EXHIBIT 4.06
SECOND SUPPLEMENTAL INDENTURE, dated as of August 27, 1997 (the "Second
Supplemental Indenture"), to the Indenture, dated as of April 15, 1996, as
supplemented by the First Supplemental Indenture dated as of September 12, 1996
(the "Indenture") between HYPERION TELECOMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and BANK OF MONTREAL TRUST COMPANY, a trust company
organized under the laws of the State of New York (the "Trustee").
WHEREAS, the Company desires and has requested the Trustee to join it
in the execution and delivery of this Second Supplemental Indenture in order to
amend certain provisions of the Indenture to permit the Company's proposed
issuance of certain Senior Secured Notes due 2004 and to grant a first priority
security interest in certain of the Company's assets to the holders of such
Senior Secured Notes due 2004; and
WHEREAS, Section 9.02 of the Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee with the consent of
at least a majority of the holders of the Senior Notes issued pursuant thereto,
provided certain conditions are met; and
WHEREAS, at least the minimum number of the holders of the Senior Notes
required by Section 9.02 of the Indenture have consented to the proposed
amendments to the Indenture and the conditions set forth in the Indenture for
the execution and delivery of this Second Supplemental Indenture have been
complied with; and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid agreement of the Company and the Trustee, in accordance with
its terms, and a valid amendment of, and supplement to, the Indenture, have been
done;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein, the Company agrees with the Trustee that the Indenture is
supplemented and amended, solely to the extent and for the purposes expressed
herein, as follows:
Section 1. Definitions.
(a) Any capitalized term used herein and not otherwise defined
herein shall have the meaning given in the Indenture.
(b) The definition of "Disqualified Stock" in Section
1.01 of the Indenture is hereby amended and restated as follows:
"Disqualified Stock" means any Capital Stock which, by its terms ( or
by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole
or in part, on or prior to the date that is 91 days after the date on
which the Senior Notes mature; provided, however, that any Capital
Stock which would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require the Company to
repurchase or redeem such Capital Stock upon the occurrence of a Change
of Control occurring prior to the final maturity of the Senior Notes
shall not constitute Disqualified Stock if the change of control
provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions applicable to the
Senior Notes contained in the covenant described in Section 4.15 and
such Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provisions prior
to the Company's repurchase of such Senior Notes as are required to be
repurchased pursuant to the covenant described in Section 4.15.
(c) The definition of "Permitted Investments" in Section
1.01 shall be amended and restated in its entirety to read as follows:
"Permitted Investments" means
(a) any Investment in a Wholly Owned Subsidiary of the Company
that is engaged, either directly or indirectly through a Qualified
Subsidiary or Joint Venture, in the Telecommunications Business;
(b) any Investment in a Qualified Subsidiary of the Company
that is directly engaged in the Telecommunications Business;
(c) any Investment in Cash Equivalents;
(d) any Investment in a Person that is not a Subsidiary of the
Company, if as a result of such Investment (i)(A) such Person becomes a
Qualified Subsidiary or Wholly Owned Subsidiary of the Company or (B)
such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Qualified Subsidiary and (ii)(A) such
Wholly Owned Subsidiary, either directly or indirectly through a
Qualified Subsidiary or a Joint Venture, is engaged in the
Telecommunications Business or (B) such Qualified Subsidiary is
directly engaged in the Telecommunications Business;
(e) any Permitted Joint Venture Investment;
(f) any Investment made as a result of the receipt of non-cash
consideration (whether or not such non-cash consideration is deemed to
be cash for the purposes of Section 4.10) from an Asset Sale that was
made pursuant to and in compliance with Section 4.10 hereof; or
(g) any Investment in an Enhanced Services Venture; or
(h) any Investment made pursuant to the terms of the Escrow
and Disbursement Agreement (as defined in the Secured Notes Indenture).
