates of each successive scheduled principal payment of such debt security and
(b) the amount of such principal payment by (ii) the sum of all such principal
payments.
"Board of Directors" means the Board of Directors of the
Company or any committee of such Board of Directors duly authorized to act with
respect to this Indenture.
"Board Resolution" means a copy of a resolution, certified by
the Secretary or Assistant Secretary of the Company to have been duly adopted by
the
6
Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in The City of New York, or in the city of
the Corporate Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether now outstanding
or issued after the date of this Indenture, including, without limitation, all
Common Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and "Capitalized Lease Obligations" means the discounted present value of the
rental obligations under such lease.
"Change of Control" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than the Permitted Investor, becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of Voting Stock representing more
than 50% of the total voting power of the Voting Stock of the Company on a fully
diluted basis or (ii) individuals who on the Deemed Closing Date constituted the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the members of the Board of
Directors then in office who either were members of the Board of Directors on
the Deemed Closing Date or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the paragraph
preceding the recitals hereof until a successor replaces it pursuant to Article
Five of this Indenture and thereafter means the successor.
7
"Company Order" means a written request or order signed in the
name of the Company (i) by its Chairman, a Vice Chairman, its President or a
Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary and delivered to the Trustee; provided, however, that
such written request or order may be signed by any two of the officers or
directors listed in clause (i) above in lieu of being signed by one of such
officers or directors listed in such clause (i) and one of the officers listed
in clause (ii) above.
"Consolidated EBITDA" means, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (iii) income taxes, to the extent
such amount was deducted in calculating Adjusted Consolidated Net Income (other
than income taxes (either positive or negative) attributable to extraordinary
and nonrecurring gains or losses or sales of assets), (iv) depreciation expense,
to the extent such amount was deducted in calculating Adjusted Consolidated Net
Income, (v) amortization expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, and (vi) all other noncash items
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all noncash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided, however, that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the quotient of (1)
the number of shares of outstanding Common Stock of such Restricted Subsidiary
not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries divided by (2) the total number of shares of outstanding Common
Stock of such Restricted Subsidiary on the last day of such period.
"Consolidated Indebtedness" means the aggregate amount of
Indebtedness of the Company and its Restricted Subsidiaries on a consolidated
basis.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including amortization
of original issue discount on any Indebtedness and the interest portion of any
deferred payment obligation, calculated in accordance with the effective
interest method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of
8
its Restricted Subsidiaries) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Restricted
Subsidiary if the net income of such Restricted Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof (but only in the same proportion as the net income of such
Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof) and (ii) any
premiums, fees and expenses (and any amortization thereof) payable in connection
with the offering of the Securities, the March 1997 Notes and the August 1997
Equipment Notes, all as determined on a consolidated basis (without taking into
account Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Convertible Notes" means the 14% Convertible Senior
Subordinated Discount Notes due 2005 of the Company.
"Convertible Notes Indenture" means the Indenture dated as of
October 23, 1995, between the Company and United States Trust Company of New
York pursuant to which the Convertible Notes were issued.
"Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular time,
be principally administered, which office is, at the date of this Indenture,
located at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Restricted Subsidiaries against fluctuations
in currency values to
9
or under which the Company or any of its Restricted Subsidiaries is a party or a
beneficiary on the date of this Indenture or becomes a party or a beneficiary
thereafter.
"Deemed Closing Date" means March 18, 1997.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" shall mean The Depository Trust Company, its
nominees, and their respective successors.
"Designated Senior Indebtedness" means the Old Senior Notes,
the March 1997 Senior Notes, the March 1997 Equipment Note Guarantee, the August
1997 Equipment Note Guarantee and any Indebtedness constituting Senior
Indebtedness of the Company that, at the date of determination, has an aggregate
principal amount of at least $25,000,000 and that is specifically designated by
the Company in the instrument creating or evidencing such Senior Indebtedness as
Designated Senior Indebtedness for purposes of this Indenture.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.10.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"fair market value" means the price that would be paid in an
arm's- length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors (whose determination shall
be conclusive) and evidenced by a Board Resolution.
"FCC" means the United States Federal Communications
Commission and any state or local telecommunications authority, department,
commission or agency (and any successors thereto).
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such
10
other statements by such other entity as approved by a significant segment of
the accounting profession. All ratios and computations contained in this
Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants set forth in Article Four and Article Five and with
other provisions of this Indenture shall be made without giving effect to (i)
the amortization of any expenses incurred in connection with the offering of the
Securities, the March 1997 Notes or the August 1997 Equipment Notes and (ii)
except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided, 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.
"Guaranteed Indebtedness" has the meaning provided in
Section 4.08.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the books of the registrar.
"Incur" means, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including, with respect to the Company and its Restricted
Subsidiaries, an "Incurrence" of Indebtedness by reason of a Person becoming a
Restricted Subsidiary of the Company; provided, however, that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or
11
other similar instruments (whether negotiable or non-negotiable), (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except trade payables, (v) all obligations of
such Person as lessee under Capitalized Leases, (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided, however, that the amount of
such Indebtedness shall be the lesser of (A) the fair market value of such asset
at such date of determination and (B) the amount of such Indebtedness, (vii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person and (viii) to the extent not otherwise
included in this definition, obligations under Currency Agreements and Interest
Rate Agreements. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations that are included in
any of clauses (i) through (viii) above, the maximum liability upon the
occurrence of the contingency giving rise to the obligation; provided, however,
that (A) the amount outstanding at any time of any Indebtedness issued with
original issue discount is (1) for purposes of determining the Indebtedness to
EBITDA Ratio, the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP and (2) for all other purposes, the
amount determined in clause (1) on the date such Indebtedness is originally
Incurred and (B) Indebtedness shall not include any liability for federal,
state, local or other taxes.
"Indebtedness to EBITDA Ratio" means, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of the
Company and its Restricted Subsidiaries on a consolidated basis ("Consolidated
Indebtedness") as at the date of determination (the "Transaction Date") to (ii)
the Consolidated EBITDA of the Company for the then most recent four full fiscal
quarters for which reports have been filed pursuant to Section 4.17 (such four
full fiscal quarter period being referred to herein as the "Four Quarter
Period"); provided, however, that (x) pro forma effect shall be given to any
Indebtedness Incurred from the beginning of the Four Quarter Period through the
Transaction Date (including any Indebtedness Incurred on the Transaction Date),
to the extent outstanding on the Transaction Date, (y) if during the period
commencing on the first day of such Four Quarter Period through the Transaction
Date (the "Reference Period"), the Company or any of the Restricted Subsidiaries
shall have engaged in any Asset Sale, Consolidated EBITDA for such period shall
be reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the
12
EBITDA (if negative), directly attributable to the assets which are the subject
of such Asset Sale and any related retirement of Indebtedness as if such Asset
Sale and related retirement of Indebtedness had occurred on the first day of
such Reference Period or (z) if during such Reference Period the Company or any
of the Restricted Subsidiaries shall have made any Asset Acquisition,
Consolidated EBITDA of the Company shall be calculated on a pro forma basis as
if such Asset Acquisition and any Incurrence of Indebtedness to finance such
Asset Acquisition had taken place on the first day of such Reference Period.
"Indenture" means this Indenture as originally executed or as
it may be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Interest Payment Date" means each semiannual interest payment
date on September 1 and March 1 of each year, commencing September 1, 2002.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect the Company or any of its Restricted
Subsidiaries against fluctuations in interest rates in respect of Indebtedness
to or under which the Company or any of its Restricted Subsidiaries is a party
or a beneficiary on the date of this Indenture or becomes a party or a
beneficiary hereafter; provided, however, that the notional principal amount
thereof does not exceed the principal amount of the Indebtedness of the Company
and its Restricted Subsidiaries that bears interest at floating rates.
"Investment" in any Person means any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers in
the ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of the Company or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other similar instruments issued by, such Person and shall
include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock held by the
Company and the Restricted Subsidiaries of any Person that has ceased to be a
Restricted Subsidiary by reason of any transaction permitted by clause (iii) of
Section 4.07. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.05, (i) "Investment" shall include the fair market value of the assets
(net of
13
liabilities) of any Restricted Subsidiary of the Company at the time that such
Restricted Subsidiary of the Company is designated an Unrestricted Subsidiary
and shall exclude the fair market value of the assets (net of liabilities) of
any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary of the Company and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined by the
Board of Directors in good faith.
"Issue Date" means the date on which the Securities are
originally issued under this Indenture.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"March 1997 Equipment Note Guarantee" means the Guarantee of
the March 1997 Equipment Notes by the Company pursuant to Article Ten of the
March 1997 Equipment Notes Indenture.
"March 1997 Equipment Notes" means the 12 1/2% Guaranteed
Senior Secured Notes Due 2004 of WinStar Equipment Corp.
"March 1997 Equipment Notes Indenture" means the indenture
relating to the March 1997 Equipment Notes, as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental thereto entered into pursuant to the applicable provisions thereof.
"March 1997 Notes" means the March 1997 Senior Notes and the
March 1997 Equipment Notes.
"March 1997 Senior Notes" means the 14 1/2% Senior Deferred
Interest Notes Due 2005 of the Company.
"March 1997 Senior Notes Indenture" means the indenture
relating to the March 1997 Senior Notes, as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
thereto entered into pursuant to the applicable provisions thereof.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments
14
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary of the Company)
and proceeds from the conversion of other property received when converted to
cash or cash equivalents, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes (whether or not such taxes
will actually be paid or are payable) as a result of such Asset Sale without
regard to the consolidated results of operations of the Company and its
Restricted Subsidiaries, taken as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required to be paid as a result of such sale and (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary of the Company as a reserve
against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in conformity
with GAAP and (b) with respect to any issuance or sale of Capital Stock, the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary of the Company) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable by the Company or any of
its subsidiaries as a result thereof.
"Offer to Purchase" means an offer to purchase Securities by
the Company from the Holders required by Section 4.10 or Section 4.11 which is
commenced by mailing a notice to the Trustee and each Holder stating: (i) the
covenant pursuant to which the offer is being made and that all Securities
validly tendered will be accepted for payment on a pro rata basis; (ii) the
purchase price and the Payment Date; (iii) that any Security not tendered will
continue to accrue interest pursuant to its terms; (iv) that, unless the Company
defaults in the payment of the purchase price, any Security accepted for payment
pursuant to the Offer to Purchase shall cease to accrue interest on and after
the Payment Date; (v) that Holders electing to have a Security purchased
pursuant to the Offer to Purchase will be required to surrender the Security
together with the form entitled "Option of the Holder to Elect Purchase" on the
reverse side thereof completed, to the Paying Agent at the address
15
specified in the notice prior to the close of business on the Business Day
immediately preceding the Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the third Business Day immediately preceding the Payment Date, a
telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount (and accrued and
unpaid interest) to the unpurchased portion thereof; provided, however, that
each Security purchased and each new Security issued shall be in a principal
amount of $1,000 or integral multiples thereof. On the Payment Date, the Company
shall (i) accept for payment on a pro rata basis any Securities or portions
thereof tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the Trustee
all Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof accepted for payment
by the Company. The Paying Agent shall promptly mail to the Holders of the
Securities so accepted for payment in an amount equal to the purchase price, and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Securities
surrendered; provided, however, that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or integral multiples
thereof. The Company will publicly announce the results of an Offer to Purchase
as soon as practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply with Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable, in the event that the
Company is required to repurchase Securities pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman
of the Board, the Vice-Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer and (ii) the
Treasurer or any Assistant Treasurer, or the Secretary or any Assistant
Secretary.
"Officers' Certificate" means a certificate signed by one
Officer listed in clause (i) of the definition thereof and one Officer listed in
clause (ii) of the definition thereof; provided, however, that any such
certificate may be signed by any two of the Officers listed in clause (i) of the
definition thereof in lieu of being signed by one Officer listed in clause (i)
of the definition thereof and one Officer listed in clause (ii) of the
definition thereof. Each Officers' Certificate (other than certificates provided
16
pursuant to TIA Section 314(a)(4)) shall include the statements provided for in
TIA Section 314(e).
"Old Senior Notes" means the 14% Senior Discount Notes due
2005 of the Company.
"Opinion of Counsel" means a written opinion signed by legal
counsel who may be an employee of or counsel to the Company. Each such Opinion
of Counsel shall include the statements provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section 2.03,
except that, for the purposes of Article Eight, the Paying Agent shall not be
the Company or a Subsidiary of the Company or an Affiliate of any of them. The
term "Paying Agent" includes any additional Paying Agent.
"Payment Date" means the date of purchase, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date a
notice is mailed pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, the Company or a Restricted
Subsidiary; (ii) Temporary Cash Investments; (iii) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses in accordance with GAAP; (iv) loans or
advances to employees in a principal amount not to exceed $1,000,000 at any one
time outstanding; (v) stock, obligations or securities received in satisfaction
of judgments; (vi) Investments, to the extent that the consideration provided by
the Company or any of its Restricted Subsidiaries consists solely of Capital
Stock (other than Redeemable Stock) of the Company; (vii) notes payable to the
Company that are received by the Company as payment of the purchase price for
Capital Stock (other than Redeemable Stock) of the Company; and (viii)
acquisitions of a minority equity interest in entities engaged in the
telecommunications business; provided, however, that (A) the acquisition of a
majority equity interest in such entities is not permitted under U.S. law
without FCC consent, (B) the Company or one of its Restricted Subsidiaries has
the right to acquire Capital Stock representing a majority of the voting power
of the Voting Stock of such entity upon receipt of FCC consent and (C) in the
event that such consent has not been obtained within 18 months of funding such
Investment, the Company or one of its Restricted Subsidiaries has the right to
sell such minority equity interest in the seller
17
thereof for consideration consisting of the consideration originally paid by the
Company and its Restricted Subsidiaries for such minority equity interest.
"Permitted Investor" means Xxxxxxx X. Xxxxxxx, Xx.
"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.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the Issue Date, including, without
limitation, all series and classes of such preferred or preference stock.
"Principal" of a debt security, including the Securities,
means the principal amount due on the Stated Maturity as shown on such debt
security.
"Redeemable Stock" means any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Securities, (ii) redeemable at the option of
the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Securities (unless the redemption price is, at the
Company's option, without conditions precedent, payable solely in Common Stock
(other than Redeemable Stock) of the Company) or (iii) convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Redeemable Stock but for provisions thereof giving holders thereof the right to
require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Securities shall not constitute Redeemable Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are no more favorable to the holders of such Capital Stock than the provisions
of Section 4.10 and Section 4.11 and such Capital Stock specifically provides
that such Person will not repurchase or redeem any such stock pursuant to such
provision prior to the Company's repurchase of such Securities as are required
to be repurchased pursuant to the provisions of Section 4.10 and Section 4.11.
"Redemption Date", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
18
"Redemption Price", when used with respect to any Security to
be redeemed, means the price at which such Security is to be redeemed pursuant
to this Indenture.
"Registrar" has the meaning provided in Section 2.03.
"Regular Record Date" for the interest payable on any Interest
Payment Date means February 15 or August 15 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice chairman of the board of directors, the chairman
or any vice chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, any
assistant vice president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, the cashier, any assistant cashier, any trust officer
or assistant trust officer, the controller or any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning provided in Section 4.05.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission and any
successor agency.
"Securities" means any of the securities, as defined in the
first paragraph of the recitals hereof, that are authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.03.
