CONFORMED COPY
DATED 20th October, 2000
By
VIATEL, INC.
RELATING TO
E170,600,000 LEASING FACILITY
FOR
VIATEL U.K. LIMITED
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CORPORATE GUARANTEE AND INDEMNITY
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[Graphic removed]
INDEX
CLAUSE PAGE
1. Interpretation.................................................... 1
2. Guarantee......................................................... 3
3. Payments.......................................................... 6
4. Taxes and Calculation of Payments................................. 7
5. Representations and Warranties.................................... 8
6. Undertakings...................................................... 11
7. Currency Indemnity................................................ 12
8. Evidence.......................................................... 13
9. Amendments and Waivers............................................ 13
10. Changes to the Parties............................................ 14
11. Set-off........................................................... 14
12. Severability...................................................... 14
13. Counterparts...................................................... 14
14. Notices........................................................... 15
15. Expenses.......................................................... 15
16. Further Assurance................................................. 16
17. Language.......................................................... 16
18. Jurisdiction...................................................... 16
19. Waiver of Immunity................................................ 17
20. confidentiality................................................... 18
21. Governing Law..................................................... 18
SCHEDULE OF COVENANTS...................................................... 19
SIGNATORIES................................................................ 50
THIS GUARANTEE AND INDEMNITY is dated 20th October, 2000,
BETWEEN:
(1) VIATEL, INC. a company incorporated under the laws of the State of
Delaware and with its principal place of business at 000 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000, XXX (the "COMPANY"); and
(2) DRESDNER KLEINWORT XXXXXX FINANCE LIMITED (Registered No. 212857) whose
registered office is at 00 Xxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (in its
capacity as security trustee for and on behalf of itself and each of
the Lessor Risk Parties, and together with its successors, permitted
assigns and permitted transferees, the "LESSOR").
BACKGROUND:
(A) This Lease Guarantee relates to a E170,600,000 lease purchase facility
to be made available to the Lessee by the Lessor on the terms of the
Master Lease Purchase Agreement.
(B) It is intended that this Lease Guarantee takes effect as a deed
notwithstanding that a party may execute it only under hand.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Lease Guarantee:
"AFFILIATE"
means a subsidiary or a holding company of a person or any other
subsidiary of that holding company for which purpose "SUBSIDIARY" and
"HOLDING COMPANY" have the meanings respectively given to them by
section 736 and 736A of the Companies Xxx 0000.
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open
for business in London and New York.
"EVENT OF DEFAULT"
means an Event of Default as that term is defined in the Master Lease
Purchase Agreement.
"GROUP"
means, in relation to any company, that company and any company which
is a holding company or subsidiary of such holding company, for which
purpose "SUBSIDIARY" and "HOLDING COMPANY" have the meanings
respectively given to them by section 736 and 736A of the Companies Xxx
0000.
"INCAPACITY"
means, in relation to a person, the death, bankruptcy, unsoundness of
mind, insolvency, liquidation, dissolution, winding-up, administration,
receivership, amalgamation, reconstruction or other incapacity of that
person whatsoever (and, in the case of a partnership, includes the
termination or change in the composition of the partnership).
"INDEMNIFIED PERSONS"
means the Lessor and each other Lessor Risk Party and their respective
agents, assigns, directors, employees, officers, secondees and servants
and "INDEMNIFIED PERSON" shall be construed accordingly.
"LESSEE"
means Viatel U.K. Limited.
"MASTER LEASE PURCHASE AGREEMENT"
means the master lease purchase agreement of even date herewith between
the Lessor and the Lessee.
"MATERIAL CONTRACTS" includes:
(i) any material licence issued to the Lessee, the Company or any
other member of the Company's Group and required for the
installation and utilisation of telecommunications networks in
the Relevant Countries in which Equipment is located; or
(ii) any other licence or agreement the termination or expiration
of which would cause a Material Adverse Change.
"MATERIAL SUBSIDIARY"
means any Subsidiary (as defined in the Schedule of Covenants to this
Lease Guarantee) which is not an Unrestricted Subsidiary (as defined in
the Schedule of Covenants to this Lease Guarantee).
"SECURED LIABILITIES"
means all present and future obligations and liabilities (whether for
the payment of money or otherwise, whether actual or contingent and
whether owed jointly or severally or in any other capacity whatsoever)
of the Lessee to the Lessor under the Transaction Documents together
with all legal and other costs, charges and expenses which the Lessor
may properly incur in enforcing or obtaining payment or performance of
any such monies, obligations or liabilities from the Lessee or
attempting so to do.
"SECURITY INTEREST"
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 or
any agreement to give any security interest).
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"SECURITY PERIOD"
means the period from the date of this Lease Guarantee until the
Secured Liabilities have been unconditionally and irrevocably
discharged and paid in full.
"VAT"
means value added tax as provided for, in the United Kingdom, in VATA
and in any other Relevant Country, equivalent legislation and
legislation (whether delegated or otherwise) supplemental thereto or in
any primary or subordinate legislation promulgated by the European
Union or any body or agency thereof and any tax similar or equivalent
to value added tax imposed by any country other than the United Kingdom
and any similar or turnover Tax replacing or introduced in addition to
any of the same.
"VATA"
means the Value Added Tax Xxx 0000.
1.2 Construction
(a) The principles of construction set out in Clause 1.2
(Construction) of the Master Lease Purchase Agreement shall
apply to this Lease Guarantee as if set out in full herein and
as if all references therein to "this Master Agreement" were
references to this Lease Guarantee.
(b) A term defined in the Master Lease Purchase Agreement has the
same meaning when used in this Lease Guarantee, unless it is
otherwise defined in this Lease Guarantee or the context
otherwise requires.
(c) A person who is not a party to this Lease Guarantee may not
enforce its terms under the Contracts (Rights of Third
Parties) Xxx 0000.