(d) The definition of "Permitted Liens" in Section 1.01
shall be amended and restated as follows:
"Permitted Liens" means
(i) Liens on the property of the Company, any Subsidiary or
any Permitted Joint Venture securing Obligations under Indebtedness
that may be incurred pursuant to clause (i) of Section 4.09 hereof;
(ii) Liens in favor of the Company;
(iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company, any Subsidiary
or any Permitted Joint Venture; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation
and do not extend to any assets other than those of the Person merged
into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition
thereof by the Company, any Subsidiary or any Permitted Joint Venture,
provided that such Liens were in existence prior to the contemplation
of such acquisition;
(v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;
(vi) Liens existing on the date of this Indenture;
(vii) Liens on property of Subsidiaries and Permitted Joint
Ventures securing Obligations under Indebtedness incurred pursuant to
clause (viii) of Section 4.09 hereof but only to the extent that (a) in
the case of Subsidiaries and Permitted Joint Ventures that are
incurring Indebtedness other than Related Network Debt, such Liens
secure only such Indebtedness incurred by such Subsidiary or such Joint
Venture; and (b) in the case of subsidiaries and Joint Ventures that
are incurring Related Network Debt, such Liens secure only such Related
Network Debt;
(viii) Liens securing Obligations under the Senior Notes and
this Indenture;
(ix) Liens securing Obligations under Vendor Debt pursuant to
clause (ii) of Section 4.09 hereof; provided that the principal amount
at maturity of such Vendor Debt secured by such Lien does not exceed
100% of the purchase price or cost of acquisition, construction or
improvement of the Telecommunications Related Assets subject to such
Liens;
(x) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been made
therefor;
(xi) Liens incurred in the ordinary course of business of the
Company, any Subsidiary or any Permitted Joint Venture with respect to
obligations that do not exceed $5.0 million at any one time outstanding
and that (a) are not incurred in connection with the borrowing of money
or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially
detract from the value of the property or materially impair the use
thereof in the operation of business by the Company, such Subsidiary or
such Permitted Joint Venture;
(xii) Liens securing Refinancing Indebtedness, but only if,
and to the extent, that such Liens that are incurred in connection with
such Refinancing Indebtedness are at least as favorable to the Holders
of Senior Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; or
(xiii) Liens securing Obligations under the Secured Notes,
the Secured Notes Indenture and the Secured Notes Security Documents.
(e) The definition of "Pro Forma EBITDA" in Section 1.01 shall
be amended and restated as follows:
"Pro Forma EBITDA" means, for any Person, for any period, the
EBITDA of such Person as determined on a consolidated basis in
accordance with GAAP consistently applied, after giving effect to the
following: (i) if, during or after such period, such Person or any of
its Subsidiaries shall have made any Asset Sale, Pro Forma EBITDA for
such Person and its Subsidiaries for such period shall be reduced by an
amount equal to the Pro Forma EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if
negative) directly attributable thereto for such period, (ii) if,
during or after such period, such Person or any of its Subsidiaries
completes an acquisition of any Person or business which immediately
after such acquisition is a Subsidiary of such Person, Pro Forma EBITDA
shall be computed so as to give pro forma effect to such Asset Sale or
the acquisition of such Person or business, as the case may be, as if
such acquisition had been completed as of the beginning of such period,
and (iii) if, during or after such period, such Person or any of its
Subsidiaries incurs any Indebtedness (including without limitation, any
Acquired Indebtedness) or issues any Disqualified Stock, Pro Forma
EBITDA shall be computed so as to give pro forma effect (including pro
forma application of the proceeds therefrom) thereto as if such
Indebtedness or Disqualified Stock had been incurred as of the
beginning of such period.
(f) The following definitions are hereby added to
Section 1.01 of the Indenture:
"Investment Grade" means BBB- or higher by Standard & Poor's
Ratings Group (or any successor rating agency) or Baa3 or higher by
Xxxxx'x Investors Service, Inc. (or any successor rating agency).
"Non-Qualified Debt" means Indebtedness (other than Vendor
Debt or Indebtedness incurred under a Credit Agreement) which (i) is
rated below Investment Grade or is unrated and (ii) was originally
issued in (A) a private placement transaction exempt from registration
under the Securities Act in which the initial purchaser(s) of such
Indebtedness at the time of such incurrence intend to immediately
resell such Indebtedness in transactions which are exempt from
registration under the Securities Act pursuant to Rule 144A, Regulation
S or other applicable exemption thereunder or (B) a registered offering
under the Securities Act.