"Senior Indebtedness" means the following obligations of the
Company, whether outstanding on the date of this Indenture or thereafter
Incurred: (i) all Indebtedness and all other monetary obligations of the Company
under the Old Senior Notes, the March 1997 Senior Notes, the March 1997
Equipment Note Guarantee and the August 1997 Equipment Note Guarantee; (ii) all
other Indebtedness of the Company
19
(other than the Securities and the Convertible Notes), including principal and
interest on such Indebtedness, unless such Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is pari passu with, or subordinated in right of payment to, the
Securities; and (iii) all fees, expenses and indemnities payable in connection
with the Old Senior Notes, the March 1997 Senior Notes, the March 1997 Equipment
Note Guarantee and the August 1997 Equipment Note Guarantee (including any
agreement pursuant to which the Old Senior Notes are issued, any agreement
pursuant to which the March 1997 Senior Notes are issued, any agreement pursuant
to which the March 1997 Equipment Note Guarantee is issued and any agreement
pursuant to which the August 1997 Equipment Note Guarantee is issued); provided,
however, that the term "Senior Indebtedness" shall not include (a) any
Indebtedness of the Company that, when Incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code, was without
recourse to the Company, (b) any Indebtedness of the Company to a Subsidiary of
the Company or to a joint venture in which the Company has an interest, (c) any
Indebtedness of the Company, to the extent not permitted by Section 4.03 or
Section 4.04, (d) any repurchase, redemption or other obligation in respect of
Redeemable Stock, (e) any Indebtedness to any employee of the Company or any of
its Subsidiaries, (f) any liability for federal, state, local or other taxes
owed or owing by the Company or (g) any trade payables of the Company. The term
"Senior Indebtedness" shall also include interest accruing subsequent to events
of bankruptcy of the Company and its Subsidiaries at the rate provided for in
the document governing such Senior Indebtedness, whether or not such interest is
an allowed claim enforceable against the debtor in a bankruptcy case under
federal bankruptcy law.
"Senior Subordinated Obligations" means any principal of,
premium, if any, or interest on the Securities payable pursuant to the terms of
the Securities or upon acceleration, to the extent relating to the purchase of
Securities or amounts corresponding to such principal, premium, if any, or
interest on the Securities.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary of the Company that, together with its Subsidiaries,
(i) for the most recent fiscal year of the Company, accounted for more than 10%
of the consolidated revenues of the Company and its Restricted Subsidiaries or
(ii) as of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Stated Maturity" means, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled
20
installment of principal of or interest on any debt security, the date specified
in such debt security as the fixed date on which such installment is due and
payable.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which Voting Stock
representing more than 50% of the voting power of the outstanding Voting Stock
is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section
4.08.
"Telecommunications Assets" means any (i) entity or business
substantially all the revenues of which are derived from (a) providing
transmission of sound, data or video; (b) the sale or provision of phone cards,
"800" services, voice mail, switching, enhanced telecommunications services,
telephone directory or telephone number information services or
telecommunications network intelligence; or (c) any business ancillary or
directly related to the businesses referred to in clause (a) or (b) above and
(ii) any assets used primarily to effect such transmission or provide the
products or services referred to in clause (a) or (b) above and any directly
related or ancillary assets including, without limitation, licenses and
applications, bids and agreements to acquire licenses, or other authority to
provide transmission services previously granted, or to be granted, by the FCC.
"Telecommunications Subsidiary" means (i) WCI Gateway, WinStar
Wireless, Inc., WinStar Telecommunications, Inc., WinStar Milliwave, Inc.,
WinStar Locate, Inc., and WinStar Wireless Fiber Corp. and, in each case, its
successors and (ii) any other Restricted Subsidiary of the Company that holds
more than a de minimis amount of Telecommunications Assets.
"Temporary Cash Investment" means any of the following: (i)
direct obligations of the United States or any agency thereof or obligations
fully and unconditionally guaranteed by the United States or any agency thereof;
(ii) time deposit accounts, certificates of deposit and money market deposits
maturing within 180 days of the date of acquisition thereof issued by a bank or
trust company which is organized under the laws of the United States, any state
thereof or any foreign country recognized by the United States, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding deposits or debt which is rated "A" (or such similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor; (iii) repurchase obligations with a term of not more than 30 days
for underlying
21
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above; (iv) commercial
paper, maturing not more than six months 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, any state thereof or any foreign
country recognized by the United States with a rating at the time as of which
any investment therein is made of "P-1" (or higher) according to Xxxxx'x
Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's
Ratings Group; and (v) securities with maturities of six months or less from the
date of acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States, or by any political subdivision
or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group or Xxxxx'x Investors Service, Inc.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939, as amended (15 U.S. Code xx.xx. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06.
"Transaction Date" means, with respect to the Incurrence of
any Indebtedness by the Company or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made.
"Trustee" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of Article Seven of this Indenture and thereafter means such
successor.
"United States Bankruptcy Code" means the Bankruptcy Reform
Act of 1978, as amended and as codified in Title 11 of the United States Code,
as amended from time to time hereafter, or any successor federal bankruptcy law.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company), other than a guarantor of the Securities, to
be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of,
or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided, however, that neither the Company nor its Restricted
Subsidiaries has any Guarantee of any Indebtedness of such Subsidiary
outstanding at the time of such designation and either (A) the Subsidiary to be
so designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets
22
greater than $1,000, that such designation would be permitted under the
provisions of Section 4.05. Notwithstanding the foregoing, WinStar New Media
Company Inc., Non Fiction Films Inc. and WinStar Global Products, Inc. and their
Subsidiaries are Unrestricted Subsidiaries. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company;
provided, however, that immediately after giving effect to such designation (x)
the Company could Incur $1.00 of additional Indebtedness under the first
paragraph of Section 4.03 and (y) no Default or Event of 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
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Anything to the contrary contained in this Indenture notwithstanding, no
Telecommunications Subsidiary may be designated an Unrestricted Subsidiary.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Securities, and shall also include a depositary
receipt issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depositary receipt; provided, however, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depositary receipt.
"Voting Stock" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"WCI Gateway" means WinStar Gateway Network, Inc. and its
successors.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, such Subsidiary if all of the outstanding Capital Stock in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by
23
applicable law) is owned by such Person or one or more Wholly Owned Subsidiaries
of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder or a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by a rule of the
SEC and not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the plural
include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
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(vii) all references to Sections or Articles refer to Sections or Articles
of this Indenture unless otherwise indicated.
SECTION 1.04. Ranking of the Securities. The Securities shall
rank pari passu with the Convertible Notes.
ARTICLE TWO
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 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
(with such appropriate insertions, omissions, substitutions and other variations
as are required by this Indenture) 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 (with such appropriate insertions,
omissions, substitutions and other variations as are required by this
Indenture), 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.
SECTION 2.02. Execution and Authentication. Two Officers 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.
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The Trustee shall authenticate and deliver Securities for
original issue upon a written order of the Company signed by two Officers. Such
order shall specify the amount of the Securities to be authenticated (not to
exceed $100,000,000) and the date on which the original issue of Securities is
to be authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed that amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent 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 th
same rights as any Registrar or Paying Agent.
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
"Security Register"). 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 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 of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
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. On or prior
to each due date of the principal and interest on any Security, the Company
shall deposit 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
26
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 on or 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 Securities are presented to the
Registrar or a co-registrar with a request (i) to register a transfer or (ii) to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall register the transfer or make the transfer,
as requested if the requirements of Section 8-401(1) of the Uniform Commercial
Code are met; provided, however, that any Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Registrar and the
Trustee duly executed by the Holder thereof or by his attorney duly authorized
in writing. To permit registration of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Securities at the Registrar's or
co-registrar's request. The Company may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof 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.
Prior to the due presentation for registration of transfer of
any Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is
27
overdue, and none of the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar shall be affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.
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 and deliver 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.
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; provided,
however, that, in determining whether the Holders of the requisite principal
amount of the outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
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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) shall
cease to be outstanding and interest on them shall cease to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate and deliver temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company and the Trustee consider 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 destroy (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 destruction 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 and to the extent 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 to
the reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder 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;
29
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. The Securities may be
redeemed at the election of the Company, in whole at any time, or in part from
time to time on or after March 1, 2002 and prior to maturity, upon not less than
30 nor more than 60 days' prior notice mailed by first-class mail to each
Holder's last address as it appears in the Security Register, at the following
Redemption Prices (expressed as a percentage of the Accumulated Amount of the
Securities), plus accrued and unpaid interest, if any, on such Accumulated
Amount to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on the relevant Interest Payment Date), if redeemed during
the 12-month period commencing on March 1 of the years set forth below:
================================================================================
Year Redemption Price
--------------------------------------------------------------------------------
2002 107.500%
--------------------------------------------------------------------------------
2003 103.750
--------------------------------------------------------------------------------
2004 and thereafter 100.000
================================================================================
SECTION 3.02. Notices to Trustee. If the Company elects to
redeem Securities pursuant to Section 3.01, it shall notify the Trustee in
writing of the Redemption Date and the principal amount of Securities to be
redeemed plus interest accrued and premium due thereon, if any, to the
Redemption Date.
The Company shall give each notice provided for in this
Section 3.02 in an Officers' Certificate at least five days before mailing the
notice to Holders referred to in Section 3.01.
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SECTION 3.03. Selection of Securities to Be Redeemed. If less
than all of the Securities are to be redeemed at any time, the Trustee shall
select the Securities to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange,
on a pro rata basis, by lot or by such other method as the Trustee in its sole
discretion shall deem fair and appropriate; provided, however, that no
Securities of $1,000 in principal amount or less shall be redeemed in part.
The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. Securities in
denominations of $1,000 in principal amount may only be redeemed in whole. The
Trustee may select for redemption portions (equal to $1,000 in principal amount
or any integral multiple thereof) of Securities that have denominations larger
than $1,000 in principal amount. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company and the Registrar promptly in
writing of the Securities or portions of Securities to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any
redemption of Securities pursuant to Section 3.01, at least 30 days but not more
than 60 days before a Redemption Date, the Company shall mail a notice of
redemption by first class mail to each Holder whose Securities are to be
redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered
to the Paying Agent in order to collect the Redemption Price;
(e) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the Redemption Price plus accrued
interest to the Redemption Date upon surrender of the Securities to the
Paying Agent;
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(f) that, if any Security is being redeemed in part, the
portion of the principal amount (equal to $1,000 in principal amount or
any integral multiple thereof) of such Security to be redeemed and
that, on and after the Redemption Date, upon surrender of such
Security, a new Security or Securities in principal amount equal to the
unredeemed portion thereof will be reissued; and
(g) that, if any Security contains a CUSIP number as provided
in Section 2.12, no representation is being made as to the correctness
of the CUSIP number either as printed on the Securities or as contained
in the notice of redemption and that reliance may be placed only on the
other identification numbers printed on the Securities.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given such
notice to the Holders), made in writing to the Trustee at least five days before
mailing the notice to the Holders referred to in this Section 3.04, the Trustee
shall give such notice of redemption in the name and at the expense of the
Company. If, however, the Company gives such notice to the Holders, the Company
shall concurrently deliver to the Trustee an Officers' Certificate stating that
such notice has been given.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the relevant Redemption Date and at the Redemption Price. Upon surrender of any
Securities to the Paying Agent, such Securities shall be paid at the Redemption
Price, plus accrued interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the redemption of Securities held by Holders to whom such notice
was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company is acting as its own Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) money sufficient to pay the Redemption Price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions thereof called for redemption on that date that have been
delivered by the Company to the Trustee for cancellation.
SECTION 3.07. Payment of Securities Called for Redemption. If
notice of redemption has been given in the manner provided above, the Securities
or
32
portion of Securities specified in such notice to be redeemed shall become due
and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date, and on and after such
date (unless the Company shall default in the payment of such Securities at the
Redemption Price and accrued interest to the Redemption Date, in which case the
principal, until paid, shall bear interest from the Redemption Date at the rate
prescribed in the Securities), such Securities shall cease to accrue interest.
Upon surrender of any Security for redemption in accordance with a notice of
redemption, such Security shall be paid and redeemed by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders registered as
such at the close of business on the relevant Regular Record Date.
SECTION 3.08. Securities Redeemed in Part. Upon surrender of
any Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder a new Security equal in principal
amount to the unredeemed portion of such surrendered Security.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall pay the
principal of, premium, if any, and interest on the Securities on the dates and
in the manner provided in the Securities and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Company, a Subsidiary of the
Company, or any Affiliate of any of them) holds on that date money designated
for and sufficient to pay the installment. If the Company or any Subsidiary of
the Company or any Affiliate of any of them, acts as Paying Agent, an
installment of principal, premium, if any, or interest shall be considered paid
on the due date if the entity acting as Paying Agent complies with Section 2.04.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Securities.
The Company shall pay interest on overdue principal, premium,
if any, and interest on overdue installments of interest, to the extent lawful,
at the rate per annum specified in the Securities.
33
SECTION 4.02. Maintenance of Office or Agency. The Company
will maintain an office or agency (which may be an office of the Trustee,
Registrar or co-registrar or any Affiliate of any of them) where Securities may
be surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the address of the Trustee set forth in Section 11.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee, located in the Borough of Manhattan, the City of New
York, as such office of the Company in accordance with Section 2.03.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the Securities and Indebtedness existing on the Issue
Date); provided, however, that the Company may Incur Indebtedness if, after
giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom, the Indebtedness to EBITDA Ratio would be
greater than zero and less than 5:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness of the Company outstanding at any time in an aggregate
principal amount not to exceed $125,000,000, less any amount of Indebtedness
Incurred pursuant to this clause (i) and permanently repaid as provided under
Section 4.10;
(ii) Indebtedness (A) to the Company evidenced by an unsubordinated
promissory note or (B) to any of its Restricted Subsidiaries; provided, however,
that any event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other
34
than to the Company or another Restricted Subsidiary) shall be deemed, in each
case, to constitute an Incurrence of such Indebtedness not permitted by this
clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are
used to refinance or refund, then outstanding Indebtedness, other than
Indebtedness Incurred under clause (i), (ii), (v), (vi) or (viii) of this
paragraph, and any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and expenses);
provided, however, that Indebtedness the proceeds of which are used to refinance
or refund the Securities or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Securities shall only be permitted
under this clause (iii) if (A) in case the Securities are refinanced in part or
the Indebtedness to be refinanced is pari passu with the Securities, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Securities, (B)
in case the Indebtedness to be refinanced is subordinated in right of payment to
the Securities, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is outstanding,
is expressly made subordinate in right of payment to the Securities at least to
the extent that the Indebtedness to be refinanced is subordinated to the
Securities and (C) such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to the Stated
Maturity of the Indebtedness to be refinanced or refunded, and the Average Life
of such new Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; provided further, however, that in no
event may Indebtedness of the Company be refinanced by means of any Indebtedness
of any Restricted Subsidiary of the Company pursuant to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency Agreements and
Interest Rate Agreements; provided, however, that such agreements do not
increase the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates or
by reason of fees, indemnities and compensation payable thereunder; and (C)
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or any of the
Restricted Subsidiaries pursuant to such agreements, in any case
35
Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary of the Company (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary of the Company for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Subsidiary in connection with such
disposition;
(v) Indebtedness of the Company not to exceed, at any one time outstanding,
two times the Net Cash Proceeds received by the Company from and after October
23, 1995, from the issuance and sale of its Capital Stock (other than Redeemable
Stock and Preferred Stock that provides for the payment of dividends in cash),
provided, however, that such Indebtedness (x) does not mature prior to the
Stated Maturity of the Securities and has an Average Life longer than the
Securities and (y) is pari passu with or subordinated to the Securities;
(vi) Indebtedness of any Restricted Subsidiary Incurred pursuant to any
credit agreement of such Restricted Subsidiary in effect on the Issue Date (and
refinancings thereof), up to the amount of the commitment under such credit
agreement on the Issue Date;
(vii) Indebtedness to the extent such Indebtedness is secured by Liens
which are purchase money or other Liens upon equipment or inventory acquired or
held by the Company or any of its Restricted Subsidiaries taken or obtained by
(A) the seller or lessor of such equipment or inventory to secure all or a part
of the purchase price or lease payments therefor or (B) the person who makes
advances or incurs obligations, thereby giving value to the Company to enable it
to purchase or acquire rights in such equipment or inventory, to secure the
repayment of all or a part of the advances so made or obligations so incurred;
provided, however, that such Liens do not extend to or cover any property or
assets of the Company or any Restricted Subsidiary other than the equipment or
inventory acquired;
(viii) Indebtedness of any Restricted Subsidiary not to exceed, at any one
time outstanding, 80% of the accounts receivable net of reserves and allowances
for doubtful accounts, determined in accordance with GAAP, of such Restricted
Subsidiary and its Restricted Subsidiaries (without duplication); provided,
however, that such Indebtedness is not Guaranteed by the Company or any of its
Restricted Subsidiaries; and
36
(ix) Indebtedness of the Company, to the extent the proceeds thereof are
immediately used to purchase Convertible Notes, Old Senior Notes, March 1997
Notes, August 1997 Equipment Notes or Securities tendered in an Offer to
Purchase made as a result of a Change of Control.