2. GUARANTEE
2.1 GUARANTEE
The Company irrevocably and unconditionally:
(a) as principal obligor guarantees to the Lessor prompt
performance by the Lessee of all of the Secured Liabilities;
(b) undertakes with the Lessor that whenever the Lessee does not
pay any amount when due under or in connection with any
Transaction Document, the Company shall forthwith on demand by
the Lessor pay that amount as if the Company instead of the
Lessee were expressed to be the principal obligor;
(c) as a separate and independent stipulation, agrees that if any
purported obligation or liability of the Lessee which would
have been the subject of this Lease Guarantee had it been
valid and enforceable is not or ceases to be valid or
enforceable against the Lessee on any ground whatsoever
whether or not known to the Lessor (including, without
limitation, any irregular exercise or absence of any corporate
power or lack of authority of, or breach of duty by, any
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person purporting to act on behalf of the Lessee or any legal
or other limitation, whether under the Limitation Acts or
otherwise or any disability or Incapacity or any change in the
constitution of the Lessee) the Company shall nevertheless be
liable to the Lessor in respect of that purported obligation
or liability as if the same were fully valid and enforceable
and the Company were the principal debtor in respect thereof
and shall be paid or caused to be paid by the Company upon
demand of the Lessor; and
(d) as principal obligor and as a separate and independent
obligation and liability, indemnifies the Lessor on demand
against any Losses suffered by any of the Indemnified Persons
from time to time in connection with or as a direct or
indirect result of:
(i) any of the warranties and representations from the
Lessee to the Lessor made in any of the Transaction
Documents being untrue or inaccurate in any respect
when made or deemed to be made;
(ii) any breach, default or failure by the Lessee duly and
punctually to perform and observe any of the Secured
Liabilities; and
(iii) any of the Transaction Documents in whole or in part
being or becoming void, voidable, invalid, illegal or
unenforceable as against the Lessee for any reason
whatsoever, whether or not known to the Lessor.
2.2 CONTINUING GUARANTEE
This Lease Guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Lessee under the
Transaction Documents, regardless of any intermediate payment or
discharge in whole or in part.
2.3 REINSTATEMENT
(a) Where any discharge (whether in respect of the obligations of
the Lessee or any security for those obligations or otherwise)
is made in whole or in part or any arrangement is made on the
faith of any payment, security or other disposition which is
avoided or must be restored on insolvency, liquidation or
otherwise without limitation, the liability of the Company
under this Clause 2 shall continue as if the discharge or
arrangement had not occurred.
(b) The Lessor may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance
or restoration.
2.4 WAIVER OF DEFENCES
The obligations of the Company under this Clause 2 will not be affected
by an act, omission, matter or thing which, but for this provision,
would reduce, release or prejudice any of its obligations under this
Clause 2 or prejudice or diminish those obligations in whole or in
part, including (whether or not known to it or the Lessor):
(a) any time or waiver granted to, or composition with, the Lessee
or any other person;
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(b) the release of the Lessee or any other person under the terms
of any composition or arrangement with any creditor of any
member of the Company's Group;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, the
Lessee or any other person or any non-presentation or
non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full
value of any security;
(d) any Incapacity or lack of powers, authority or legal
personality of or dissolution or change in the members or
status of the Lessee or any other person;
(e) any variation (however fundamental) or replacement of a
Transaction Document or any other document or security so that
references to that Transaction Document in this Clause 2 shall
include each variation or replacement;
(f) any unenforceability, illegality or invalidity of any
obligation of any person under any Transaction Document or any
other document or security, to the intent that the Company's
obligations under this Clause 2 shall remain in full force and
their guarantee be construed accordingly, as if there were no
unenforceability, illegality or invalidity; or
(g) any postponement, discharge, reduction, non-provability or
other similar circumstance affecting any obligation of the
Lessee under a Transaction Document resulting from any
insolvency, liquidation or dissolution proceedings or from any
law, regulation or order so that each such obligation shall
for the purposes of the Company's obligations under this
Clause 2 be construed as if there were no such circumstance.
2.5 IMMEDIATE RECOURSE
The Company waives any right it may have of first requiring the Lessor
(or any trustee or agent on its behalf) to proceed against or enforce
any other rights or security or claim payment from any person before
claiming from the Company under this Clause 2.
2.6 APPROPRIATIONS
Until all amounts which may be or become payable by the Lessee under or
in connection with the Transaction Documents have been irrevocably paid
in full, the Lessor or any other Lessor Risk Party (or any trustee or
agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by the Lessor or any other Lessor
Risk Party (or any trustee or agent on its behalf) in respect
of those amounts, or apply and enforce the same in such manner
and order as it sees fit (whether against those amounts or
otherwise) and the Company shall not be entitled to the
benefit of the same; and
(b) hold in an interest bearing suspense account any moneys
received from the Company, or on account of the Company's
liability, under this Clause 2.
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2.7 NON-COMPETITION
Until all amounts which may be or become payable by the Lessee under or
in connection with the Transaction Documents have been irrevocably paid
in full, the Company shall not, after a claim has been made or by
virtue of any payment or performance by them under this Clause 2:
(a) be subrogated to any rights, security or moneys held, received
or receivable by the Lessor or any other Lessor Risk Party (or
any trustee or agent on its behalf) or be entitled to any
right of contribution or indemnity in respect of any payment
made or moneys received on account of the Company's liability
under this Clause 2;
(b) claim, rank, prove or vote as a creditor of the Lessee or its
respective estate in competition with the Lessor (or any
trustee or agent on its behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of the Lessee, or
exercise any right of set-off as against the Lessee,
unless the Lessor otherwise directs. The Company shall hold in trust
for and forthwith pay or transfer to the Lessor any payment or
distribution or benefit of security received by it contrary to this
Clause 2.7 or as directed by the Lessor.
2.8 ADDITIONAL SECURITY
This Lease Guarantee is in addition to and is not in any way prejudiced
by any other security now or subsequently held by the Lessor.
3. PAYMENTS
3.1 PLACE
All payments by the Company under this Lease Guarantee shall be made to
the Lessor in the currency and to its account at such office or bank as
would be applicable to the corresponding payments by the Lessee in the
relevant currency under the Master Lease Purchase Agreement.