"Permitted Indebtedness" means Indebtedness which may be
incurred by the Company, its Subsidiaries or its Joint Ventures
pursuant to clauses (i) through (x) of the second paragraph of Section
4.09 hereof.
"Secured Notes" means the Company's 12-1/4% Senior Secured
Notes due 2004.
"Secured Notes Indenture" means the indenture pursuant to
which the Secured Notes shall be issued.
"Secured Notes Security Documents" mean the Pledge Agreement
(as defined in the Secured Notes Indenture) and the Escrow and
Disbursement Agreement (as defined in the Secured Notes Indenture).
"Stock Collateral" means all of the Company's Capital Stock in
Hyperion of Florida, Inc., Hyperion of Kentucky, Inc., Hyperion of New
York, Inc, Hyperion of Tennessee, Inc. and Hyperion of Vermont, Inc.
pledged pursuant to the Secured Notes Security Documents.
Section 2. Offer To Purchase By Application Of Excess Proceeds.
Section 3.09 of the Indenture is hereby amended and restated as
follows:
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall
follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the
extent that a longer period is required by applicable law (the "Offer
Period"). No later than five Business days after the termination of the
Offer Period (the "Purchase Date"), the Company shall purchase the
principal amount of Senior Notes required to be purchased pursuant to
Section 4.10 hereof or, if Senior Notes tendered in response to the
Asset Sale Offer are less than the amount required to be purchased
pursuant to Section 4.10, all Senior Notes tendered in response to the
Asset Sale Offer. Payment for any Senior Notes so purchased shall be
made in the same manner as interest payments are made.
The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in
connection with any offer required to be made by the Company to
repurchase the Senior Notes as a result of an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 3.09, the Company shall comply
with the applicable securities laws or regulations and shall not be
deemed to have breached it obligations hereunder by virtue thereof.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and
unpaid interest shall be paid to the Person in whose name a Senior Note
is registered at the close of business on such record date, and no
additional interest shall be payable to Holders who tender Senior Notes
pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of
the Holders, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Senior Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms
of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Senior Note not tendered or accepted for
payment shall continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment,
any Senior Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Senior Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such
Senior Note purchased and may not elect to have only a portion of such
Senior Note purchased;
(f) that Holders electing to have a Senior Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Senior Note with the form entitled "Operation of Holder to Elect
Purchase" on the reverse of the Senior Note completed, or transfer by
book-entry transfer, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice at
least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Senior Note the Holder
delivered for purchases and a statement that such Holder is withdrawing
his election to have such Senior Note purchased;
(h) that, if the aggregate principal amount or Accreted Value,
as applicable, of Senior Notes surrendered by Holders exceeds the
amount required to be purchased pursuant to Section 4.10 hereof, the
Company shall select the Senior Notes to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the
Company so that only Senior Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Senior Notes were purchased only in
part shall be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered (or transferred by
book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Senior Notes or portions thereof tendered or required to
be purchased pursuant to the Asset Sale Offer, or, if less than the
amount so required to be purchased has been tendered, all Senior Notes
tendered, and shall deliver to the Trustee an Officers' Certificate
stating that such Senior Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of Section 4.10
hereof and this Section 3.09. The Company, the Depository or the Paying
Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Senior
Notes tendered by such Holder and accepted by the Company for purchase,
and the Company shall promptly issue a new Senior Note, and the
Trustee, upon written request from the Company shall authenticate and
mail or deliver such new Senior Note to such Holder, in a principal
amount equal to any unpurchased portion of the Senior Note surrendered.