(b) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included. For purposes of
determining compliance with this Section 4.03, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, the Company, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses.
(c) The Company will not, and will not permit any Restricted
Subsidiary to, Incur any Guarantee of Indebtedness of any Unrestricted
Subsidiary.
SECTION 4.04. Limitation on Senior Subordinated Indebtedness.
The Company will not (i) Incur any Indebtedness, other than the Securities, that
is expressly made subordinated in right of payment to any Senior Indebtedness
unless such Indebtedness, by its terms and by the terms of any agreement or
instrument pursuant to which such Indebtedness is outstanding is expressly made
pari passu with, or subordinate in right of payment to, the Securities pursuant
to provisions substantially similar to those contained in Article Ten; provided,
however, that the foregoing limitation shall not apply to distinctions between
categories of Senior Indebtedness that exist by reason of any Liens or
Guarantees arising or created in respect of some but not all Senior Indebtedness
or (ii) Incur any Indebtedness secured by a Lien if such Indebtedness is not
Senior Indebtedness, unless contemporaneously therewith effective provision is
made to secure the Securities equally and ratably with such secured Indebtedness
for so long as such secured Indebtedness is secured by a Lien.
SECTION 4.05. Limitation on Restricted Payments. The Company
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on its
Capital Stock (other than dividends or distributions payable solely in shares of
its or such Restricted Subsidiary's Capital Stock (other than Redeemable Stock)
held by such holders or in options, warrants or other rights to acquire such
shares of Capital Stock) other than such Capital Stock held by the Company or
any of its Restricted Subsidiaries (and other than pro rata dividends or
distributions on Common Stock of Restricted Subsidiaries); (ii) repurchase,
redeem, retire or otherwise acquire for value any shares of Capital Stock of the
Company (including options, warrants or other rights to acquire such shares of
Capital Stock)
37
held by Persons other than any Wholly Owned Restricted Subsidiaries of the
Company; (iii) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or retirement
for value, of Indebtedness of the Company that is subordinated in right of
payment to the Securities; or (iv) make any Investment, other than a Permitted
Investment, in any Person (such payments or any other actions described in
clauses (i) through (iv) being collectively "Restricted Payments") if, at the
time of, and after giving effect to, the proposed Restricted Payment: (A) a
Default or Event of Default shall have occurred and be continuing, (B) except
with respect to any Investment (other than an Investment consisting of the
designation of a Restricted Subsidiary as an Unrestricted Subsidiary), the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03 or (C) the aggregate amount expended for all Restricted Payments
(the amount so expended, if other than in cash, to be determined in good faith
by the Board of Directors, whose determination shall be conclusive and evidenced
by a Board Resolution) after the Deemed Closing Date shall exceed the sum of (1)
50% of the aggregate amount of the Adjusted Consolidated Net Income (or, if the
Adjusted Consolidated Net Income is a loss, minus 100% of such amount)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Deemed Closing
Date and ending on the last day of the last fiscal quarter preceding the
Transaction Date for which reports have been filed pursuant to Section 4.17 plus
(2) the aggregate Net Cash Proceeds received by the Company after the Deemed
Closing Date from the issuance and sale permitted by this Indenture of its
Capital Stock (other than Redeemable Stock) to a Person who is not a Subsidiary
of the Company, or from the issuance to a Person who is not a Subsidiary of the
Company of any options, warrants or other rights to acquire Capital Stock of the
Company (in each case, exclusive of any convertible Indebtedness, Redeemable
Stock or any options, warrants or other rights that are redeemable at the option
of the Holder, or are required to be redeemed, prior to the Stated Maturity of
the March 1997 Senior Notes and the Securities), plus (3) an amount equal to the
net reduction in Investments (other than reductions in Permitted Investments and
other than reductions in Investments made pursuant to clauses (vi) or (vii) of
the second paragraph of this Section 4.05 in any Person resulting from payments
of interest on Indebtedness, dividends, repayments of loans or advances, or
other transfers of assets, in each case to the Company or any Restricted
Subsidiary (except to the extent any such payment is included in the calculation
of Adjusted Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"), not to exceed the amount of Investments previously
made by the Company and its Restricted Subsidiaries in such Person.
38
The foregoing provision shall not be violated by reason of:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would comply
with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of payment to
the Securities, including premium, if any, and accrued and unpaid interest, with
the proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of
the second paragraph of Section 4.03;
(iii) the repurchase, redemption or other acquisition of Capital Stock of
the Company (or options, warrants or other rights to acquire such Capital Stock)
in exchange for, or out of the proceeds of a substantially concurrent sale of,
shares of Capital Stock or options, warrants or other rights to purchase such
Capital Stock (in each case other than Redeemable Stock) of the Company;
(iv) the making of any other Restricted Payment made by exchange for, or
out of the proceeds of, a substantially concurrent sale of shares of the Capital
Stock or options, warrants or other rights to acquire such Capital Stock (in
each case other than Redeemable Stock) of the Company;
(v) payments or distributions, in the nature of satisfaction of dissenters'
rights, pursuant to or in connection with a consolidation, merger or transfer of
assets that complies with the provisions of this Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the
property and assets of the Company;
(vi) Investments, not to exceed $15,000,000 at any one time outstanding;
(vii) Investments, not to exceed $15,000,000 at any one time outstanding,
in entities, substantially all of the assets of which consist of
Telecommunications Assets;
(viii) cash payments in lieu of the issuance of fractional shares of Common
Stock upon conversion (including mandatory conversion) of the Convertible Notes
as provided for in the Convertible Notes Indenture;
(ix) cash payments in lieu of the issuance of fractional shares of Common
Stock of the Company upon conversion of any class of Preferred Stock of the
39
Company; provided, however, that this exception shall not be available with
respect to more than two such conversions with respect to any such class of
Preferred Stock by any given Affiliate of the Company; and
(x) Investments in entities that directly (or indirectly through
subsidiaries) own licenses granted by the FCC or any other governmental entity
with authority to grant telecommunications licenses; provided, however, that, in
each case the Company or a Restricted Subsidiary shall, at the time of making
such Investment, have an active role in the management or operation of such
entity and in the provision of telecommunications services by such entity;
provided, however, that, except in the case of clauses (i) and (iii) of this
paragraph, no Default or Event of Default shall have occurred and be continuing
or occur as a consequence of the actions or payments set forth herein. Any
Investments made other than in cash shall be valued, in good faith, by the Board
of Directors. Any Investment made pursuant to clause (vi) or (vii) of this
paragraph shall be deemed to be no longer outstanding (and repaid in full) if
and when the Person in which such Investment is made becomes a Restricted
Subsidiary of the Company.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii)
thereof), and the Net Cash Proceeds from any issuance and sale of Capital Stock
referred to in clauses (iii) or (iv) shall be included in calculating whether
the conditions of clause (C) of the first paragraph of this Section 4.05 have
been met with respect to any subsequent Restricted Payments. In the event the
proceeds of an issuance of Capital Stock of the Company are used for the
redemption, repurchase or other acquisition of the Securities or Indebtedness
that is pari passu with the Securities then the Net Cash Proceeds of such
issuance shall be included in clause (C) of the first paragraph of this Section
4.05 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
SECTION 4.06. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. The Company will not, and will
not permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions permitted by applicable
law on any Capital Stock of such Restricted Subsidiary owned by the Company or
any other Restricted Subsidiary;
40
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary that owns, directly or indirectly, any Capital Stock of such
Restricted Subsidiary;
(iii) make loans or advances to the Company or any other Restricted
Subsidiary that owns, directly or indirectly, any Capital Stock of such
Restricted Subsidiary; or
(iv) transfer any of its property or assets to the Company or any other
Restricted Subsidiary that owns, directly or indirectly, any Capital Stock of
such Restricted Subsidiary.
The foregoing provisions shall not prohibit any encumbrances
or restrictions:
(i) existing on the Issue Date in this Indenture or any other agreement in
effect on the Issue Date, and any extensions, refinancings, renewals or
replacements of such agreements; provided, however, that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets of such
Person acquired by the Company or any Restricted Subsidiary, at the time of such
acquisition and not incurred in contemplation thereof, which encumbrances or
restrictions are not applicable to any Person or the property or assets of any
Person other than such Person or the property or assets of such Person so
acquired;
(iv) in the case of clause (iv) of the first paragraph of this Section
4.06, (A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture or (C) arising or agreed to in the ordinary course
of business, not relating to any Indebtedness, and that do not, individually or
in the aggregate, detract from the value of property or assets of the Company or
any Restricted
41
Subsidiary in any manner material to the Company or any Restricted Subsidiary;
or
(v) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary.
Nothing contained in this Section 4.06 shall prevent the Company or any
Restricted Subsidiary from (i) restricting the sale or other disposition of
property or assets of the Company or any of its Restricted Subsidiaries that
secure Indebtedness of the Company or any of its Restricted Subsidiaries or (ii)
creating, incurring, assuming or suffering to exist any Liens otherwise
permitted under Section 4.09 of the March 1997 Senior Notes Indenture as in
effect on the Deemed Closing Date.
SECTION 4.07. Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries. The Company will not sell, and will not permit
any Restricted Subsidiary, directly or indirectly, to issue or sell any shares
of Capital Stock of a Restricted Subsidiary (including options, warrants or
other rights to purchase shares of such Capital Stock) except:
(i) to the Company or a Wholly Owned Restricted Subsidiary;
(ii) issuances or sales to foreign nationals of shares of Capital Stock of
foreign Restricted Subsidiaries, to the extent required by applicable law;
(iii) if, immediately after giving effect to such issuance or sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary; or
(iv) issuances or sales of Common Stock of Restricted Subsidiaries, other
than the Telecommunications Subsidiaries, if within six months of each such
issuance or sale, the Company or such Restricted Subsidiary applies an amount
not less than the Net Cash Proceeds thereof (if any) in accordance with clause
(A) or (B) of the first paragraph of Section 4.10.
SECTION 4.08. Limitation on Issuances of Guarantees by
Restricted Subsidiaries. The Company will not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee any Indebtedness of the Company
("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to this Indenture
providing for a Guarantee (a "Subsidiary Guarantee") of payment of the
Securities by such Restricted Subsidiary and
42
(ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee; provided, however, that this paragraph shall not
be applicable to any Guarantee of any Restricted Subsidiary that (x) existed at
the time such Person became a Restricted Subsidiary and (y) was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Securities
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Securities
then the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Securities.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person not an Affiliate of the Company of all of the Company's
and each Restricted Subsidiary's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by this Indenture) or (ii) the release or discharge of the
Guarantee which resulted in the creation of such Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.09. Limitation on Transactions with Shareholders and
Affiliates. The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of any class of Capital Stock of the
Company or with any Affiliate of the Company or any Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or, if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply
to (i) transactions (A) approved by a majority of the disinterested members of
the Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a
43
financial point of view; (ii) any transaction solely between the Company and any
of its Wholly Owned Restricted Subsidiaries or solely between Wholly Owned
Restricted Subsidiaries; (iii) the payment of reasonable fees to directors of
the Company who are not employees of the Company; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes; or (v) any
Restricted Payments not prohibited by the provisions of Section 4.05 (other than
pursuant to clause (iv) of the definition of "Permitted Investment" or clause
(vi) of the second paragraph of Section 4.05). Notwithstanding the foregoing,
any transaction covered by the first paragraph of this Section 4.09 and not
covered by clauses (ii) through (iv) of this paragraph, the aggregate amount of
which exceeds $250,000 in value, must be approved or determined to be fair in
the manner provided for in clause (i)(A) or (B) above.
SECTION 4.10. Limitation on Asset Sales. The Company will not,
and will not permit any Restricted Subsidiary to, consummate any Asset Sale,
unless (i) the consideration received by the Company or such Restricted
Subsidiary is at least equal to the fair market value of the assets sold or
disposed of and (ii) at least 85% of the consideration received consists of cash
or Temporary Cash Investments. In the event and to the extent that the Net Cash
Proceeds received by the Company or its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Deemed Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12- month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been prepared), then the Company shall or shall cause the relevant Restricted
Subsidiary to (i) within six months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an amount
equal to such excess Net Cash Proceeds to permanently repay unsubordinated
Indebtedness of the Company, or Indebtedness of any Restricted Subsidiary, in
each case owing to a Person other than the Company or any of its Restricted
Subsidiaries or (B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement committing to so
invest within six months after the date of such agreement), in property or
assets of a nature or type or that are used in a business (or in a company
having property and assets of a nature or type, or engaged in a business)
similar or related to the nature or type of the property and assets of, or the
business of, the Company and its Restricted Subsidiaries existing on the date of
such investment (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) and (ii)
apply (no later than the end of the six-month period referred to in clause (i))
such excess Net Cash Proceeds (to the extent not applied pursuant to clause (i))
as provided in the following paragraph of this Section 4.10. The amount of such
excess Net Cash Proceeds required to be
44
applied (or to be committed to be applied) during such six-month period as set
forth in clause (i) of the preceding sentence and not applied as so required by
the end of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Offer to Purchase
pursuant to this Section 4.10 totals at least $10,000,000, the Company must
commence, not later than the 15th Business Day after the first day of such
month, and consummate an Offer to Purchase from the Holders on a pro rata basis
an aggregate principal amount of Securities equal to the Excess Proceeds on such
date, at a purchase price equal to 101% of the Accumulated Amount of such
Securities on such date of purchase, plus accrued and unpaid interest (if any)
on such Accumulated Amount to the date of purchase; provided, however, that no
Offer to Purchase shall be required to be commenced with respect to the
Securities until the Business Day following the payment date with respect to the
Offer to Purchase March 1997 Senior Notes, March 1997 Equipment Notes and August
1997 Equipment Notes and need not be commenced if the Excess Proceeds remaining
after application to the March 1997 Senior Notes, March 1997 Equipment Notes and
August 1997 Equipment Notes purchased in such Offer to Purchase applicable
thereto are less than $10,000,000; provided further, however, that no Securities
may be purchased under this Section 4.10 unless the Company shall have purchased
all March 1997 Senior Notes, March 1997 Equipment Notes and August 1997
Equipment Notes tendered pursuant to the Offer to Purchase applicable thereto.