3.2 FUNDS
Payments under this Lease Guarantee to the Lessor shall be made for
value on the due date at such times and in such funds as the Lessor may
specify to the Company as being customary at the time for the
settlement of transactions in the relevant currency in the place for
payment.
3.3 CURRENCY
(a) Any other amount payable under this Lease Guarantee is, except as
otherwise provided in this Lease Guarantee, payable in the currency in
which the relevant Loss was incurred, or the relevant claim is made, by
the Lessor.
3.4 SET-OFF AND COUNTERCLAIM
All payments made by a Company under this Lease Guarantee shall be made
without set-off or counterclaim.
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3.5 NON-BUSINESS DAYS
If a payment under this Lease Guarantee is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
succeeding Business Day.
3.6 DEFAULT INTEREST
In addition to its liability under Clause 2.1 above, the Company shall
pay or cause to be paid to the Lessor, on demand, to the extent not
paid by the Lessee, interest at the rate specified in Clause 6.3 (Late
Payments) of the Master Lease Purchase Agreement (both before and after
judgment) accruing on a day to day basis, and on the basis of a 360 day
year (or a 365 day year when the amount in respect of which default
interest is payable under this Clause 3.6 is denominated in a currency
where it is customary for banks or financial institutions to calculate
interest on such a basis), on each amount (or any part thereof) for the
time being due to the Lessor under this Lease Guarantee and unpaid from
the date of demand on the Company for payment until payment is made
(but excluding the day on which value for any payment made is received
by the Lessor).
3.7 SUSPENSE ACCOUNTS
Any money received in connection with this Lease Guarantee (whether
before or after any Incapacity of the Lessee or the Company) may be
placed to the credit of an interest bearing suspense account with a
view to preserving the rights of the Lessor to prove for the whole of
its claims against the Lessee or any other person liable or may be
applied in or towards satisfaction of such of the Secured Liabilities
as the Lessor may from time to time conclusively determine in its
absolute discretion.
4. TAXES AND CALCULATION OF PAYMENTS
4.1 GROSS-UP
All payments by the Company under this Lease Guarantee shall be made
without any deduction and free and clear of and without deduction or
withholding for or on account of any Taxes, except to the extent that
the Company is required by law to make payment subject to any Taxes. If
any Tax or amounts in respect of Tax must be deducted, or any other
deductions must be made, from any amounts payable or paid by the
Company, under the Transaction Documents, the Company shall pay such
additional amounts as may be necessary to ensure (taking into account
any deduction or withholding on such additional amounts) that the
Lessor receives a net amount equal to the full amount which it would
have received had payment not been made subject to Tax or any other
deduction.
4.2 TAX RECEIPTS
All Taxes required by law to be deducted or withheld by the Company
from any amounts paid or payable under this Lease Guarantee shall be
paid by the Company when due and the Company shall, within 30 days of
the payment being made, deliver to the Lessor evidence satisfactory to
the Lessor (including all relevant tax receipts) that the payment has
(to the extent required by law) been duly remitted to the appropriate
authority.
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4.3 VALUE ADDED TAX
Save where expressly provided to the contrary, all payments made under
this Lease Guarantee are calculated without regard to VAT. If any such
payment constitutes the whole or any part of the consideration for a
taxable or deemed taxable supply, the amount of that payment shall be
increased by an amount equal to the amount of VAT which is chargeable
in respect of the taxable supply in question subject to the production
by the person making the supply to the recipient of such supply of a
valid VAT invoice in respect thereof.
5. REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES
The Company makes the representations and warranties set out in this
Clause 5 to the Lessor.
5.2 STATUS
(a) It is a corporation, duly incorporated and validly existing under the
laws of the State of Delaware; and
(b) it has the power to own its assets and carry on its business as it is
being conducted.
5.3 POWERS AND AUTHORITY
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, this
Lease Guarantee and the transactions contemplated by this Lease
Guarantee.
5.4 LEGAL VALIDITY
This Lease Guarantee constitutes its legal, valid and binding
obligation enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or equitable principles relating
to or limiting creditors' rights generally.
5.5 AUTHORISATIONS
All authorisations (i) required in connection with the entry into,
performance, validity and enforceability of this Lease Guarantee and
the transactions contemplated by this Lease Guarantee or (ii) necessary
to ensure the validity or enforceability of this Lease Guarantee and
such transactions have been obtained or effected (as appropriate) and
are in full force and effect and will remain in full force and effect
until the Secured Liabilities are discharged in full.
5.6 FINANCIAL STATEMENTS
To the extent consistent with Clause 6.2 (Financial Information), its
audited consolidated financial statements most recently delivered to
the Lessor:
(a) have been prepared by a reputable accounting firm in
accordance with US GAAP, consistently applied; and
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(b) fairly represent the financial condition of the Company's
Group as at the date to which they were drawn up,
and, except for matters disclosed in the Second Quarter 2000 10-Q,
there has been no Material Adverse Change in the financial condition of
the Company's Group taken as a whole since the date to which those
accounts were drawn up.
5.7 PARI PASSU RANKING
The obligations of the Company under this Lease Guarantee rank and will
rank at least pari passu with all its other unsecured obligations,
except those which are mandatorily preferred by law.
5.8 STAMP DUTIES
No stamp or registration duty or similar taxes or charges are payable
in the State of New York or the State of Delaware in respect of this
Lease Guarantee.
5.9 IMMUNITY
(a) The execution of this Lease Guarantee by the Company
constitutes, and its exercise of its rights and performance of
its obligations under this Lease Guarantee will constitute,
private and commercial acts done and performed for private and
commercial purposes; and
(b) The Company will not be entitled to claim immunity from suit,
execution, attachment or other legal process in any
proceedings taken in the State of New York and/or England in
relation to any Transaction Documents to which it is a party.