Any Senior Note not so accepted shall be promptly mailed or delivered
by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
Section 3. Dividend and Other Payment Restrictions Affecting
Subsidiaries. Section 4.08 of the Indenture shall be amended and
restated as follows:
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary to:
(i) (a) pay any dividends or make any other distributions to the
Company or any of its Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to
the Company or any of its Subsidiaries;
(ii) make loans or advances to the Company or any of its Subsidiaries;
(iii)grant liens or grant security interests on its assets in favor of
the Holders of Senior Notes or guarantee the payment of the Senior
Notes; or
(iv) transfer any of its properties or assets to the Company or any of
its Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) Existing Indebtedness as in effect on the date of this
Indenture;
(b) any Credit Agreement creating or evidencing Indebtedness
permitted by clause (i) of Section 4.09 and any amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof;
(c) the Indenture and the Senior Notes;
(d) applicable law;
(e) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent
with past practices;
(f) purchase money obligations or Vendor Debt for property
acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iv) above on the
property so acquired;
(g) Indebtedness incurred pursuant to clause (viii) of Section
4.09; provided that such encumbrance or restriction only relates
to the Subsidiary or Permitted Joint Venture incurring such
Indebtedness;
(h) Refinancing Indebtedness, provided that such encumbrances or
restrictions are no more restrictive than those contained in the
documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(i) the Secured Notes Indenture, the Secured Notes Security
Documents and the Secured Notes.
Section 4. Incurrence of Indebtedness and Issuance of Preferred Stock.
Section 4.09 of the Indenture shall be amended and restated as follows:
The Company shall not, and shall not permit any of its
Subsidiaries or Joint Ventures to, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including, without
limitation, Acquired Indebtedness) and that the Company will not issue
any Disqualified Stock and will not permit any of its Subsidiaries or
Joint Ventures to issue any shares of Preferred Stock; provided that
the Company may incur Indebtedness (including Acquired Indebtedness) or
issue shares of Disqualified Stock if the Company's Consolidated
Leverage Ratio as of the last day of the Company's most recently ended
fiscal quarter for which internal financial statements are available
immediately preceding the date on which such Indebtedness is incurred,
or such Disqualified Stock is issued, as the case may be, would have
been (a) greater than zero and less than 5.5 to 1.0, if such incurrence
or issuance is on or prior to March 31, 1999, and (b) greater than zero
and less than 5.0 to 1.0, if such incurrence or issuance is after March
31, 1999, determined on a pro forma basis (including pro forma
application of the net proceeds therefrom) as if such Indebtedness had
been incurred, or such Disqualified Stock has been issued, as the case
may be, at the beginning of such fiscal quarter.
The foregoing provisions shall not apply to:
(i) the incurrence of Indebtedness by the Company, any Subsidiary (other
than a General Partner Subsidiary) or any Permitted Joint Venture
pursuant to Credit Agreement(s), provided that the aggregate principal
amount at maturity of such Credit Agreement(s) at any one time
outstanding under this clause (i) does not exceed $50.0 million for the
Company, all of its Subsidiaries (other than a General Partner
Subsidiary) and all of its Permitted Joint Ventures combined;
(ii) the incurrence of Vendor Debt by the Company, any Subsidiary (other
than a General Partner Subsidiary) or any Permitted Joint Venture,
provided that the aggregate principal amount at maturity of such Vendor
Debt does not exceed 80% of the purchase price or cost of the
construction, acquisition or improvement of the applicable
Telecommunications Related Assets;
(iii) Refinancing Indebtedness;
(iv) the incurrence of Indebtedness by the Company not to exceed, at any one
time outstanding, 2.0 times the net cash proceeds received by the
Company from the issuance and sale of its Capital Stock (other than
Disqualified Stock) to a Person other than a Subsidiary or a Joint
Venture of the Company, provided that such Indebtedness (y) does not
mature prior to the Stated Maturity of the Senior Notes and has a
Weighted Average Life to Maturity longer than the Senior Notes and (z)
is subordinated to the Senior Notes;
(v) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount at maturity (or accreted value, as
applicable) at any time outstanding not to exceed $10.0 million;
(vi) the incurrence by any Restricted Joint Venture of Non-Recourse Debt,