SECTION 4.11. Repurchase of Securities upon a Change of
Control. The Company must commence, within 30 days of the occurrence of a Change
of Control, and consummate an Offer to Purchase for all the Securities then
outstanding, at a purchase price equal to 101% of the Accumulated Amount of the
Securities on the date of purchase, plus accrued and unpaid interest (if any) on
such Accumulated Amount to the date of purchase. Prior to the mailing of the
notice to Holders of Securities commencing such Offer to Purchase, but in any
event within 30 days following any Change of Control, the Company covenants to
(i) repay in full all indebtedness of the Company that would prohibit the
repurchase of the Securities pursuant to such Offer to Purchase or (ii) obtain
any requisite consents under instruments governing any such indebtedness of the
Company to permit the repurchase of the Securities. The Company shall first
comply with the covenant in the preceding sentence before it shall repurchase
Securities pursuant to this Section 4.11.
The Company may not repurchase any Securities (or any other
subordinated obligations, including the Convertible Notes) pursuant to this
Section 4.11 until it has repurchased or caused WEC or WEC II, as the case may
be, to repurchase
45
all March 1997 Senior Notes, March 1997 Equipment Notes and August 1997
Equipment Notes tendered pursuant to the Offer to Purchase March 1997 Senior
Notes, March 1997 Equipment Notes and August 1997 Equipment Notes as a result of
such Change of Control. However, if the Company is unable to repay all of its
Indebtedness that would prohibit repurchase of the Securities or is unable to
obtain the consents of the holders of Indebtedness, if any, of the Company
outstanding at the time of a Change of Control whose consent would be so
required to permit the repurchase of Securities or otherwise fails to purchase
any Securities validly tendered, then the Company will have breached such
covenant. This breach will constitute an Event of Default under this Indenture
if it continues for a period of 30 consecutive days after written notice is
given to the Company by the Trustee or the Holders of at least 25% in aggregate
principal amount of the Securities outstanding. In addition, the failure by the
Company to repurchase Securities at the conclusion of the Offer to Purchase will
constitute an Event of Default without any waiting period or notice
requirements.
SECTION 4.12. Existence. Subject to Articles Four and Five of
this Indenture, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of the Company and each such Subsidiary and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the existence of any
Restricted Subsidiary (other than of the Company), if the maintenance or
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries taken as a whole. In addition, the
Company agrees to take such actions, within a reasonable time after the Issue
Date (and in any event prior to any proceeding initiated regarding the
dissolution of the Company), as may be necessary to ensure that it shall be in
good standing under the laws of the jurisdiction of its incorporation.
SECTION 4.13. Payment of Taxes and Other Claims. The Company
will pay or discharge and shall cause each of its Subsidiaries to pay or
discharge, or cause to be paid or discharged, before the same shall become
delinquent (i) all material taxes, assessments and governmental charges levied
or imposed upon (a) the Company or any such Subsidiary, (b) the income or
profits of any such Subsidiary which is a corporation or (c) the property of the
Company or any such Subsidiary and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a lien upon the
property of the Company or any such Subsidiary; provided, however, that the
Company shall not be required to pay or discharge, or cause to be paid or
discharged, any such tax, assessment, charge or claim the amount, applicability
46
or validity of which is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established.
SECTION 4.14. Maintenance of Properties and Insurance. The
Company will cause all properties used or useful in the conduct of its business
or the business of any of its Restricted Subsidiaries, to be maintained and kept
in reasonable condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.14 shall prevent the Company or any such
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company will provide or cause to be provided, for itself
and its Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily insured against
by corporations similarly situated and owning like properties, including, but
not limited to, product liability insurance and public liability insurance, with
reputable insurers or with the government of the United States of America, or an
agency or instrumentality thereof, in such amounts, with such deductibles and by
such methods as shall be customary for corporations similarly situated in the
industry in which the Company or such Restricted Subsidiary, as the case may be,
is then conducting business.
SECTION 4.15. Notice of Defaults. In the event that the
Company becomes aware of any Default or Event of Default, the Company, promptly
after it becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.16. Compliance Certificates. (a) The Company shall
deliver to the Trustee, within 90 days after the end of the Company's fiscal
year, an Officers' Certificate stating whether or not the signers know of any
Default or Event of Default that occurred during such fiscal year. Such
certificates shall contain a certification from the principal executive officer,
principal financial officer or principal accounting officer of the Company that
a review has been conducted of the activities of the Company and the Restricted
Subsidiaries and the Company's and the Restricted Subsidiaries' performance
under this Indenture and that, to the best knowledge of such officer, the
Company has complied with all conditions and covenants under this Indenture. For
purposes of this Section 4.16, such compliance shall be determined without
regard to any period of grace or requirement of notice provided under this
47
Indenture. If they do know of such a Default or Event of Default, the
certificate shall describe any such Default or Event of Default and its status.
(b) The Company shall (to the extent not prohibited by
applicable accounting rules) deliver to the Trustee, within 90 days after the
end of its fiscal year, a certificate signed by the Company's independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Securities as they
relate to accounting matters, (ii) that they have read the most recent Officers'
Certificate delivered to the Trustee pursuant to paragraph (a) of this Section
4.16 and (iii) whether, in connection with their audit examination, anything
came to their attention that caused them to believe that the Company, as the
case may be, was not in compliance with any of the terms, covenants, provisions
or conditions of Article Four and Section 5.01 of this Indenture as they pertain
to accounting matters and, if any Default or Event of Default has come to their
attention, specifying the nature and period of existence thereof; provided,
however, that such independent certified public accountants shall not be liable
in respect of such statement by reason of any failure to obtain knowledge of any
such Default or Event of Default that would not be disclosed in the course of an
audit examination conducted in accordance with generally accepted auditing
standards in effect at the date of such examination.
(c) Within 90 days after the end of the Company's fiscal year,
the Company shall deliver to the Trustee a list of all Significant Subsidiaries.
The Trustee shall have no duty with respect to any such list except to keep it
on file and available for inspection by the Holders.
SECTION 4.17. SEC Reports and Reports to Holders. Whether or
not the Company is required to file reports with the SEC, if any Securities are
outstanding, the Company shall file with the SEC, all such reports and other
information as it would be required to file with the SEC by Sections 13(a) or
15(d) under the Exchange Act. The Company shall supply the Trustee and each
Holder of Securities or shall supply to the Trustee for forwarding to each such
Holder, without cost to the Trustee or such Holder, copies of such reports or
other information.
SECTION 4.18. Waiver of Stay, Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the
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Company hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall
not consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person (other than a consolidation or merger with or into
a Wholly Owned Restricted Subsidiary with a positive net worth; provided,
however, that, in connection with any such merger or consolidation, no
consideration (other than Common Stock in the surviving Person, or the Company)
shall be issued or distributed to the stockholders of the Company) or permit any
Person to merge with or into the Company unless:
(i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or that acquired or leased such property and assets of the Company shall
be a corporation organized and validly existing under the laws of the United
States of America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of the Company on all of the Securities and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro forma
basis, the Company or any Person becoming the successor obligor of the
Securities shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(iv) immediately after giving effect to such transaction on a pro forma
basis the Company, or any Person becoming the successor obligor of the
Securities could Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03; and
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(v) the Company delivers to the Trustee an Officers' Certificate (attaching
the arithmetic computations to demonstrate compliance with clauses (iii) and, if
applicable, (iv)) and Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture complies with
the provisions of this Section 5.01 and that all conditions precedent provided
for herein relating to such transaction have been complied with; provided,
however, that clauses (iii) and (iv) above do not apply if, in the good faith
determination of the Board of Directors of the Company, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of the Company; provided
further, however, that any such transaction shall not have as one of its
purposes the evasion of the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall
occur with respect to the Securities if:
(a) the Company defaults in the payment of the principal of
(or premium, if any, on) any Security when the same becomes due and
payable, upon acceleration, redemption or otherwise, whether or not
such payment is prohibited pursuant to the provisions of Article Ten;
(b) the Company defaults in the payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days, whether or not such payment is
prohibited pursuant to the provisions of Article Ten;
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(c) the Company defaults in the performance of or breaches any
other covenant or agreement of the Company contained in this Indenture
or under the Securities and such default or breach continues for a
period of 30 consecutive days after written notice to the Company by
the Trustee or the Holders of 25% or more in aggregate principal amount
of the Securities;
(d) there occurs with respect to any issue or issues of
Indebtedness of the Company, or any Significant Subsidiary having an
outstanding principal amount of $25,000,000 or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (i) an event of default that has
caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or
annulled within 30 days of such acceleration and/or (ii) the failure to
make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or
extended within 30 days of such payment default;
(e) any final judgment or order (not covered by insurance) for
the payment of money in excess of $25,000,000 in the aggregate for all
such final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall
not be paid or discharged, and there shall be any period of 60
consecutive days following entry of the final judgment or order that
causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to
exceed $25,000,000 during which a stay of enforcement of such final
judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(f) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any
Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
(B) appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property
and assets of the Company or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company or any
Significant Subsidiary and, in each case, such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
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(g) the Company or any Significant Subsidiary (i) commences a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (ii)
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any
Significant Subsidiary or (iii) effects any general assignment for the
benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in clause (f) or (g) of Section 6.01 that occurs
with respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities, then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest on the Securities to be immediately due and payable. Upon a
declaration of acceleration, such principal, premium, if any, and accrued
interest shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (d) of Section 6.01
has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (d) shall be remedied or cured by the
Company or the relevant Significant Subsidiary or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto. If an Event of Default specified in clause (f) or (g) of
Section 6.01 occurs with respect to the Company, the principal of, premium, if
any, and accrued interest on the Securities then outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration, but
before a judgment or decree for the payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in principal amount of the
outstanding Securities, by written notice to the Company and to the Trustee, may
waive all past Defaults and rescind and annul such declaration of acceleration
and its consequences if (a) the Company has paid or deposited with the Trustee a
sum sufficient to pay (i) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, (ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities that have become
due otherwise than by such declaration or occurrence of acceleration and
interest thereon at the rate prescribed therefor by such Securities, and
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(iv) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate prescribed therefor by such Securities, (b) all
existing Events of Default, other than the nonpayment of the principal of,
premium, if any, and accrued interest on the Securities that have become due
solely by such declaration of acceleration, have been cured or waived and (c)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of principal of, premium, if any, or
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Sections
6.02, 6.07 and 9.02, the Holders of at least a majority in principal amount of
the outstanding Securities, by written notice to the Trustee, may waive all past
Defaults and Events of Default and rescind and annul a declaration of
acceleration (except a Default in the payment of principal of, premium, if any,
or interest on any Security as specified in clause (a) or (b) of Section 6.01 or
in respect of a covenant or provision of this Indenture which cannot be modified
or amended without the consent of the holder of each outstanding Security
affected) if (i) all existing Events of Default, other than the nonpayment of
principal of, premium, if any, or interest on the Securities that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Securities may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee;
provided, however, that the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that may involve the Trustee in personal
liability, or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders not joining in the giving of such
direction; and provided further, however, that the Trustee may
53
take any other action it deems proper that is not inconsistent with any
directions received from Holders of Securities pursuant to this Section 6.05.
SECTION 6.06. Limitation on Suits. A Holder or Holders may not
institute any proceeding, judicial or otherwise, with respect to this Indenture
or the Securities, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder or Holders have previously given to the Trustee written
notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against any costs, liabilities or
expenses to be incurred in compliance with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Securities have not given the Trustee a
direction that is inconsistent with such written request.
For purposes of Section 6.05 of this Indenture and this
Section 6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Securities have concurred in any request or direction of the
Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Securities or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Security to receive payment of principal of, premium, if any, or interest
on such Holder's Security on or after the respective due dates expressed on such
Security, or to
54
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of principal, premium or interest specified in clause (a),
(b) or (c) of Section 6.01 occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor of the Securities for the whole amount of principal,
premium, if any, and accrued interest remaining unpaid, together with interest
on overdue principal, premium, if any, and, to the extent that payment of such
interest is lawful, interest on overdue installments of interest, in each case
at the rate specified in the Securities, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Securities or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee holds or collects any
money or property pursuant to this Article Six, it shall pay out the money or
property in the following order:
First: to the Trustee for all amounts due under Section 7.07;
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Second: to Holders for amounts then due and unpaid for principal
of, premium, if any, and interest on the Securities in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if
any, and interest, respectively; and
Third: to the Company or any other obligors of the Securities, as
their interests may appear, or as a court of competent jurisdiction
may direct.
The Trustee, upon prior written notice to the Company, may fix
a record date and payment date for any payment to Holders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court may
require any party litigant in such suit to file an undertaking to pay the costs
of the suit, and the court may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Securities.
SECTION 6.12. Restoration of Rights and Remedies. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then, and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Company, Trustee and the Holders shall continue as though no
such proceeding has been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or wrongfully taken Securities in Section 2.07, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 6.14. Delay or Omission Not Waiver. No delay or
omission of the Trustee or of any Holder to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Six or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Whether or not
herein expressly so provided, every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA
Sections 315(a) through (d):
(i) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document and may in good faith
conclusively rely as to the truth of the statements and the correctness of the
opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate, opinion and/or an accountants' certificate;
(iii) the Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any attorney or agent appointed
with due care;
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(iv) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction;
(v) the Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within its rights or
powers or for any action it takes or omits to take in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Securities relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture; provided, however, that the
Trustee's conduct does not constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a fact or circumstance be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
(vii) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or attorney;
and
(viii) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a written Company Order and any resolution of the
Board of Directors may be sufficiently evidenced by a written Board Resolution.
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 the Trustee. Any Agent may do the same
with like rights. However, the Trustee is subject to TIA Sections 310(b) and
311.
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SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Securities, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Securities and (iii) shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event
of Default occurs and is continuing and if such Default or Event of Default is
known to a trust officer of the Trustee, the Trustee shall mail to each Holder
in the manner and to the extent provided in TIA Section 313(c) notice of the
Default or Event of Default within five Business Days after it occurs, unless
such Default or Event of Default has been cured; provided, however, that, except
in the case of a default in the payment of the principal of, premium, if any, or
interest on any Security, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or the Responsible Officer of the Trustee in
good faith determines that the withholding of such notice is in the interest of
the Holders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days
after each May 15, beginning with May 15, 1998, the Trustee shall mail to each
Holder as provided in TIA Section 313(c) a brief report that complies with TIA
Section 313(a) dated as of such May 15, if required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time and upon the Trustee's request such
compensation as shall be agreed upon in writing for its services in any capacity
hereunder. The compensation of the Trustee shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses and advances
incurred or made by the Trustee; provided, however, that the Trustee shall be
under no obligation whatsoever under this Indenture or any other document
delivered in connection with the Securities, to advance or expend its own funds.
Such expenses shall include the reasonable compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it
harmless against, any loss or liability or expense incurred by it without
negligence or bad faith on its part in connection with the acceptance or
administration of this Indenture and its duties under this Indenture and the
Securities, including, without limitation, the costs and expenses of defending
itself against any claim or liability and of complying with any process served
upon it or any of its officers in connection with the exercise or performance of
any of its powers or duties under this Indenture and the Securities.