5.10 NO ADVERSE CONSEQUENCES
Subject to the reservations (if any) contained in the legal opinion
issued pursuant to paragraphs 6(ii) of Part I of Schedule 3 to the
Master Lease Purchase Agreement:
(a) it is not necessary under the laws of the States of New York
or Delaware:
(i) in order to enable the Lessor to enforce its rights
under this Lease Guarantee; or
(ii) by reason of the execution of this Lease Guarantee or
any other Transaction Document or the performance by
it of its obligations under this Lease Guarantee or
any other Transaction Documents,
that the Lessor should be licensed, qualified or otherwise
entitled to carry on business in the States of New York or
Delaware; and
(b) the Lessor is not and will not be deemed to be resident,
domiciled or carrying on business in the States of New York or
Delaware by reason only of the execution, performance and/or
enforcement of this Lease Guarantee or any other Transaction
Document.
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5.11 JURISDICTION/GOVERNING LAW
Subject to the reservations contained in the legal opinion issued
pursuant to paragraphs 6(ii) of Part I of Schedule 3 to the Master
Lease Purchase Agreement:
(a) the:
(i) irrevocable submission under Clause 18 (Jurisdiction)
to the jurisdiction of the courts of England;
(ii) agreement that this Lease Guarantee is governed by
English law; and
(iii) agreement not to claim any immunity to which it or
its assets may be entitled,
of the Company are legal, valid and binding under the laws of
the States of New York and Delaware; and
(b) any judgment obtained in England will be recognised and be
enforceable by the courts of the States of New York and
Delaware.
5.12 NON-CONFLICT
The entry into and performance by it of, and the transactions
contemplated by, this Lease Guarantee does not and will not:
(a) conflict with any applicable law or regulation or judicial or
official order; or
(b) conflict with the constitutional documents of the Company; or
(c) conflict with any document which is binding upon the Company
or upon any asset of the Company.
5.13 NO DEFAULT
No other event is outstanding which constitutes (or with the giving of
notice, lapse of time, determination of materiality or the fulfilment
of any other applicable condition or any combination of the foregoing,
would reasonably be expected to constitute) a default under any
document which is binding on the Company or any asset of the Company to
an extent or in a manner which might effect a Material Adverse Change.
5.14 LITIGATION
Except as otherwise disclosed in the Company's periodic filings with
the U.S. Securities and Exchange Commission, no litigation, arbitration
or administrative proceedings are current or, to its knowledge, pending
or threatened against any member of the Viatel, Inc. Group which, if
adversely determined, would effect a Material Adverse Change.
5.15 SHAREHOLDINGS
The Lessee is a wholly owned direct or indirect subsidiary of the
Company.
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5.16 MATERIAL CONTRACTS
Each of the Material Contracts to which the Company is a party
constitutes its legal, valid and binding obligation and is enforceable
by the Company in accordance with its terms (except as enforcement may
be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally or equitable principles relating to or
limiting creditors' rights generally) and all material authorisations,
approvals, consents, licences, exemptions, filings, recordings and
other matters necessary in connection with the entry into, performance,
validity and enforceability of the Material Contracts have been
obtained and are in full force and effect.
5.17 ACCURACY OF INFORMATION
To the best of its knowledge and belief all written information
supplied by the Company to the Lessor was true as at the date that it
was supplied and the Company has not failed to disclose to the Lessor
any information which, if disclosed, might adversely affect the
decision of a person considering whether to enter into this Lease
Guarantee and/or the Master Lease Purchase Agreement in the capacity of
the Lessor.
5.18 NOTE INDENTURES
The covenants contained in the Schedule of Covenants to this Lease
Guarantee are not materially less onerous than the covenants contained
in the Indenture (as that term is defined in the Schedule of Covenants)
which Indenture contains, on an overall basis, the most onerous
covenants imposed on the Company in any Indenture entered into by the
Company.
5.19 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out above in this Clause 5 shall
survive the execution of this Lease Guarantee and shall be deemed to be
repeated on (i) the date of this Lease Guarantee and (ii) other than
the representations and warranties set out in Clause 5.6, each Initial
Term Start Date.
6. UNDERTAKINGS
6.1 DURATION
The undertakings in this Clause 6 of, and in the Schedule of Covenants
to, this Lease Guarantee remain in force from the date of this Lease
Guarantee for so long as any amount is or may be outstanding under the
Transaction Documents.
6.2 FINANCIAL INFORMATION
The Company will supply to the Lessor:
(i) as soon as the same are available (and in any event within 120
days of the end of each of its financial years) its audited
consolidated financial statements for that financial year; and
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(ii) as soon as the same are available (and in any event within 60
days of the end of each of its financial quarters) its
unaudited consolidated financial statements for that financial
quarter.
6.3 INFORMATION - MISCELLANEOUS
The Company will supply to the Lessor:
(a) all documents that are not filed at the Securities and
Exchange Commission in the United States despatched by the
Company to its shareholders or public debtholders (or any
class of them) or by it to its creditors generally (or any
class of them) at the same time as they are despatched;
(b) as soon as reasonably practicable after becoming aware
thereof, details of any litigation, arbitration or
administrative proceedings which are current, threatened or
pending which if adversely determined, would effect a Material
Adverse Change; and
(c) promptly such further information in the possession or control
of the Company regarding the financial condition and
operations of the Company as the Lessor may reasonably
request.
6.4 NOTIFICATION OF POTENTIAL EVENT OF DEFAULT
As soon as practicable after becoming aware thereof, the Company shall
notify the Lessor of any Event of Default or Potential Event of Default
together with details of any action being taken in connection
therewith.
6.5 AUTHORISATIONS
The Company will promptly:
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Lessor of,
any authorisation required under any applicable law or regulation to
enable it to perform its obligations under, or for the validity or
enforceability of, this Lease Guarantee.
6.6 PARI PASSU RANKING
The Company will procure that its obligations under this Lease
Guarantee do and will rank at least pari passu with all its other
present and future unsecured obligations, except for obligations
mandatorily preferred by law.