provided that if any Non-Recourse Debt of a Restricted Joint Venture
ceases to be Non-Recourse Debt, such event shall be deemed to
constitute an incurrence of Indebtedness as of the dates such
Indebtedness ceases to be Non-Recourse Debt;
(vii) the guarantee of Indebtedness by a General Partner Subsidiary in
connection with the incurrence of Indebtedness by the Restricted Joint
Venture of which such General Partner Subsidiary is a general partner;
(viii)the incurrence by the Company's Subsidiaries (other than General
Partner Subsidiaries) and Permitted Joint Ventures of Indebtedness
(including Acquired Indebtedness) so long as all of the net proceeds of
such incurrence are used by such Subsidiary or Permitted Joint Venture,
as the case may be, directly in connection with the design,
construction, development or acquisition of a Telecommunication Service
Market; provided that, as of the last day of the Company's most
recently ended fiscal quarter for which internal financial statements
are available immediately preceding the date on which such Indebtedness
is incurred, either: (a)(1) the aggregate principal amount at maturity
of all Indebtedness outstanding of such Subsidiary or such Permitted
Joint Venture does not exceed (x) the product of (I) 1.75 times (II)
the total amount of Invested Equity Capital of the Subsidiary or
Permitted Joint Venture incurring such Indebtedness minus (y) the
product of (I) the quotient obtained by dividing (A) the total amount
of Invested Equity Capital of the Subsidiary or Permitted Joint Venture
incurring such Indebtedness by (B) the aggregate amount of Invested
Equity Capital of all of the Company's Subsidiaries and Permitted Joint
Ventures times (II) the quotient obtained by dividing (A) the aggregate
principal amount of the then outstanding Secured Notes by (B) 1.75 and
(2) the aggregate principal amount at maturity of all Non-Qualified
Debt outstanding of such Subsidiary or such Permitted Joint Venture
does not exceed (x) the product of (I) 1.50 times (II) the total amount
of Invested Equity Capital of the Subsidiary or Permitted Joint Venture
incurring such Non-Qualified Debt minus (y) the product of (I) the
quotient obtained by dividing (A) the total amount of Invested Equity
Capital of the Subsidiary or Permitted Joint Venture incurring such
Non-Qualified Debt by (B) the aggregate amount of Invested Equity
Capital of all of the Company's Subsidiaries and Permitted Joint
Ventures times (II) the quotient obtained by dividing (A) the aggregate
principal amount of the then outstanding Secured Notes by (B) 1.50; or
(b) the Consolidated Leverage Ratio of such Subsidiary or such
Permitted Joint Venture would not have been greater than 3.5 to 1.0;
provided that for purposes of this clause (viii)(b) the product of (I)
the quotient obtained by dividing (A) the total amount of Invested
Equity Capital of the Subsidiary or Permitted Joint Venture incurring
such Indebtedness by (B) the aggregate amount of Invested Equity
Capital of all of the Company's Subsidiaries and Permitted Joint
Ventures times (II) the aggregate principal amount of the then
outstanding Secured Notes shall be added to clause (i) of the
definition of Consolidated Leverage Ratio solely for purposes of the
calculation thereof for purposes hereof, in each case, determined on a
pro forma basis (including pro forma application of the net proceeds
therefrom) as if such Indebtedness had been incurred at the beginning
of such fiscal quarter; provided, further, any Indebtedness incurred by
any Subsidiary of the Company or any Permitted Joint Venture (other
than Related Networks) pursuant to this clause (viii) shall be
non-recourse with respect to the Company or any other Subsidiary of the
Company or any other Joint Venture;
(ix) the incurrence by the Company of the Existing Indebtedness; and
(x) the incurrence of Indebtedness by the Company with respect to the
Secured Notes.
For purposes of this Section 4.09, in the event that the
Company proposes to incur Indebtedness pursuant to clause (iv) above,
the Company shall, simultaneously with the incurrence of such
Indebtedness, deliver to the Trustee a resolution of the Board of
Directors set forth in an Officers' Certificate stating that the sale
or sales of Capital Stock forming the basis for the incurrence of such
Indebtedness (i) constitutes a long term investment in the Company and
(ii) has not been made for the purpose of circumventing this Section
4.09. In the event that the Company rescinds, reverses or unwinds such
sale of Capital Stock or otherwise returns or refunds all or any
portion of the net cash proceeds of such sale of Capital Stock (whether
by dividend, distribution or otherwise) within 270 days of the date of
the incurrence of such Indebtedness, such Indebtedness will be deemed
to be incurred on the date of, and immediately after giving effect to,
such rescission, reversal, unwinding, return or refund.