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To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee, in its capacity as Trustee, except
money or property held in trust to pay principal of, premium, if any, and
interest on particular Securities.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (f) or (g) of Section
6.01, the expenses and the compensation for the services are intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
SECTION 7.08. Replacement of Trustee. A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in this
Section 7.08.
The Trustee may resign at any time by so notifying the Company
in writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Company. The Company may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal.
If the Trustee resigns or is removed, or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the outstanding Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, either subject to the lien provided in
Section 7.07 or less amounts retained by the retiring Trustee to satisfy amounts
owed to it pursuant to the terms of this Indenture, including but not limited to
Section 7.07 hereof, as the retiring Trustee determines, (i) the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, (ii) the resignation or removal of the retiring Trustee shall become
effective and (iii) the successor Trustee shall have all the rights, powers and
duties of
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the Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any
Holder who satisfies the requirements of TIA Section 310(b) may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
The Company shall give notice of any resignation and any
removal of the Trustee and each appointment of a successor Trustee to all
Holders. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue
indefinitely for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee
shall have a combined capital and surplus of at least $25,000,000 as set forth
in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be
liable for interest on any money received by it except as the Trustee may agree
in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Securities any and all withholding
taxes applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Securities, to withhold such amounts and timely pay
the same to the appropriate
61
authority in the name of and on behalf of the holders of the Securities, that it
will file any necessary withholding tax returns or statements when due, and
that, as promptly as possible after the payment thereof, it will deliver to each
Holder of a Security appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Holders may
reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Securities and this Indenture if:
(i) all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities that have been
replaced or Securities that are paid pursuant to Section 4.01 or
Securities for whose payment money or securities have theretofore been
held in trust and thereafter repaid to the Company, as provided in
Section 8.05) have been delivered to the Trustee for cancellation and
the Company has paid all sums payable by it hereunder; or
(ii) (A) the Securities mature within one year or all of them
are to be called for redemption within one year under arrangements
satisfactory to the Trustee for giving the notice of redemption, (B)
the Company irrevocably deposits in trust with the Trustee during such
one-year period, under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, as trust funds solely
for the benefit of the Holders for that purpose, money or U.S.
Government Obligations sufficient (in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee), without
consideration of any reinvestment of any interest thereon, to pay
principal, premium, if any, and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder, (C) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, (D) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound and
(E) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with.
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With respect to the foregoing clause (i), the Company's
obligations under Section 7.07 shall survive. With respect to the foregoing
clause (ii), the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.11, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's obligations
in Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable
deposit, the Trustee upon request shall acknowledge in writing the discharge of
the Company's obligations, as the case may be, under the Securities and this
Indenture except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The
Company will be deemed to have paid and will be discharged from any and all
obligations in respect of the Securities on the 123rd day (or, to the extent
applicable under clause (D) below, one year) after the date of the deposit
referred to in clause (A) of this Section 8.02 if:
(A) with reference to this Section 8.02, the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee (or another trustee satisfying the requirements of Section 7.10
of this Indenture) and conveyed all right, title and interest for the
benefit of the Holders, under the terms of an irrevocable trust
agreement in form and substance satisfactory to the Trustee as trust
funds in trust, specifically pledged to the Trustee for the benefit of
the Holders as security for payment of the principal of, premium, if
any, and interest, if any, on the Securities, and dedicated solely to,
the benefit of the Holders, in and to (1) money in an amount, (2) U.S.
Government Obligations that, through the payment of interest, premium,
if any, and principal in respect thereof in accordance with their
terms, will provide, not later than one day before the due date of any
payment referred to in this clause (A), money in an amount or (3) a
combination thereof in an amount sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, without consideration of the reinvestment of such interest
and after payment of all federal, state and local taxes or other
charges and assessments in respect thereof payable by the Trustee, the
principal of, premium, if any, and accrued interest on the outstanding
Securities at the Stated Maturity or earlier optional redemption of
such principal or interest; provided, however, that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal,
premium, if any, and interest with respect to the Securities;
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(B) such deposit will not result in a breach or violation of,
or constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(C) immediately after giving effect to such deposit on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; and no Default or Event of
Default shall occur during the period ending on the 123rd day (or one
year) after such date of deposit;
(D) the Company shall have delivered to the Trustee (1) either
(x) a ruling directed to the Trustee received from the Internal Revenue
Service to the effect that the Holders will not recognize income, gain
or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised or (y) an Opinion of Counsel to the same effect as the ruling
described in clause (x) above accompanied by a ruling to that effect
published by the Internal Revenue Service, unless there has been a
change in the applicable federal income tax law since the date of this
Indenture such that a ruling from the Internal Revenue Service is no
longer required and (2) an Opinion of Counsel to the effect that (x)
the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and (y) after the passage of 123 days following the
deposit (except, with respect to any trust funds for the account of any
Holder who may be deemed to be an "insider" for purposes of the United
States Bankruptcy Code, after one year following the deposit), the
trust funds will not be subject to the effect of Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company under either
such statute, and either (i) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally) or (ii) if a court
were to rule under any such law in any case or proceeding that the
trust funds remained property of the Company (a) assuming such trust
funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold,
for the benefit of the Holders, a valid and perfected security interest
in such trust funds that is not avoidable in bankruptcy or otherwise
except for the effect of Section 552(b) of the United States Bankruptcy
Code on interest on the trust funds accruing after the commencement of
a case under such statute and (b) the Holders will be entitled to
receive adequate protection of their interests in such trust funds if
such trust funds are used in such case or proceeding;
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(E) if the Securities are then listed on a national securities
exchange, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit defeasance and discharge will
not cause the Securities to be delisted; and
(F) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02 have been complied with.
Notwithstanding the foregoing, prior to the end of the 123-day
(or one year) period referred to in clause (D)(2)(y) of this Section 8.02, none
of the Company's obligations under this Indenture shall be discharged.
Subsequent to the end of such 123-day (or one year) period with respect to this
Section 8.02, the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05,
2.06, 2.07, 2.11, 4.01, 4.02, 7.07, 7.08, 8.05 and 8.06 shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's obligations
in Sections 7.07, 8.05 and 8.06 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (D)(1)
of this Section 8.02 may be provided specifically without regard to, and not in
reliance upon, the continuance of the Company's obligations under Section 4.01,
then the Company's obligations under such Section 4.01 shall cease upon delivery
to the Trustee of such ruling or Opinion of Counsel and compliance with the
other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon written
request shall acknowledge in writing the discharge of the Company's obligations
under the Securities and this Indenture except for those surviving obligations
in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company
may omit to comply with any term, provision or condition set forth in clauses
(iii) and (iv) of Section 5.01 and Sections 4.03 through 4.19, and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and Sections
4.03 through 4.19, and clauses (d) and (e) of Section 6.01 shall be deemed not
to be Events of Default, in each case with respect to the outstanding Securities
if:
(i) with reference to this Section 8.03, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or another
trustee satisfying the requirements of Section 7.10) and conveyed all right,
title and interest to the Trustee for the benefit of the Holders, under the
terms of an
65
irrevocable trust agreement in form and substance satisfactory to the Trustee as
trust funds in trust, specifically pledged to the Trustee for the benefit of the
Holders as security for payment of the principal of, premium, if any, and
interest, if any, on the Securities, and dedicated solely to, the benefit of the
Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that,
through the payment of interest and principal in respect thereof in accordance
with their terms, will provide, not later than one day before the due date of
any payment referred to in this clause (i), money in an amount or (C) a
combination thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, without
consideration of the reinvestment of such interest and after payment of all
federal, state and local taxes or other charges and assessments in respect
thereof payable by the Trustee, the principal of, premium, if any, and interest
on the outstanding Securities on the Stated Maturity or earlier optional
redemption of such principal or interest; provided, however, that the Trustee
shall have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Obligations to the payment of such principal, premium, if
any, and interest with respect to the Securities;
(ii) such deposit will not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(iii) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit;
(iv) the Company has delivered to the Trustee an Opinion of Counsel to the
effect that (A) the creation of the defeasance trust does not violate the
Investment Company Act of 1940, (B) the Holders have a valid first-priority
security interest in the trust funds, (C) the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and the
defeasance of the obligations referred to in the first paragraph of this Section
8.03 and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such deposit
and defeasance had not occurred and (D) after the passage of 123 days following
the deposit (except, with respect to any trust funds for the account of any
Holder who may be deemed to be an "insider" for purposes of the United States
Bankruptcy Code, after one year following the deposit), the trust funds will not
be subject to the effect of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or
Section 15 of the New York Debtor and Creditor Law in a case
66
commenced by or against the Company under either such statute, and either (1)
the trust funds will no longer remain the property of the Company (and therefore
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally) or (2) if
a court were to rule under any such law in any case or proceeding that the trust
funds remained property of the Company (x) assuming such trust funds remained in
the possession of the Trustee prior to such court ruling to the extent not paid
to the Holders, the Trustee will hold, for the benefit of the Holders, a valid
and perfected security interest in such trust funds that is not avoidable in
bankruptcy or otherwise (except for the effect of Section 552(b) of the United
States Bankruptcy Code on interest on the trust funds accruing after the
commencement of a case under such statute), (y) the Holders will be entitled to
receive adequate protection of their interests in such trust funds if such trust
funds are used in such case or proceeding and (z) no property, rights in
property or other interests granted to the Trustee or the Holders in exchange
for, or with respect to, such trust funds will be subject to any prior rights of
holders of other Indebtedness of the Company or any of its Subsidiaries;
(v) if the Securities are then listed on a national securities exchange,
the Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that such deposit defeasance and discharge will not cause the Securities
to be delisted; and
(vi) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the defeasance contemplated by this Section 8.03
have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section
8.06, the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Securities and this Indenture to
the payment of principal of, premium, if any, and interest on the Securities;
but such money need not be segregated from other funds except to the extent
required by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07,
8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company upon request set forth in an Officers' Certificate any excess money held
by them at any time and thereupon shall be relieved from all liability with
respect to such money. The Trustee and the Paying Agent shall pay to the Company
upon request any
67
money held by them for the payment of principal, premium, if any, or interest
that remains unclaimed for two years; provided, however, that the Trustee or
such Paying Agent before being required to make any payment shall cause to be
published at the expense of the Company once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money at such Holder's address (as set forth in the Security Register) notice
that such money remains unclaimed and that after a date specified therein (which
shall be at least 30 days from the date of such publication or mailing) any
unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another Person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01, 8.02
or 8.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 8.01, 8.02 or 8.03, as the case may be; provided, however, that, if
the Company has made any payment of principal of, premium, if any, or interest
on 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.
SECTION 8.07. Insiders. With respect to the determination of
the Persons constituting beneficial owners of Securities and whether any such
Person is an "insider" for purposes of Sections 8.02(D)(2)(y) and 8.03(iv)(D),
the Trustee may rely on an Officers' Certificate.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors, and the Trustee may amend
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or supplement this Indenture or the Securities without notice to or the consent
of any Holder:
(a) to cure any ambiguity, defect or inconsistency in this
Indenture; provided, however, that such amendments or supplements shall
not adversely affect the interests of the Holders in any material
respect;
(b) to comply with Article Five;
(c) to comply with any requirements of the SEC in connection
with the qualification of this Indenture under the TIA;
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(e) to make any change that, in the opinion of the Board of
Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections
6.04 and 6.07 and without prior notice to the Holders, the Company, when
authorized by its Board of Directors (as evidenced by a Board Resolution), and
the Trustee may amend this Indenture and the Securities with the written consent
of the Holders of a majority in principal amount of the Securities then
outstanding, and the Holders of a majority in principal amount of the Securities
then outstanding by written notice to the Trustee may waive future compliance by
the Company with any provision of this Indenture or the Securities.
Notwithstanding the provisions of this Section 9.02, without
the consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any installment of
interest on, any Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or
adversely affect any right of repayment at the option of any Holder of any
Security, or the currency in which, any Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
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(ii) reduce the percentage in principal amount of outstanding Securities
the consent of whose Holders is required for any such supplemental indenture,
for any waiver of compliance with certain provisions of this Indenture or
certain Defaults and their consequences provided for in this Indenture;
(iii) waive a Default in the payment of principal of, premium, if any, or
interest on, any Security; or
(iv) modify any of the provisions of this Section 9.02, except to increase
any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. Any failure of the Company
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an
amendment or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the Security of the
consenting Holder, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to its
Security or portion of its Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee of written consents from the Holders
of the requisite percentage in principal amount of the outstanding Securities.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then,
notwithstanding the last two sentences of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies) and only those persons shall be
70
entitled to consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it is of the type described in any of clauses (i)
through (v) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (v) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Security that evidences the same indebtedness as the Security of the consenting
Holder.
SECTION 9.04. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder to deliver such Security to the Trustee. The Trustee may
place an appropriate notation on the Security about the changed terms and return
it to the Holder and the Trustee may place an appropriate notation on any
Security thereafter authenticated. Alternatively, if the 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.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article Nine is authorized or permitted by
this Indenture. Subject to the preceding sentence, the Trustee shall sign such
amendment, supplement or waiver if the same does not adversely affect the rights
of the Trustee. The Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
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ARTICLE TEN
SUBORDINATION
SECTION 10.01. Securities Subordinate to Senior Indebtedness.
The Company and the Trustee each covenants and agrees, and each Holder, by its
acceptance of a Security, likewise covenants and agrees, that all Securities
shall be issued subject to the subordination provisions contained in this
Article Ten, and each Holder of a Security, whether upon original issue or upon
transfer, assignment or exchange thereof, accepts and agrees that the Senior
Subordinated Obligations shall be, to the extent and in the manner set forth in
this Article Ten, subordinated in right of payment and subject to the prior
payment in full, in cash or cash equivalents, of all amounts payable under
Senior Indebtedness including, without limitation, the Company's obligations
under the Designated Senior Indebtedness and any interest accruing subsequent to
an event specified in Sections 6.01(f) and 6.01(g), whether or not such interest
is an allowed claim enforceable against the debtor under the United States
Bankruptcy Code. The Securities are pari passu with the Convertible Notes.
SECTION 10.02. No Payment on Securities in Certain
Circumstances. (a) No direct or indirect payment by or on behalf of the Company
of any Senior Subordinated Obligations, whether pursuant to the terms of the
Securities or upon acceleration or otherwise, shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of the
obligations on any Senior Indebtedness, and such default shall not have been
cured or waived, or the benefits of this sentence waived by or on behalf of, the
holders of such Senior Indebtedness.