6.7 MATERIAL CONTRACTS
The Company undertakes that it will and will procure that the Lessee,
each Permitted Sub-Lessee and each Material Subsidiary will:
(a) comply in all material respects with all its obligations under
the Material Contracts to which it is a party; and
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(b) maintain and in good faith enforce its rights under the
Material Contracts to the extent necessary to ensure its
compliance with its obligations under the Transaction
Documents.
6.8 COVENANTS/UNDERTAKINGS IN THE SCHEDULE OF COVENANTS
The Company undertakes that it will comply with each of the covenants
and undertakings set out in the Schedule of Covenants to this Lease
Guarantee.
7. CURRENCY INDEMNITY
(a) If the Lessor receives an amount in respect of the Company's
liability under this Lease Guarantee or if that liability is
converted into a claim, proof, judgment or order in a currency
other than the currency (the "CONTRACTUAL CURRENCY") in which
the amount is expressed to be payable under this Lease
Guarantee:
(i) the Company shall indemnify the Lessor as an
independent obligation against any Losses arising out
of or as a result of the conversion;
(ii) if the amount received by the Lessor, when converted
into the contractual currency at a market rate in the
usual course of its business is less than the amount
owed in the contractual currency, the Company shall
forthwith on demand pay to the Lessor an amount in
the contractual currency equal to the deficit; and
(iii) the Company shall forthwith on demand pay to the
Lessor concerned any exchange costs and taxes payable
in connection with any such conversion.
(b) The Company waives any right it may have in any jurisdiction
to pay any amount under this Lease Guarantee in a currency
other than that in which it is expressed to be payable.
8. EVIDENCE
8.1 ACCOUNTS
Accounts maintained by the Lessor in connection with this Lease
Guarantee are prima facie evidence of the matters to which they relate.
8.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by the Lessor of a rate or amount
under this Lease Guarantee is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
9. AMENDMENTS AND WAIVERS
9.1 PROCEDURE
Any term of this Lease Guarantee may be amended or waived with the
agreement of the Company and the Lessor.
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9.2 WAIVERS AND REMEDIES CUMULATIVE
The rights of the Lessor under this Lease Guarantee:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
10. CHANGES TO THE PARTIES
10.1 TRANSFERS BY THE COMPANY
Except as provided by paragraph 2.16 of the Schedule of Covenants, the
Company may not assign, transfer, novate or dispose of any of, or any
interest in, their rights and/or obligations under this Lease
Guarantee.
10.2 TRANSFERS BY LESSOR
(a) The Company consents to any assignment, transfer, novation or
Lease Participation Arrangement made under and in accordance
with the terms of the Master Lease Purchase Agreement.
(b) Any reference in this Lease Guarantee to a Lessor includes the
Lessor's permitted successors, assigns and transferees.
(c) The Company acknowledges the provisions of Clause 22.3
(Dealings by the Lessor) of the Master Lease Purchase
Agreement and agrees, that its consent will not be
unreasonably withheld, conditioned or delayed in connection
with any assignment or transfer proposed by the Lessor in
accordance with Clause 22.3 (Dealings by the Lessor) of the
Master Lease Purchase Agreement.
11. SET-OFF
The Lessor may set off any matured obligation owed by the Company under
this Lease Guarantee (to the extent beneficially owned by the Lessor)
against any obligation (whether or not matured) owed by the Lessor to
the Company, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the Lessor may convert either obligation at a market rate
of exchange in its usual course of business for the purpose of the
set-off. If either obligation is unliquidated or unascertained, the
Lessor may set off in an amount estimated by it in good faith to be the
amount of that obligation.
12. SEVERABILITY
If a provision of this Lease Guarantee is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:
14
(a) the validity or enforceability in that jurisdiction of any
other provision of this Lease Guarantee; or
(b) the validity or enforceability in other jurisdictions of that
or any other provision of this Lease Guarantee.
13. COUNTERPARTS
This Lease Guarantee may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were
on a single copy of this Lease Guarantee.
14. NOTICES
14.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Lease Guarantee shall be given in writing and, unless otherwise stated,
may be made by letter or facsimile. Any such notice will be deemed to
be given as follows:
(a) if by letter, when delivered personally or on actual receipt;
and
(b) if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
14.2 ADDRESSES FOR NOTICES
(a) The address and facsimile number of the Company are:
000 Xxxxx Xxxxxx
Xxx Xxxx
Xxx Xxxx 00000
Facsimile: 00 1 212 350 9250
Attention: General Counsel
or such other address or facsimile number as the Company may notify to
the Lessor by not less than five Business Days' notice.
(b) The address and facsimile number of the Lessor are:
XX Xxx 00000
Xxxxxxxxx Xxxxx
0 Xxxx Xxxx
Xxxxxx XX0X 0XX
Facsimile: x00 (0) 00 0000 0000
Attention: Xxxxx Xxxxxxx, Leasing Team
15
or such other address or facsimile number as the Lessor may notify to
the Company by not less than five Business Days' notice.
15. EXPENSES
The Company shall indemnify the Lessor, on a full indemnity basis, from
and against, and on demand reimburse the Lessor for, all costs, charges
and expenses properly incurred by the Lessor in exercising or enforcing
or endeavouring to exercise or enforce, any right or remedy conferred
upon the Lessor hereunder or by law including in connection with any
action brought by the Lessor to recover any payment due hereunder, or
relating to any breach of any covenant or obligation in this Lease
Guarantee, whether or not any such action progresses to judgment.
16. FURTHER ASSURANCE
The Company agrees from time to time, at its sole expense, to do and
perform such other and further acts and execute and deliver any and all
such other instruments as may be required by law or reasonably
requested by the Lessor to establish, maintain and protect the rights
and remedies of the Lessor and to carry out and effect the intent and
purpose of this Lease Guarantee.
17. LANGUAGE
(a) Any notice given under or in connection with this Lease
Guarantee shall be in English.
(b) All other documents provided under or in connection with this
Lease Guarantee shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English
translation shall prevail unless the document is a
statutory or other official document.