For purposes of this Section 4.09, in the event that a
Restricted Joint Venture becomes a Permitted Joint Venture or otherwise
ceases to be a Restricted Joint Venture, all of the then outstanding
Indebtedness of such entity shall be deemed to have been incurred as of
the date that such Restricted Joint Venture becomes a Permitted Joint
Venture or otherwise ceases to be a Restricted Joint Venture.
Section 5. Asset Sales. Section 4.10 of the Indenture shall be amended
and restated as follows:
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, whether in a single transaction or a series of
related transactions occurring within any twelve-month period, make any
Asset Sale, unless
(i) the Company or the Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair
market value (as determined in good faith by the Board of Directors)
for the shares or assets sold or otherwise disposed of; and
(ii) at least 90% of such consideration consists of cash,
provided that
(A) an amount equal to the fair market value (as determined in good faith
by the Board of Directors) of:
(1) Telecommunications Related Assets received by the Company or any
Subsidiary from the transferee that will be used by the Company or such
Subsidiary in the operation of a Telecommunications Business;
(2) the Voting Stock of any Person engaged in a Telecommunications Business
received by the Company or any Subsidiary; provided that on the date
such Voting Stock is received, such Investment in Voting Stock
constitutes a Permitted Joint Venture Investment; or
(3) the publicly tradable Voting Stock of any person engaged in the
Telecommunications Business received by the Company or any Subsidiary
as consideration for a sale of an Equity Interest in any Restricted
Joint Venture, shall, for the purposes of this Section 4.10, be deemed
to be cash which was applied in accordance with the first sentence of
the penultimate paragraph of this Section 4.10; and
(B) in the event that any of Hyperion Telecommunications of Pennsylvania,
Inc., Hyperion Telecommunications of Tennessee, Inc. or Hyperion
Telecommunications of New York, Inc. sell their respective partnership
interests in the partnerships to which each is a partner to the
respective partnerships in the manner specified by the applicable
partnership agreement, (1) the principal amount at maturity of any
seller note issued to the Company or any of its Wholly Owned
Subsidiaries shall be deemed to be cash for purposes of this Section
4.10 and (2) the payments of principal pursuant to such seller note
shall be deemed to be Net Cash Proceeds (for purposes of the
penultimate paragraph of this Section 4.10) as and when such payments
are received.
For purposes of this Section 4.10, the first $1.0 million of
Net Cash Proceeds received from Asset Sales (other than Asset Sales of
Stock Collateral) in any fiscal year shall not be subject to the
restrictions contained in this section.
In determining the fair market value with respect to any Asset
Sale or series of related Asset Sales involving aggregate consideration
in excess of $10.0 million, the Board of Directors of the Company must
obtain an opinion as to the fairness to the Holders of Senior Notes of
such Asset Sales from a financial point of view issued by a nationally
recognized investment banking firm with total assets in excess of $1.0
billion; provided that no such opinion shall be required if such Asset
Sale is in accordance with the terms of any Local Partnership Agreement
to which the Company or any of its Subsidiaries is a party on the date
hereof.
The Company may apply the Net Cash Proceeds from any Asset
Sale to an investment in Telecommunications Related Assets in a
Telecommunications Service Market within 180 days after such Asset
Sale; provided that if the Company determines to make such investment
in a New Telecommunications Service Market, the Company shall be deemed
to have complied with the first clause of this sentence if, the Company
(y) within 180 days of such Asset Sale, delivers to the Trustee a
resolution adopted by a majority of the Board of Directors set forth in
an Officer's Certificate certifying that the Company intends to utilize
the Net Cash Proceeds of such Asset Sale to invest in a specific new
Telecommunications Service Market and (z) completes such investment
within 360 days of such Asset Sale. The Company shall be deemed to have
completed its investment for purposes of the preceding clause (z), so
long as the Company has (i) a business plan that sets forth the
Company's investment plans for the applicable Telecommunications
Service Market and (ii) issued all material purchase orders to the
appropriate parties that are necessary to complete such business plan.