(b) In addition, during the continuance of any other event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, upon receipt by the Trustee of written
notice from the trustee or other representative for the holders of such
Designated Senior Indebtedness (or the holders of at least a majority in
principal amount of such Designated Senior Indebtedness then outstanding), no
payment of Senior Subordinated Obligations may be made by or on behalf of the
Company upon or in respect of the Securities for a period (a "Payment Blockage
Period") commencing on the date of receipt of such notice and ending 159 days
thereafter (unless, in each case, such Payment Blockage Period shall be
terminated by written notice to the Trustee from such trustee of, or other
representatives for, such holders). Not more than one Payment Blockage Period
may be commenced with respect to the Securities during any period of 360
consecutive days. Notwithstanding anything in this Indenture to the contrary,
there must be 180 consecutive days in any 360-day period in which no Payment
Blockage Period is in effect. No event of default that existed or was continuing
(it being acknowledged that
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any subsequent action that would give rise to an event of default pursuant to
any provision under which an event of default previously existed or was
continuing shall constitute a new event of default for this purpose) on the date
of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness initiating such Payment Blockage Period shall be,
or shall be made, the basis for the commencement of a second Payment Blockage
Period by the representative for, or the holders of, such Designated Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such event of default shall have been cured or waived for a period of not less
than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder and the Trustee has
received notice pursuant to Section 10.12 that such payment is prohibited by
paragraphs (a) and (b) of this Section 10.02, the Trustee shall promptly notify
the holders of the Senior Indebtedness identified to the Trustee by the Company
as being holders of Senior Indebtedness of such prohibited payment and such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that, upon notice from the Trustee
to the holders of Senior Indebtedness that such prohibited payment has been
made, the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) within 30 days of receipt of such notice from the
Trustee, notify the Trustee of the amounts then due and owing on the Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness and any excess above
such amounts due and owing on Senior Indebtedness shall be paid to the Holders.
SECTION 10.03. Payment Over of Proceeds Upon Dissolution, Etc..
(a) Upon any payment or distribution of assets or securities of the Company of
any kind or character, whether in cash, property or securities, upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness (including any interest accruing subsequent to an event of
bankruptcy, whether or not such interest is an allowed claim enforceable against
the debtor under the United States Bankruptcy Code) shall first be paid in full,
in cash or cash equivalents, before the Holders of the Securities or the Trustee
on behalf of the Holders of the Securities shall be entitled to receive any
payment by the Company on account of Senior Subordinated Obligations, or any
payment to acquire any of the Securities for cash, property or securities, or
any distribution with respect to the Securities of any cash, property or
securities. Before
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any payment may be made by, or on behalf of, the Company of any Securities upon
any such dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Securities
or the Trustee on behalf of the Holders of the Securities would be entitled, but
for the subordination provisions of this Article Ten, shall be made by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person making such payment or distribution or by the Holders of
the Securities or the Trustee if received by them or it, directly to the holders
of the Senior Indebtedness (pro rata) to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
representatives as their respective interests appear, to the extent necessary to
pay all such Senior Indebtedness in full, in cash or cash equivalents, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether
by or on behalf of the Company, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Indebtedness or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation to
repay any Senior Indebtedness is declared to be fraudulent, invalid, or
otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then the obligation so declared fraudulent, invalid
or otherwise set aside (and all other amounts that would come due with respect
thereto had such obligation not been so affected) shall be deemed to be
reinstated and outstanding as Senior Indebtedness for all purposes of this
Indenture as if such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, shall be received by the Trustee or any Holder at a time when such
payment or distribution is prohibited by Section 10.03(a) and before all
obligations in respect of Senior Indebtedness are paid in full, in cash or cash
equivalents, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness (pro rata to such holders on the basis of the respective
amount of Senior Indebtedness held by such holders) or their representatives,
74
or to the trustee under the Senior Note Indenture, or to the trustee or trustees
under any other indenture pursuant to which any such Senior Indebtedness may
have been issued, as their respective interests appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full, in cash or cash equivalents, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of such Senior Indebtedness.
(d) For purposes of this Section 10.03, the words "cash,
property or securities" shall not be deemed to include, so long as the effect of
this clause is not to cause the Securities to be treated in any case or
proceeding or similar event described in this Section 10.03 as part of the same
class of claims as the Senior Indebtedness or any class of claims pari passu
with, or senior to, the Senior Indebtedness for any payment or distribution,
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment that are subordinated, at least to the extent
that the Securities are subordinated, to the payment of all Senior Indebtedness
then outstanding; provided, however, that (i) if a new corporation results from
such reorganization or readjustment, such corporation assumes the Senior
Indebtedness and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the sale, conveyance, transfer, lease or other disposition
of all or substantially all of its property and assets to another corporation
upon the terms and conditions provided in Article Five shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of this
Section 10.03 if such other corporation shall, as a part of such consolidation,
merger, sale, conveyance, transfer, lease or other disposition, comply with the
conditions provided in Article Five.
SECTION 10.04. Subrogation of Holders to Rights of Holders of
Senior Indebtedness. Upon the payment in full of all Senior Indebtedness in cash
or cash equivalents, the Holders of Securities shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company made on such Senior Indebtedness
until the principal of, premium, if any, and interest on the Securities shall be
paid in full, and no such payments or distributions to the holders of Senior
Indebtedness (or any trustee therefor) of any cash, property or securities of
the Company to which the Holders or the Trustee on their behalf would be
entitled except for the provisions of this Article Ten, and no payment pursuant
to the provisions of this Article Ten to the holders of Senior Indebtedness by
Holders or the Trustee on their behalf shall be, as among the Trustee, the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders, deemed to be a payment by the Company to or on account of the Senior
75
Indebtedness, it being understood that the provisions of this Article Ten are
and are intended solely for the purpose of defining the relative rights of, the
Holders, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Ten shall
have been applied, pursuant to the provisions of this Article Ten, to the
payment of all amounts payable under Senior Indebtedness, then, and in such
case, the Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment in full, in cash
or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 10.05. Obligations of Company Unconditional. Nothing
contained in this Article Ten or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders, the obligation
of the Company, which is unconditional and absolute, to pay to the Holders the
principal of, premium, if any, and interest on the Securities as and when the
same shall become due and payable in accordance with their terms, or to affect
the relative rights of the Holders and creditors of the Company other than the
holders of the Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon a Default or an Event of Default under this Indenture,
subject to the rights, if any, under this Article Ten, of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Ten will restrict the right of the Trustee or the
Holders to take any action to declare the Securities to be due and payable prior
to their Stated Maturity pursuant to Section 6.01 or to pursue any rights or
remedies hereunder; provided, however, that all Senior Indebtedness then due and
payable or thereafter declared to be due and payable shall first be paid in
full, in cash or cash equivalents, before the Holders or the Trustee are
entitled to receive any direct or indirect payment from the Company of Senior
Subordinated Obligations.
SECTION 10.06. Payments May Be Made Prior to Dissolution.
Nothing contained in this Article Ten or elsewhere in this Indenture or in any
of the Securities (a) shall prevent the Company at any time, except under the
conditions described in Article Six or Section 10.02 or 10.03, from making
payments of or on account of the Senior Subordinated Obligations to the Holders
entitled thereto or from
76
depositing any moneys with the Trustee for such payments, or (b) shall prevent
the application by the Trustee (or any Paying Agent other than the Company) of
any moneys deposited with it hereunder to the payment of or on account of the
Senior Subordinated Obligations, if the Trustee or such Paying Agent, as the
case may be, did not, at least two business days prior to the date upon which
such payment becomes due and payable, have written notice as provided in Section
10.02 or 10.12 of any event prohibiting the making of such payment. The Company
shall give prompt written notice to the Trustee of any dissolution, winding up,
liquidation or reorganization of the Company.
SECTION 10.07. No Waiver of Subordination Provisions. No right
of any present or future holder of any Senior Indebtedness of the Company to
enforce the subordination provisions of this Article Ten shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with. The provisions of this Article Ten are intended to
be for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness.
SECTION 10.08. Authorization to Trustee to Take Action to
Effectuate Subordination. Each Holder of Securities by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate, as between the Holders and the holders
of the Senior Indebtedness, the subordination as provided in this Article Ten
and appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 10.09. Senior Indebtedness May Be Renewed or Extended,
Etc. Without in any way limiting the generality of Section 10.07 of this
Indenture, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
77
SECTION 10.10. Trustee to Have No Fiduciary Duty to Holders of
Senior Indebtedness. With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Ten, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and the
Trustee shall not be liable to any holder of Senior Indebtedness if it shall pay
over or deliver to the Holders, the Company or any other Person moneys or assets
to which any holder of Senior Indebtedness shall be entitled by virtue of this
Article Ten or otherwise.
SECTION 10.11. Rights of Trustee as Holder of Senior
Indebtedness. The Trustee shall be entitled to all rights set forth in this
Article Ten in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 10.12. Notice to Trustee. The Company shall give
prompt written notice to the Trustee of any fact known to the Company which
would prohibit the making of any payment of moneys to or by the Trustee in
respect of Securities pursuant to the provisions of this Article Ten or
otherwise. The Trustee shall not be charged with knowledge of the existence of a
default or event of default with respect to the Senior Indebtedness or any other
facts that would prohibit the making of any payment to or by the Trustee unless
and until the Trustee shall have received written notice thereof mailed or
delivered to the Trustee at its Corporate Trust Office signed by an Officer of
the Company, any holder or representative of any class of Senior Indebtedness or
any trustee or agent therefor; and prior to the receipt of any such written
notice, the Trustee shall, subject to Article Seven, be entitled to assume that
no such facts exist; provided, however, that, if the Trustee shall not have
received the notice provided for in this Section 10.12 at least two Business
Days prior to the date upon which, by the terms of this Indenture, any money
shall become payable for any purpose (including, without limitation, the payment
of the principal or, premium, if any, or interest on any Security), then
notwithstanding anything herein to the contrary, the Trustee shall have full
power and authority to receive any money from the Company and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary that may be received by it on or after such prior date
except for an acceleration of the Securities prior to such application. Nothing
contained in this Section 10.12 shall limit the right of the holders of Senior
Indebtedness to recover payments as contemplated by this Article Ten. The
foregoing shall not apply if the Paying Agent is the Company.
78
The Trustee shall be entitled to rely on the delivery to it of
a written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a trustee on behalf of, or other representative of,
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Ten.
SECTION 10.13. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities
referred to in this Article Ten, the Trustee and the Holders shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, delivered to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Ten.
SECTION 10.14. Not to Prevent Events of Default. The failure
to make a payment on account of principal of, premium, if any, or interest on
the Securities by reason of any provision of this Article Ten will not be
construed as preventing the occurrence of an Event of Default.
SECTION 10.15. Trustee's Compensation Not Prejudiced.
Nothing in this Article Ten will apply to amounts due to the Trustee pursuant to
other sections of this Indenture.
79
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939. This Indenture
shall be subject to the provisions of the TIA that are required to be a part of
this Indenture and shall, to the extent applicable, be governed by such
provisions.
SECTION 11.02. Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail addressed as follows:
if to the Company:
WinStar Communications, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
if to the Trustee:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
at the Company's expense to such Holder's address as it appears on the Security
Register by first class mail and shall be sufficiently given to such Holder if
so mailed within the time prescribed. Copies of any such communication or notice
to a Holder shall also be mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
Except for a notice to the Trustee, which is deemed given only when received,
and except as otherwise provided in this Indenture, if a notice or communication
is mailed in the manner provided in this Section 11.02 it is duly given, whether
or not the addressee receives it.
80
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be in writing and filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 11.03. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each person signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each
such person, such condition or covenant has been complied with;
provided, however, that,
81
with respect to matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar.
The Trustee may make reasonable rules for action by or at a meeting of Holders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Change of Control Payment Date, Excess
Proceeds Payment Date, Stated Maturity or date of maturity of any Security shall
not be a Business Day, then payment of principal of, premium, if any, or
interest on such Security, as the case may be, need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Change of Control Payment Date,
Excess Proceeds Payment Date, or Redemption Date, or at the Stated Maturity or
date of maturity of such Security; provided, however, that no interest shall
accrue for the period from and after such Interest Payment Date, Change of
Control Payment Date, Excess Proceeds Payment Date, Redemption Date, Stated
Maturity or date of maturity, as the case may be.
SECTION 11.07. Governing Law. This Indenture and the
Securities shall be governed by the laws of the State of New York, excluding (to
the extent permissible by law) any rule of law that would cause the application
of the laws of any jurisdiction other than the State of New York.
SECTION 11.08. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the
Securities, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
contained in this Indenture, or in any of the Securities, or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer, director, employee or controlling person, as
such, of the Company or of any successor Person thereof in such capacity;
provided, however, that the foregoing shall not affect the Company's obligations
with respect to the Equipment Note Guarantee; it being expressly understood that
all such liability is hereby expressly waived and released as a condition of,
and as consideration for, the execution of this Indenture and the issue of the
Securities.
82
SECTION 11.10. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 11.11. Duplicate Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
SECTION 11.12. Separability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.13. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
WINSTAR COMMUNICATIONS, INC.
By:__________________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:__________________________
Name:
Title:
EA-1
EXHIBIT A
[FACE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE]
*/
**/
***/
WINSTAR COMMUNICATIONS, INC.
15% Senior Subordinated Deferred Interest Note Due 2007
CUSIP _________
No. $_________
WINSTAR COMMUNICATIONS, INC., a Delaware corporation (the
"Company", which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to __________ , or its
registered assigns, the principal sum of ___________________ ($__________) on
March 1, 2007.
SemiAnnual Interest Accrual Date: March 1 and September 1,
commencing March 1, 1998.
Interest Payment Dates: March 1 and September 1, commencing
September 1, 2002.
Regular Record Dates: February 15 and August 15.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
------------------
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and the attachment
from such Exhibit 1 caption "[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 the Rule 144A/Regulation S
Appendix and replace the Assignment Form included in this Exhibit A with
Assignment Form included in such Exhibit 1.
***/ Add the Original Issue Discount Legend from Exhibit 1 to the Rule
144A/Regulation S Appendix..
EA-2
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Date: WINSTAR COMMUNICATIONS, INC.
By:
Name:
Title:
(Form of Trustee's Certificate of Authentication)
This is one of the 15% Senior Subordinated Deferred Interest
Notes Due 2007 described in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
Date:
By:
Authorized Signatory
EA-3
[REVERSE SIDE OF EXCHANGE NOTE OR PRIVATE EXCHANGE NOTE]
WINSTAR COMMUNICATIONS, INC.
15% Senior Subordinated Deferred Interest Note Due 2007
1. Principal and Interest.
The Company will pay the principal of this Note on March 1,
2007.
The Company promises to pay interest on the Accumulated Amount
of this Note on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Until March 1, 2002, interest on the Notes will accrue at a
rate of 15% per annum and be compounded semiannually on each SemiAnnual Interest
Accrual Date, but (except as provided below) will not be payable in cash. From
and after March 1, 2002, interest on the Accumulated Amount of each Note will be
payable semiannually (to the holders of record of the Notes at the close of
business on the February 15 or August 15 immediately preceding the relevant
Interest Payment Date) on each Interest Payment Date, commencing September 1,
2002.
"Accumulated Amount" means, as of any date (the "Specified
Date"), the amount provided below for each $1,000 principal amount of Notes.