18. JURISDICTION
18.1 SUBMISSION
For the benefit of the Lessor, the Company agrees that the courts of
England have jurisdiction to settle any disputes in connection with
this Lease Guarantee and accordingly submits to the jurisdiction of the
English courts.
Without prejudice to the immediately preceding paragraph and for the
benefit of the Lessor, the Company agrees that any New York State court
or Federal court sitting in New York City has jurisdiction to settle
any disputes in connection with this Lease Guarantee and accordingly
submits to the jurisdiction of those courts.
18.2 SERVICE OF PROCESS
Without prejudice to any other mode of service, the Company:
(a) irrevocably appoints as its agent for service of process
Viatel UK Limited in relation to any proceedings before the
English courts in connection with this Lease Guarantee;
16
(b) agrees that failure by a process agent to notify it of the
process will not invalidate the proceedings concerned;
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 14 (Notices);
and
(d) agrees that if the appointment of any person mentioned in
paragraph (a) above ceases to be effective, the Company shall
immediately appoint a further person in England to accept
service of process on its behalf in England and, failing such
appointment within 15 days, the Lessor is entitled to appoint
such a person by notice to the Company.
18.3 FORUM CONVENIENCE AND ENFORCEMENT ABROAD
The Company:
(a) waives objection to the English, New York State and United
States' courts on grounds of inconvenient forum or otherwise
as regards proceedings in connection with this Lease
Guarantee; and
(b) agrees that a judgment or order of an English, New York State
or United States' court in connection with this Lease
Guarantee is conclusive and binding on it and may be enforced
against it in the courts of any other jurisdiction.
18.4 NON-EXCLUSIVITY
Nothing in this Clause 18 limits the right of the Lessor to bring
proceedings against the Company in connection with this Lease
Guarantee:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
18.5 WAIVER OF JURY TRIAL
EACH PARTY TO THIS LEASE GUARANTEE WAIVES ANY RIGHTS IT MAY HAVE TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED ON OR ARISING FROM
THIS LEASE GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. In the
event of litigation, this Lease Guarantee may be filed as a written
consent to a waiver of jury trial.
19. WAIVER OF IMMUNITY
The Company irrevocably and unconditionally:
(a) agrees that if the Lessor brings proceedings against it or its
assets in relation to this Lease Guarantee, no immunity from
those proceedings (including, without limitation, suit,
attachment prior to judgment, other attachment, the obtaining
of judgment, execution or other enforcement) will be claimed
by or on behalf of itself or with respect to its assets;
17
(b) waives any such right of immunity which it or its assets now
has or may subsequently acquire; and
(c) consents generally in respect of any such proceedings to the
giving of any relief or the issue of any process in connection
with those proceedings, including, without limitation, the
making, enforcement or execution against any assets whatsoever
(irrespective of its use or intended use but subject to any
third party rights therein) of any order or judgment which may
be made or given in those proceedings.
20. CONFIDENTIALITY
This Lease Guarantee and the other Transaction Documents are
confidential information of the Company, the Lessee and the Lessor.
Neither the Company nor the Lessor (or any member of the Lessor's
Group) shall disclose to any person any information relating to this
Lease Guarantee and the other Transaction Documents other than:
(a) to its respective employees or agents; or
(b) to any prospective or actual Lessor Risk Parties having a need
to know for the purposes of determining whether to enter into
negotiations or negotiating and documenting this transaction;
or
(c) if required to do so by any Applicable Law,
without, in the case of the Company, the prior written consent of the
Lessor (who shall not unreasonably withhold or delay its consent,
provided that, without prejudice to any other right to withhold its
consent, the Lessor shall be entitled to withhold its consent unless
and until it has obtained the prior written consent of Nortel to such
disclosure) and, in the case of the Lessor, the prior written consent
of the Company (which the Company shall not unreasonably withhold or
delay). If the Company or the Lessor is required at any time to
disclose any such information contained in this Lease Guarantee or any
of the other Transaction Documents, the Company or the Lessor, as the
case may be, shall promptly notify the Lessor or, as the case may be,
the Company and at the request and expense of the Lessor or, as the
case may be, the Company will request confidential treatment of the
information identified by the Lessor or, as the case may be, the
Company as confidential and the Lessor or, as the case may be, the
Company shall agree (such agreement not to be unreasonably withheld or
delayed, provided always that, without prejudice to any other right to
withhold its agreement, the Lessor shall be entitled to withhold its
agreement unless and until it has obtained the prior written consent of
Nortel) the form of disclosure (unless there is a statutory form or
requirement).
For the avoidance of doubt, this Clause 20 shall not apply in respect
of information which is in or which comes into the public domain other
than as a result of a breach of this Clause 20.
21. GOVERNING LAW
This Lease Guarantee is governed by English law.
This Lease Guarantee has been entered into as a deed on the date stated at the
beginning of this Lease Guarantee.
18
SCHEDULE OF COVENANTS
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS
In this Schedule 1, the following words, terms and phrases shall have
the following meanings:
"ACQUIRED INDEBTEDNESS"
means Indebtedness of a Person existing at the time such Person becomes
a Material Subsidiary or assumed in connection with an Asset
Acquisition by the Company or a Material Subsidiary and not Incurred in
connection with, or in anticipation of, such Person becoming a Material
Subsidiary or such Asset Acquisition.