Any Net Cash Proceeds from an Asset Sale that are not invested as
provided in the two preceding sentences shall constitute Excess
Proceeds. When the aggregate amount of Excess Proceeds exceeds $2.5
million, the Company shall commence to purchase (an "Asset Sale Offer")
the maximum principal amount of Senior Notes and Senior Secured Notes
(on a pro rata basis based upon the relative aggregate principal amount
of Senior Notes (or, prior to April 15, 2001, the aggregate Accreted
Value of Senior Notes) and Secured Notes then outstanding) that may be
purchased out of the Excess Proceeds, at an offer price in cash equal
to 100% of aggregate principal amount thereof, plus accrued and unpaid
interest to the date of repurchase (or, in the case of repurchases of
Senior Notes prior to April 15, 2001, at a purchase price equal to 100%
of the Accreted Value thereof as of the date of repurchase) in
accordance with the procedures set forth in this Indenture, provided,
that, in the event of an Asset Sale Offer as a result (in whole or in
part) of an Asset Sale of Stock Collateral, the Company shall, purchase
(i) first, all Secured Notes tendered pursuant to such Asset Sale Offer
in an aggregate principal amount equal to the portion of such Excess
Proceeds resulting from such Asset Sale of Stock Collateral and (ii)
second, all Secured Notes and Senior Notes on a pro rata basis (in the
same manner as described above) in an aggregate principal amount (or,
with respect to Senior Notes prior to April 15, 2001, an aggregate
Accreted Value) equal to the Excess Proceeds not used to purchase
Secured Notes pursuant to clause (i) of this proviso. To the extent
that the aggregate principal amount at maturity thereof, plus accrued
and unpaid interest to the date of repurchase (or, in the case of
repurchases of Senior Notes prior to April 15, 2001, the Accreted Value
thereof as of the date of repurchase) of the Senior Notes and the
Secured Notes tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such remaining Excess Proceeds for
any purpose not prohibited by this Indenture. If the aggregate
principal amount at maturity thereof, plus accrued and unpaid interest
to the date of repurchase (or, in the case of repurchases of Senior
Notes prior to April 15, 2001, the Accreted Value thereof as of the
date of repurchase) of Senior Notes and of Secured Notes surrendered by
their respective holders exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Notes and Secured Notes to be purchased
on a pro rata basis. Upon completion of such offers, the amount of
Excess Proceeds shall be reset at zero. Pending application of the Net
Cash Proceeds as set forth above from Asset Sales, all such Net Cash
Proceeds shall be placed in escrow for the benefit of the Holders of
Senior Notes and Secured Notes.
Notwithstanding the foregoing, the Company shall not, and
shall not permit any Subsidiary to, directly or indirectly, make any
Asset Sale of any Equity Interests of any Subsidiary (at least 80% of
the voting power of the Capital Stock of which is owned by the Company)
except pursuant to an Asset Sale of all of the Equity Interests of such
Subsidiary; provided that any sale of any Equity Interest of any such
Subsidiary to a Strategic Investor shall be deemed not be an Asset Sale
for purposes of this Section 4.10, so long as such sale of such Equity
Interests does not result in such Subsidiary ceasing to be a Subsidiary
of the Company.
Section 6. Confirmation of Indenture. Except as supplemented by this
Second Supplemental Indenture, the Indenture is hereby ratified and confirmed in
all respects and made applicable in all respects to the Senior Notes and the
holders thereof. The Indenture and this Second Supplemental Indenture shall be
read and construed as one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and attested, all as of the date and
first year above written.
ATTEST: HYPERION TELECOMMUNICATIONS, INC.
/s/ Xxxxxx Xxxxxxx, Xx. By: /s/ Xxxxxx X. Xxxxxxxx
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ATTEST: BANK OF MONTREAL TRUST COMPANY,
as Trustee
______________________________ By: /s/ Xxxxxxx Xxxxxxxx
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