(i) If the Specified Date occurs on one of the following dates
(each, a "SemiAnnual Interest Accrual Date"), the Accumulated Amount of
this Note will equal the amount set forth below for such Note for such
SemiAnnual Interest Accrual Date:
SemiAnnual Interest Accrual Date Accumulated Amount
March 1, 1998........................... $1060.000
September 1, 1998....................... 1139.500
March 1, 1999........................... 1224.963
September 1, 1999....................... 1316.835
March 1, 2000........................... 1415.597
September 1, 2000....................... 1521.767
March 1, 2001........................... 1635.900
September 1, 2001....................... 1758.592
March 1, 2002........................... 1890.486
EA-4
(ii) if the Specified Date occurs before the first SemiAnnual
Interest Accrual Date, the Accumulated Amount will equal the sum of (A)
$1,000 and (B) an amount equal to the product of (1) the Accumulated
Amount for the first SemiAnnual Interest Accrual Date less $1,000
multiplied by (2) a fraction, the numerator of which is the number of
days elapsed from the Issue Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is the
number of days from the Issue Date to the first SemiAnnual Interest
Accrual Date, using a 360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two SemiAnnual
Interest Accrual Dates, the Accumulated Amount will equal the sum of
(A) the Accumulated Amount for the SemiAnnual Interest Accrual Date
immediately preceding such Specified Date and (B) an amount equal to
the product of (1) the Accumulated Amount for the immediately following
SemiAnnual Interest Accrual Date less the Accumulated Amount for the
immediately preceding SemiAnnual Interest Accrual Date multiplied by
(2) a fraction, the numerator of which is the number of days elapsed
from the immediately preceding SemiAnnual Interest Accrual Date to the
Specified Date, using a 360-day year or twelve 30-day months, and the
denominator of which is 180; or
(iv) if the Specified Date occurs after the last SemiAnnual
Interest Accrual Date, the Accumulated Amount of this Note will equal
$1890.486.
Notwithstanding anything to the contrary above, (i) if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Note from and including the date on
which any such Registration Default shall occur to but excluding the earlier of
(x) the date on which all Registration Defaults have been cured and (y) the date
on which all Notes become freely transferable by Holders other than Affiliates
of the Company without further registration under the Securities Act. Such
additional interest will be payable in cash semiannually in arrears, at a rate
per annum equal to .50% of the Accumulated Amount of the Notes on the relevant
additional interest payment date. Such additional interest will be payable on
each SemiAnnual Interest Accrual Date or Interest Payment Date, as the case may
be, commencing with the first SemiAnnual Interest Accrual Date following the
applicable Registration Default. Payments of additional interest on the Notes
will be made to the Holders of Notes on the Regular Record Date (or, if there is
no Regular Record Date, the date 15 days prior to such SemiAnnual Interest
Accrual Date) immediately preceding such SemiAnnual Interest Accrual Date or
Interest Payment Date.
The Company shall pay interest on overdue principal and
premium, if any, and (to the extent lawful) interest on overdue installments of
interest.
EA-5
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the Accumulated Amount of the Notes as provided
above on each March 1 and September 1, commencing September 1, 2002, to the
persons who are Holders (as reflected in the Security Register) at the close of
business on the February 15 or August 15 immediately preceding the relevant
Interest Payment Date, in each case, even if the Note is cancelled on
registration of transfer or registration of exchange after such record date;
provided, however, that, with respect to the payment of principal, the Company
will not make payment to the Holder unless this Note is surrendered to a Paying
Agent.
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 Notes represented by a global Note
(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 Note
(including principal, premium and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Note 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).
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the
"Trustee") will act as authenticating agent, Paying Agent and Registrar. The
Company may change any authenticating agent, Paying Agent or Registrar without
notice. The Company, any Subsidiary or any Affiliate of any of them may act as
Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture dated as of
October 1, 1997 (the "Indenture"), between the Company and the Trustee.
Capitalized terms herein are used as defined in the Indenture unless otherwise
indicated. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act. The
Notes are subject to all such terms, and Holders are referred to the Indenture
and the Trust Indenture Act for a statement of all such terms. To the extent
permitted by applicable law, in the event of any inconsistency between the terms
of this Note and the terms of the Indenture, the terms of the Indenture shall
control.
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The Indenture limits the original aggregate principal amount
of the Notes to $100,000,000 (subject to Section 2.07 of the Indenture).
5. Redemption.
The Notes will not be redeemable prior to March 1, 2002.
Thereafter, the Notes will be redeemable, at the Company's option, in whole at
any time or in part from time to time upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each Holders' last address as
it appears in the Security Register, at the following Redemption Prices
(expressed as a percentage of the Accumulated Amount of the Notes), plus accrued
and unpaid interest, if any, on such Accumulated Amount to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is on or prior to the Redemption Date to receive interest due on the
relevant Interest Payment Date), if redeemed during the 12-month period
commencing March 1 of the years set forth below:
Year Redemption Price
2002 107.500%
2003 103.750
2004 and thereafter 100.000
6. Notice of Redemption.
Notice of any optional redemption will be mailed by the
Company at least 30 days but not more than 60 days before a Redemption Date to
each Holder of Notes to be redeemed at his last address as it appears in the
Security Register. Notes in original denominations larger than $1,000 may be
redeemed in part; provided, however, that Notes will only be issued in
denominations of $1,000 principal amount or integral multiples thereof. On and
after the Redemption Date, interest ceases to accrue on Notes (or portions of
Notes) called for redemption, unless the Company defaults in the payment of the
Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the repurchase of its Notes by the Company in cash
pursuant to the offer described in the Indenture at a purchase price equal to
101% of the Accumulated Amount of such Notes on such date of purchase, plus
accrued and unpaid interest, if any, on such Accumulated Amount to the date of
purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30
days after any Change of Control occurs to each Holder at his last address as it
appears in the Security Register. Notes in original denominations larger than
$1,000 may be sold to the Company in
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part; provided, however, that Notes will only be issued in denominations of
$1,000 principal amount at maturity or integral multiples thereof. On and after
the Change of Control Payment Date, interest ceases to accrue on Notes or
portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and integral multiples thereof. A
Holder may register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer or exchange of any Notes selected for redemption. Also, it need not
register the transfer or exchange of any Notes for a period of 15 days before a
selection of Notes to be redeemed is made.
9. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all
purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company at its request. After that, Holders entitled
to the money must look to the Company for payment, unless an applicable law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
11. Discharge Prior to Redemption or Maturity.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Notes 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 Notes to redemption or maturity, as
the case may be.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes
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then outstanding. Without notice to or the consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency and make any change that, in
the opinion of the Board of Directors of the Company, does not materially and
adversely affect the rights of any Holder.
13. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to incur
additional indebtedness; pay dividends or make distributions in respect of their
capital stock; make investments or make certain other restricted payments; sell
assets; issue or sell stock of Restricted Subsidiaries; enter into transactions
with stockholders or affiliates; or, with respect to the Company, consolidate,
merge or sell all or substantially all of its assets. Within 90 days after the
end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with such limitations.
14. Successor Persons.
Generally, when a successor person or other entity assumes all
the obligations of its predecessor under the Notes and the Indenture, the
predecessor person will be released from those obligations.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable, upon acceleration, redemption or
otherwise whether or not such payment is prohibited by the subordination
provisions of the Indenture; (b) default in the payment of interest on any Note
when the same becomes due and payable, and such default continues for a period
of 30 days whether or not such payment is prohibited by the subordination
provisions of the Indenture; (c) the Company defaults in the performance of or
breaches any other covenant or agreement of the Company in the Indenture or
under the Notes and such default or breach continues for a period of 30
consecutive days after written notice by the Trustee or the Holders of 25% or
more in aggregate principal amount of the Notes; (d) there occurs with respect
to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $25,000,000 or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (i) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (ii) the failure to make a principal payment at the final
(but not any
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interim) fixed maturity and such defaulted payment shall not have been made,
waived or extended within 30 days of such payment default; (e) any final
judgment or order (not covered by insurance) for the payment of money in excess
of $25,000,000 in the aggregate for all such final judgments or orders against
all such Persons (treating any deductibles, self-insurance or retention as not
so covered) shall be rendered against the Company or any Significant Subsidiary
and shall not be paid or discharged, and there shall be any period of 60
consecutive days following entry of the final judgment or order that causes the
aggregate amount for all such final judgments or orders outstanding and not paid
or discharged against all such Persons to exceed $25,000,000 during which a stay
of enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (f) a court having jurisdiction in the
premises enters a decree or order for (i) relief in respect of the Company or
any Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (ii)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (iii) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (g) the Company or any Significant Subsidiary (i) commences a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (ii) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (iii) effects any general assignment for the benefit
of creditors.
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) above that occurs with respect to the Company)
occurs and is continuing under the Indenture, the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders), may, and the Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued interest, if any, on the Notes to be
immediately due and payable. If a bankruptcy or insolvency default with respect
to the Company or any Restricted Subsidiary occurs and is continuing, the
principal amount of the Notes automatically becomes due and payable. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of at least a
majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power.
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16. Subordination.
The payment of the Notes is, to the extent set forth in the
Indenture, subordinated in right of payment in full, in cash or cash
equivalents, of all Senior Indebtedness of the Company. To the extent provided
in the Indenture, Senior Indebtedness of the Company must be paid before the
Notes may be paid. The Company agrees, and each Holder by accepting a Note
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purposes.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services for
the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator, stockholder, officer, director, employee or
controlling person as such, of the Company or of any successor Person thereof in
such capacity, shall have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
19. Authentication.
This Note shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Note.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
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(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
22. Governing Law.
The Indenture and the Notes shall be governed by the laws of
the State of New York, excluding (to the extent permissible by law) any rule of
law that would cause the application of the laws of any jurisdiction other than
the State of New York.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to WinStar
Communications, Inc., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000,
Attention: General Counsel.
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ASSIGNMENT FORM
I or we assign and transfer this Note to:
Please insert social security or other identifying number of assignee
Print or type name, address and zip code of assignee and irrevocably appoint ,
as agent, to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
Dated Signed
(Sign exactly as name appears on the other side of this Note)
Signature Guarantee 1
--------
1 The Holder's signature must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act.
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
4.10 or Section 4.11 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.10 or Section 4.11 of the Indenture, state the amount (in
principal amount):
$-------------
Date:
Your Signature:
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: 2
--------
2 The Holder's signature must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act.
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RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE
144A, INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7)) AND TO CERTAIN PERSONS IN OFFSHORE
TRANSACTIONS IN RELIANCE ON REGULATION S.
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:
"Definitive Security" means a certificated Initial Security
bearing the restricted securities legend set forth in Section 2.3(d) and which
is held by an IAI in accordance with Section 2.1(c).
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Exchange Securities" means the 15% Senior Subordinated
Deferred Interest Notes Due 2007 to be issued pursuant to this Indenture in
connection with a Registered Exchange Offer pursuant to the Registration Rights
Agreement.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act and
Regulation D promulgated thereunder.
"Initial Purchasers" means Credit Suisse First Boston
Corporation and BT Securities Corporation.
"Initial Securities" means the 15% Senior Subordinated
Deferred Interest Notes Due 2007, issued under this Indenture on or about the
date hereof.
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"Private Exchange" means the offer by the Company, pursuant to
the Registration Rights Agreement, to the Initial Purchasers to issue and
deliver to each 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 the 15% Senior
Subordinated Deferred Interest Notes Due 2007 to be issued pursuant to this
Indenture to the Initial Purchasers in a Private Exchange.
"Purchase Agreement" means the Purchase Agreement dated
October 7, 1997, among the Company and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the 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 the Registration Rights
Agreement dated October 7, 1997, among the Company and the Initial Purchasers.
"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 Depositary), 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 the Registration
Rights Agreement.
"Transfer Restricted Securities" means Definitive Securities
and Securities that bear or are required to bear the legend set forth in Section
2.3(d) hereto.
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1.2 Other Definitions
Defined in
Term Section:
"Agent Members".........................................................................................2.1(b)
"Global Security".......................................................................................2.1(a)
"Regulation S"..........................................................................................2.1(a)
"Rule 144A".............................................................................................2.1(a)
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the
Company pursuant to the Purchase Agreement.
(a) Global Securities. Initial Securities offered and sold to
a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in
reliance on Regulation S under the Securities Act ("Regulation S"), in each case
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without interest coupons with the global securities legend and restricted
securities legend set forth in Exhibit 1 hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its New York office, as custodian for
the Depositary (or with such other custodian as the Depositary may direct), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount at maturity of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depositary.
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 Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (b)
shall be delivered by the Trustee to such
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Depositary or pursuant to such Depositary's instructions or held by the Trustee
as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee 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 Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global
Securities will not be entitled to receive physical delivery of certificated
Securities. Purchasers of Initial Securities who are IAI's and are not QIBs and
did not purchase Initial Securities sold in reliance on Regulation S will
receive Definitive Securities; provided, however, that upon transfer of such
Definitive Securities to a QIB, such Definitive Securities will, unless the
Global Security has previously been exchanged, be exchanged for an interest in a
Global Security pursuant to the provisions of Section 2.3.
2.2 Authentication. The Trustee shall authenticate and deliver: (1)
Initial Securities for original issue in an aggregate principal amount of
$100,000,000 and (2) Exchange Securities or Private Exchange Securities for
issue only in a Registered Exchange Offer or a Private Exchange, respectively,
pursuant to the 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 whether the Securities are to be Initial Securities,
Exchange Securities or Private Exchange Securities. The aggregate principal
amount of Securities outstanding at any time may not exceed $100,000,000 except
as provided in Section 2.07 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitiv
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
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(y) to exchange such Definitive Securities for an equal principal amount of
Definitive Securities of other authorized denominations, the Registrar or
co-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 or co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(ii) 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 (in the form set forth on the reverse of
the Security); or
(B) if such Definitive Securities are being
transferred to the Company, a certification to that effect (in
the form set forth on the reverse of the Security); or
(C) if such Definitive Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144; or (x) in reliance on another
exemption from the registration 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 or
Registrar so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section
2.3(d)(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 Global Security except upon satisfaction of the
requirements set forth below. Upon
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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 being transferred (A) to a
QIB in accordance with Rule 144A, or (B) outside the United States in
an offshore transaction within the meaning of Regulation S and in
compliance with Rule 904 under the Securities Act; and
(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 Global Security to reflect an increase in
the aggregate principal amount of the Securities represented by the
Global Security, such instructions to contain information regarding the
Depositary 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 Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security 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 Global Security
equal to the principal amount of the Definitive Security so cancelled. If no
Global Securities 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, a new Global Security 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 Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in accordance with
the Depositary's procedures containing information regarding the participant
account of the Depositary to be credited with a beneficial interest in the
Global Security. The Registrar shall, in accordance with such instructions,
instruct the Depositary 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) Notwithstanding any other provisions of this Rule
144A/Regulation S Appendix (other than the provisions set forth in
Section 2.4), a Global Security may not be transferred as a whole
except by the Depositary to a nominee of the
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Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 or
Section 2.09 of the Indenture 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 Initial Securities
intended to ensure that such transfers comply with Rule 144A or
Regulation S, as the case may be) and such other procedures as may from
time to time be adopted by the Company.
(d) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing the Global
Securities and the Definitive Securities (and all Securities issued in
exchange therefor or in substitution thereof) 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 (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 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 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, (ii) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
A-8
SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (iv) TO THE ISSUER, OR (v) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (i) THROUGH (v) 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 Definitive Security will 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:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder 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; and
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar shall
permit the Holder 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 Holder
certifies in writing to the Registrar that its request for
such exchange 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 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
A-9
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 to be issued in global form will cease to
apply, and a certificated Initial Security or Private Exchange Security
without 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 pursuant to which Holders of such
Initial Securities are offered Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will cease to apply and certificated Initial Securities
with the Restricted Securities Legend set forth in Exhibit 1 hereto
will be available to Holders of such Initial Securities that do not
exchange their Initial Securities, and Exchange Securities in
certificated or global form 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 pursuant to which Holders of such Initial
Securities are offered Private Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply, and Private Exchange Securities in
global form with the Restricted Securities Legend set forth in Exhibit
1 hereto will be available to Holders that exchange such Initial
Securities in such Private Exchange.
(e) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for certificated or Definitive Securities, redeemed, repurchased or canceled,
such Global Security shall be returned to the Depositary 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 certificated or
Definitive Securities, redeemed, repurchased or canceled, the principal amount
at maturity 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.