"ADJUSTED CONSOLIDATED NET INCOME"
means for any period, the aggregate net income (or loss) of the Company
and its Material Subsidiaries for such period determined in conformity
with generally accepted accounting principles;
PROVIDED that the following items shall be excluded in computing
Adjusted Consolidated Net Income (without duplication):
(i) the net income (or loss) of any Person that is not a Material
Subsidiary, except (x) with respect to net income, to the
extent of the amount of dividends or other distributions
actually paid to the Company or any of its Material
Subsidiaries by such Person during such period and (y) with
respect to net losses, to the extent of the amount of
Investments made by the Company or any Material Subsidiary in
such Person during such period;
(ii) solely for the purposes of calculating the amount of
Restricted Payments that may be made pursuant to Paragraph 2.2
(iv)(C) hereof (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
Material Subsidiary or is merged into or consolidated with the
Company or any of its Material Subsidiaries or all or
substantially all of the property and assets of such Person
are acquired by the Company or any of its Material
Subsidiaries; (iii) the net income of any Material Subsidiary
to the extent that the declaration or payment of dividends or
similar distributions by such Material 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 Material Subsidiary; (iv) any gains or
losses (on an after-tax basis) attributable to Asset Sales and
sales of capacity or dark fibres; (v) except for purposes of
calculating the amount of Restricted Payments that may be made
pursuant to Paragraph 2.2 (iv)(C) hereof, any amount paid or
accrued as dividends on Preferred Stock of the Company or any
Material Subsidiary owned by Persons other than the Company
and any of its Material Subsidiaries; (vi) all extraordinary
gains and extraordinary losses; and (vii) any compensation
expense paid or payable solely with Capital Stock (other than
Disqualified Stock) of the Company or any options, warrants or
other rights to acquire Capital Stock (other than Disqualified
Stock) of the Company.
19
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS"
means the total amount of assets of the Company and its Material
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 conformity with GAAP), after deducting therefrom (i)
all current liabilities of the Company and its Material Subsidiaries
(excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other
like intangibles, all as set forth on the most recent quarterly or
annual consolidated balance sheet of the Company and its Material
Subsidiaries supplied to the Lessor in accordance with Clause 6.2 of
this Lease Guarantee.
"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.
"ASSET ACQUISITION"
means:
(i) an investment by the Company or any of its Material
Subsidiaries in any other Person pursuant to which such Person
shall become a Material Subsidiary or shall be merged into or
consolidated with the Company or any of its Material
Subsidiaries;
PROVIDED that such Person's primary business is related, ancillary or
complementary to the businesses of the Company or any of its Material
Subsidiaries on the date of such investment; or
(ii) an acquisition by the Company or any of its Material
Subsidiaries of the property and assets of any Person other
than the Company or any of its Material Subsidiaries that
constitute substantially all of a division or line of business
of such Person; PROVIDED that the property and assets acquired
are related, ancillary or complementary to the businesses of
the Company or any of its Material Subsidiaries on the date of
such acquisition.
"ASSET DISPOSITION"
means the sale or other disposition by the Company or any of its
Material Subsidiaries (other than to the Company or another Material
Subsidiary) of (i) all or substantially all of the Capital Stock of any
Material Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Material Subsidiaries.
"ASSET SALE"
means any sale, transfer or other disposition (including by way of
merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its
20
Material Subsidiaries to any Person other than the Company or any of
its Material Subsidiaries of:
(i) all or any of the Capital Stock of any Material Subsidiary;
(ii) all or substantially all of the property and assets of a
division or line of business of the Company or any of its
Material Subsidiaries; or
(iii) any other property and assets (other than the Capital Stock or
other Investment in an Unrestricted Subsidiary) of the Company
or any of its Material Subsidiaries outside the ordinary
course of business of the Company or such Material Subsidiary
and, in each case, that is not governed by Paragraph 2.16
(When Company may merge etc.) of this Schedule;
PROVIDED that "Asset Sale" shall not include:
(a) sales or other dispositions of inventory, receivables and
other current assets;
(b) sales, transfers or other dispositions of assets constituting
a Restricted Payment permitted to be made under Paragraph 2.2
hereof;
(c) sales, transfers or other dispositions of assets with a fair
market value (as certified in an Officers' Certificate) not in
excess of $1 million in any transaction or series of related
transactions;
(d) sales or other dispositions of assets for consideration at
least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received
would constitute property or assets of the kind described in
Paragraph 2.8 (b)(i)(B) hereof;
(e) any liquidation of Temporary Cash Investments; or
(f) a transfer, directly or indirectly, of receivables or other
payment rights arising from a transfer of indefeasible rights
of use or dark fibre, which transfer of receivables or rights
is to a special purpose entity created for the purpose of
issuing securities to be paid or redeemed from, or beneficial
interests in, the cash or revenues generated from the assets
transferred; PROVIDED that the consideration received by the
Company is at least equal to the fair market value of the
asset transferred and the proceeds are used by the Company (A)
to repay unsubordinated Indebtedness of the Company owed to a
Person other than the Company or a Material Subsidiary, (B) to
invest in the manner described in Paragraph 2.8 (b)(i)(B)
hereof or (C) for working capital purposes or (g) other
transfers of capacity or dark fibre.
"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.
21
"BOARD OF DIRECTORS"
means the Board of Directors of the Company as required by the context
or any committee of such Board of Directors duly authorized to act
under the Indenture.
"BOARD RESOLUTION"
means a copy of a resolution, certified by the Secretary or Assistant
Secretary of the Company as required by the context to have been duly
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Lessor.
"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 London are
authorised or required 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 outstanding on 19th
March, 1999 or issued thereafter, including, without limitation, all
Common Stock and Preferred Stock.
"CAPITALISED 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.
"CAPITALISED LEASE OBLIGATIONS"
means the discounted present value of the rental obligations under a
Capitalized Lease.
"CHANGE OF CONTROL"
means such time as (i) a "person" or a "group" (within the meaning of
Sections 13(d) and 14(d) (2) of the Exchange Act) becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
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 19th
March, 1999 constitute the Board of Directors (together with any new
directors whose election by the Board of Directors or whose nomination
to the Board of Directors 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 19th March, 1999 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.
"COMMISSION"
means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act or, if at any time after
the execution of this instrument such Commission is not existing and
22
performing the duties now assigned to it under the TIA, then the body
performing such duties at such time.
"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 the Indenture, including, without
limitation, all series and classes of such common stock.
"COMPANY"
means Viatel, Inc.