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(f) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities, Definitive Securities and Global Securities at the
Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.07, 4.10, 4.11 and
9.04 of the Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any certificated or
Definitive Security selected for redemption in whole or in part
pursuant to Article Three of this Indenture, except the unredeemed
portion of any certificated or Definitive Security being redeemed in
part, or (b) any Security for a period beginning 15 Business Days
before the mailing of a notice of an offer to repurchase or redeem
Securities or 15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on
such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by
notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(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 Depositary or other Person with respect to the accuracy of the
records of the Depositary 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
A-11
owner or other Person (other than the Depositary) 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 Depositary 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 Depositary subject
to the applicable rules and procedures of the Depositary. The Trustee
may rely and shall be fully protected in relying upon information
furnished by the Depositary 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 Inden-
ture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among
Depositary 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.
2.4 Certificated Securities.
(a) A Global Security deposited with the Depositary or with
the Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of certificated
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 and (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and 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
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depositary
to the Trustee located 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 certificated
Initial Securities of authorized denominations. Any portion of a Global
A-12
Security transferred pursuant to this Section shall be executed, authenticated
and delivered only in denominations of $1,000 principal amount and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(d), bear the
Restricted Securities Legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events
specified in Section 2.4(a), the Company will promptly make available to the
Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
EI-1
EXHIBIT 1
to
Rule 144A/REGULATION S APPENDIX
[FACE OF INITIAL NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY (AS DEFINED BELOW) 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.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE REGISTERED FORM, THIS CERTIFICATE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC
TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (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 PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EI-2
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 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, (ii) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (iv) TO THE ISSUER, OR (v) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (i) THROUGH
(v) 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.
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.(1)
[Original Issue Discount Legend]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR
PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $1,000 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $____, IN EACH CASE PER $1,000 PRINCIPAL AMOUNT OF
THIS SECURITY. THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT ATTRIBUTABLE TO THE
PERIOD COMMENCING OCTOBER 7, 1997 AND ENDING ON MARCH 1, 1998 IS $60.00. FOR
PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE DATE OF THIS SECURITY IS OCTOBER
7, 1997. FOR PURPOSES OF SECTION 1272 OF THE CODE, THE YIELD TO MATURITY
(COMPOUNDED SEMIANNUALLY ON MARCH 1 AND SEPTEMBER 1) IS 15%, CALCULATED BASED ON
THE APPROXIMATE METHOD.
------------
(1) Include if a Definitive Security is to be held by an institutional
"accredited investor" (as defined in Rule 501(a), (1), (2), (3) or (7))
under the Securities Act.
EI-3
WINSTAR COMMUNICATIONS, INC.
15% Senior Subordinated Deferred Interest Note Due 2007
CUSIP _________
No. $___________
WINSTAR COMMUNICATIONS, INC., a Delaware corporation (the
"Company", which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to __________ , or its
registered assigns, the principal sum of ____________ ($_____) on March 1, 2007.
SemiAnnual Interest Accrual Date: March 1 and September 1, commencing March
1, 1998.
Interest Payment Dates: March 1 and September 1, commencing
September 1, 2002.
Regular Record Dates: February 15 and August 15.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
EI-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.
Date: WINSTAR COMMUNICATIONS, INC.
By:
Name:
Title:
(Form of Trustee's Certificate of Authentication)
This is one of the 15% Senior Subordinated Deferred Interest
Notes Due 2007 described in the within-mentioned Indenture.
Date:
UNITED STATES TRUST
COMPANY OF NEW YORK, as
Trustee
By:
Authorized Signatory
EI-5
[REVERSE SIDE OF NOTE]
WINSTAR COMMUNICATIONS, INC.
15% Senior Subordinated Deferred Interest Note Due 2007
1. Principal and Interest.
The Company will pay the principal of this Note on March 1,
2007.
The Company promises to pay interest on the Accumulated Amount
of this Note on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Until March 1, 2002, interest on the Notes will accrue at a
rate of 15% per annum and be compounded semiannually on each SemiAnnual Interest
Accrual Date, but (except as provided below) will not be payable in cash. From
and after March 1, 2002, interest on the Accumulated Amount of each Note will be
payable semiannually (to the holders of record of the Notes at the close of
business on the February 15 or August 15 immediately preceding the relevant
Interest Payment Date) on each Interest Payment Date, commencing September 1,
2002.
"Accumulated Amount" means, as of any date (the "Specified
Date"), the amount provided below for each $1,000 principal amount of Notes.
(i) If the Specified Date occurs on one of the following dates
(each, a "SemiAnnual Interest Accrual Date"), the Accumulated Amount of
this Note will equal the amount set forth below for such Note for such
SemiAnnual Interest Accrual Date:
SemiAnnual Interest Accrual Date Accumulated Amount
March 1, 1998........................... $1060.000
September 1, 1998....................... 1139.500
March 1, 1999........................... 1224.963
September 1, 1999....................... 1316.835
March 1, 2000........................... 1415.597
September 1, 2000....................... 1521.767
March 1, 2001........................... 1635.900
September 1, 2001....................... 1758.592
March 1, 2002........................... 1890.486
EI-6
(ii) if the Specified Date occurs before the first SemiAnnual
Interest Accrual Date, the Accumulated Amount will equal the sum of (A)
$1,000 and (B) an amount equal to the product of (1) the Accumulated
Amount for the first SemiAnnual Interest Accrual Date less $1,000
multiplied by (2) a fraction, the numerator of which is the number of
days elapsed from the Issue Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is the
number of days from the Issue Date to the first SemiAnnual Interest
Accrual Date, using a 360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two SemiAnnual
Interest Accrual Dates, the Accumulated Amount will equal the sum of
(A) the Accumulated Amount for the SemiAnnual Interest Accrual Date
immediately preceding such Specified Date and (B) an amount equal to
the product of (1) the Accumulated Amount for the immediately following
SemiAnnual Interest Accrual Date less the Accumulated Amount for the
immediately preceding SemiAnnual Interest Accrual Date multiplied by
(2) a fraction, the numerator of which is the number of days elapsed
from the immediately preceding SemiAnnual Interest Accrual Date to the
Specified Date, using a 360-day year or twelve 30-day months, and the
denominator of which is 180; or
(iv) if the Specified Date occurs after the last SemiAnnual
Interest Accrual Date, the Accumulated Amount of this Note will equal
$1890.486.
Notwithstanding anything to the contrary above, (i) if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Note from and including the date on
which any such Registration Default shall occur to but excluding the earlier of
(x) the date on which all Registration Defaults have been cured and (y) the date
on which all Notes become freely transferable by Holders other than Affiliates
of the Company without further registration under the Securities Act. Such
additional interest will be payable in cash semiannually in arrears, at a rate
per annum equal to .50% of the Accumulated Amount of the Notes on the relevant
additional interest payment date. Such additional interest will be payable on
each SemiAnnual Interest Accrual Date or Interest Payment Date, as the case may
be, commencing with the first SemiAnnual Interest Accrual Date following the
applicable Registration Default. Payments of additional interest on the Notes
will be made to the Holders of Notes on the Regular Record Date (or, if there is
no Regular Record Date, the date 15 days prior to such SemiAnnual Interest
Accrual Date) immediately preceding such SemiAnnual Interest Accrual Date or
Interest Payment Date.
EI-7
The Company shall pay interest on overdue principal and
premium, if any, and (to the extent lawful) interest on overdue installments of
interest.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the Accumulated Amount of the Notes as provided
above on each March 1 and September 1, commencing September 1, 2002, to the
persons who are Holders (as reflected in the Security Register) at the close of
business on the February 15 or August 15 immediately preceding the relevant
Interest Payment Date, in each case, even if the Note is cancelled on
registration of transfer or registration of exchange after such record date;
provided, however, that, with respect to the payment of principal, the Company
will not make payment to the Holder unless this Note is surrendered to a Paying
Agent.
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 Notes represented by a global Note
(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 Note
(including principal, premium and interest) by mailing a check to the registered
address of each Holder thereof; provided, however, that payments on a
certificated Note 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).
3. Paying Agent and Registrar.
Initially, United States Trust Company of New York (the
"Trustee") will act as authenticating agent, Paying Agent and Registrar. The
Company may change any authenticating agent, Paying Agent or Registrar without
notice. The Company, any Subsidiary or any Affiliate of any of them may act as
Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture dated as of
October 1,1997 (the "Indenture"), between the Company and the Trustee.
Capitalized
EI-8
terms herein are used as defined in the Indenture unless otherwise indicated.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act. The Notes are subject
to all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note
and the terms of the Indenture, the terms of the Indenture shall control.
The Indenture limits the original aggregate principal amount
of the Notes to $100,000,000 (subject to Section 2.07 of the Indenture).
5. Redemption.
The Notes will not be redeemable prior to March 1, 2002.
Thereafter, the Notes will be redeemable, at the Company's option, in whole at
any time or in part from time to time upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each Holders' last address as
it appears in the Security Register, at the following Redemption Prices
(expressed as a percentage of the Accumulated Amount of the Notes), plus accrued
and unpaid interest, if any, on such Accumulated Amount to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is on or prior to the Redemption Date to receive interest due on the
relevant Interest Payment Date), if redeemed during the 12-month period
commencing March 1 of the years set forth below:
Year Redemption Price
2002 107.500%
2003 103.750
2004 and thereafter 100.000
6. Notice of Redemption.
Notice of any optional redemption will be mailed by the
Company at least 30 days but not more than 60 days before a Redemption Date to
each Holder of Notes to be redeemed at his last address as it appears in the
Security Register. Notes in original denominations larger than $1,000 may be
redeemed in part; provided, however, that Notes will only be issued in
denominations of $1,000 principal amount or integral multiples thereof. On and
after the Redemption Date, interest ceases to accrue on Notes (or portions of
Notes) called for redemption, unless the Company defaults in the payment of the
Redemption Price.
7. Repurchase upon Change in Control.
EI-9
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the repurchase of its Notes by the Company in cash
pursuant to the offer described in the Indenture at a purchase price equal to
101% of the Accumulated Amount of such Notes on such date of purchase, plus
accrued and unpaid interest, if any, on such Accumulated Amount to the date of
purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30
days after any Change of Control occurs to each Holder at his last address as it
appears in the Security Register. Notes in original denominations larger than
$1,000 may be sold to the Company in part; provided, however, that Notes will
only be issued in denominations of $1,000 principal amount at maturity or
integral multiples thereof. On and after the Change of Control Payment Date,
interest ceases to accrue on Notes or portions of Notes surrendered for purchase
by the Company, unless the Company defaults in the payment of the Change of
Control Payment.
8. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in
denominations of $1,000 of principal amount and integral multiples thereof. A
Holder may register the transfer or exchange of Notes in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer or exchange of any Notes selected for redemption. Also, it need not
register the transfer or exchange of any Notes for a period of 15 days before a
selection of Notes to be redeemed is made.
9. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all
purposes.
10. Unclaimed Money.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company at its request. After that, Holders entitled
to the money must look to the Company for payment, unless an applicable law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
EI-10
11. Discharge Prior to Redemption or Maturity.
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Notes 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 Notes to redemption or maturity, as
the case may be.
12. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that, in the opinion
of the Board of Directors of the Company, does not materially and adversely
affect the rights of any Holder.
13. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to incur
additional indebtedness; pay dividends or make distributions in respect of their
capital stock; make investments or make certain other restricted payments; sell
assets; issue or sell stock of Restricted Subsidiaries; enter into transactions
with stockholders or affiliates; or, with respect to the Company, consolidate,
merge or sell all or substantially all of its assets. Within 90 days after the
end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with such limitations.
14. Successor Persons.
Generally, when a successor person or other entity assumes all
the obligations of its predecessor under the Notes and the Indenture, the
predecessor person will be released from those obligations.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable, upon acceleration, redemption or
otherwise whether or
EI-11
not such payment is prohibited by the subordination provisions of the Indenture;
(b) default in the payment of interest on any Note when the same becomes due and
payable, and such default continues for a period of 30 days whether or not such
payment is prohibited by the subordination provisions of the Indenture; (c) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes and such default or
breach continues for a period of 30 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount of the
Notes; (d) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal amount
of $25,000,000 or more in the aggregate for all such issues of all such Persons,
whether such Indebtedness now exists or shall hereafter be created, (i) an event
of default that has caused the holder thereof to declare such Indebtedness to be
due and payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 30 days of such acceleration and/or (ii) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within 30 days of such
payment default; (e) any final judgment or order (not covered by insurance) for
the payment of money in excess of $25,000,000 in the aggregate for all such
final judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments
or orders outstanding and not paid or discharged against all such Persons to
exceed $25,000,000 during which a stay of enforcement of such final judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; (f) a
court having jurisdiction in the premises enters a decree or order for (i)
relief in respect of the Company or any Significant Subsidiary in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (ii) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (iii) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (g) the Company or any Significant Subsidiary (i)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (ii) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of
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the property and assets of the Company or any Significant Subsidiary or (iii)
effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) above that occurs with respect to the Company)
occurs and is continuing under the Indenture, the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders), may, and the Trustee at the request of such Holders shall, declare the
principal of, premium, if any, and accrued interest, if any, on the Notes to be
immediately due and payable. If a bankruptcy or insolvency default with respect
to the Company or any Restricted Subsidiary occurs and is continuing, the
principal amount of the Notes automatically becomes due and payable. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Notes. Subject to certain limitations, Holders of at least a
majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power.
16. Subordination.
The payment of the Notes is, to the extent set forth in the
Indenture, subordinated in right of payment in full, in cash or cash
equivalents, of all Senior Indebtedness of the Company. To the extent provided
in the Indenture, Senior Indebtedness of the Company must be paid before the
Notes may be paid. The Company agrees, and each Holder by accepting a Note
agrees, to the subordination provisions contained in the Indenture and
authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purposes.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from and perform services for
the Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator, stockholder, officer, director, employee or
controlling person as such, of the Company or of any successor Person thereof in
such capacity, shall have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or
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their creation. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
19. Authentication.
This Note shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Note.
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
21. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
22. Governing Law.
The Indenture and the Notes shall be governed by the laws of
the State of New York, excluding (to the extent permissible by law) any rule of
law that would cause the application of the laws of any jurisdiction other than
the State of New York.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to WinStar
Communications, Inc., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000,
Attention: General Counsel.
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ASSIGNMENT FORM
I or we assign and transfer this Note to:
Please insert social security or other identifying number of assignee
Print or type name, address and zip code of assignee and irrevocably appoint ,
as agent, to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
Dated Signed
(Sign exactly as name appears on the other side of this Note)
Signature Guarantee 1
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
--------
1 The Holder's signature must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act.
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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; or
(5) |_| pursuant to another available exemption from registration provided by
Rule 144 under the Securities Act of 1933.
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) or (5) is checked, the Trustee may 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
EI-16
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
------------------------
Signature
Signature Guarantee:
--------------------- --------------------------
Signature must be guaranteed Signature
------------------------------------------------------------
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
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[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 in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Security following officer of Trustee or
Global Security Global Security such decrease or increase)Securities Custodian
EI-18
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
4.10 or Section 4.11 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.10 or Section 4.11 of the Indenture, state the amount (in
principal amount):
$----------
Date:
Your Signature:
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: 2
--------
2 The Holder's signature must be guaranteed by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" as
defined by Rule 17Ad-15 under the Exchange Act.