"CONSOLIDATED EBITDA"
means, for any period, Adjusted Consolidated Net Income for such period
plus, to the extent such amount was deducted in calculating such
Adjusted Consolidated Net Income, (i) Consolidated Interest Expense,
(ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash 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 non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its
Material Subsidiaries in conformity with GAAP; PROVIDED that, if any
Material Subsidiary is not a Wholly Owned Material 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 Material
Subsidiary multiplied by (B) the percentage ownership interest in the
income of such Material Subsidiary not owned on the last day of such
period by the Company or any of its Material Subsidiaries.
"CONSOLIDATED INTEREST EXPENSE"
means, for any period, the aggregate amount of interest in respect of
Indebtedness (including, without limitation, 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 interest in respect of Indebtedness that is
Guaranteed or secured by the Company or any of its Material
Subsidiaries, and all but the principal component of rentals in respect
of Capitalised Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Material Subsidiaries during
such periods).
"CONSOLIDATED LEVERAGE RATIO"
means, on any Transaction Date, the ratio of (i) the aggregate amount
of Indebtedness of the Company and its Material Subsidiaries on a
consolidated basis outstanding on such Transaction Date to (ii) four
times Consolidated EBITDA for the then most recent fiscal quarter for
which financial statements of the Company have been presented to the
Lessor in accordance with Clause 6.2 of this Lease Guarantee; PROVIDED
that, in making the foregoing calculation, (A) PRO FORMA effect shall
be given to the Incurrence or repayment of any Indebtedness to be
Incurred or repaid on the Transaction Date; (B) PRO FORMA effect shall
be given to Asset Dispositions and Asset Acquisitions (including giving
23
PRO FORMA effect to the application of proceeds of any Asset
Disposition) that occur from the beginning of the then most recent four
fiscal quarters through the Transaction Date (the "REFERENCE PERIOD"),
as if they had occurred and such proceeds had been applied on the first
day of such Reference Period; and (C) PRO FORMA effect shall be given
to asset dispositions and asset acquisitions (including giving PRO
FORMA effect to the application of proceeds of any asset disposition)
that have been made by any Person that has become a Material Subsidiary
or has been merged with or into the Company or any Material Subsidiary
during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when
such Person was a Material Subsidiary as if such asset dispositions or
asset acquisitions were Asset Dispositions or Asset Acquisitions that
occurred on the first day of such Reference Period; PROVIDED that to
the extent that clause (B) or (C) of this sentence requires that PRO
FORMA effect be given to an Asset Acquisition or Asset Disposition,
such PRO FORMA calculation shall be based upon the four full fiscal
quarters immediately preceding the Transaction Date of the Person, or
division or line of business of the Person, that is acquired or
disposed of for which financial information is available,
"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 Material Subsidiaries or, as the case may
be, of the Lessee or any Permitted Sub-Lessee or, as the case may be,
of any company and its Group into which the Company, the Lessee or any
Permitted Sub-Lessee may merge or to which the Company, Lessee or
Permitted Sub-Lessee may sell, convey, transfer, lease or otherwise
dispose of all or substantially all of its assets and with which it is
consolidated in accordance with Paragraph 2.16 (which shall be as of a
date not more than 90 days prior to the date of such computation, and
which, in the case of the Company, shall not take into account
Unrestricted Subsidiaries), including, without limitation, the
respective amounts reported on such balance sheet attributable to
Preferred Stock, less any amounts attributable to Disqualified 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 or, as the case may be, of the
Lessee or any Permitted Sub-Lessee or, as the case may be, of the
Company into which the Company, the Lessee or any Permitted Sub-Lessee
may merge or to which the Company, Lessee or Permitted Sub-Lessee may
sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets and with which it is consolidated in
accordance with Paragraph 2.16 or any of its 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 Xx. 00 xx xxx Xxxxxx
Xxxxxx xx Xxxxxxx).
"CURRENCY AGREEMENT"
means any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement.
"DISQUALIFIED 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 end of
the Final Initial Term, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the end of
the Final Initial Term or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness
24
having a scheduled maturity prior to the end of the Final Initial Term;
PROVIDED that any Capital Stock that would not constitute Disqualified
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 end of the Final Initial Term shall not constitute Disqualified
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 contained in Paragraphs 2.8 and 2.10
hereof, and such Capital Stock, or the agreements or instruments
governing the redemption rights thereof, specifically provides that
such Person will not repurchase or redeem any such stock pursuant to
such provision prior to the Company's prepayment of the applicable
Capital Outstanding pursuant to Paragraphs 2.8 and 2.10 hereof.
"EXCESS PROCEEDS"
has the meaning provided in Paragraph 22.8 hereof.
"EXCHANGE ACT"
means the Securities Exchange Act of 1934 of the United States of
America, 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 if evidenced by a Board Resolution.
"FINAL INITIAL TERM"
means:
(a) at any time during the Commitment Period, the period from the
date of this Agreement until the date which falls 36 months
after the end of the Commitment Period; and
(b) after the end of the Commitment Period, the Initial Term which
has the latest Initial Term Start Date.
"GAAP"
means generally accepted accounting principles in the United States of
America as in effect as of 19th March, 1999, 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 other statements by such other
entity as approved by a significant segment of the accounting
profession. All ratios and computations contained or referred to in
this Schedule 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 and with other
provisions of this Schedule shall be made without giving effect to (i)
the amortization or write-off of any expenses incurred in connection
with negotiating, agreeing and executing the Transaction Documents and
(ii) except as otherwise provided, the amortization of any amounts
required or permitted by Accounting Principles Board Opinion Nos. 16
and 17.
25
"GUARANTEE"
means any obligation, contingent or otherwise, of any Person directly
or indirectly guaranteeing any Indebtedness 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 of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the
ordinary course of business) , 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 of the
payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); PROVIDED 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.
"HOLDER" or "NOTEHOLDER"
means the registered holder of any Note.
"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 an "Incurrence" of Acquired Indebtedness;
PROVIDED 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 other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto, but
excluding obligations with respect to letters of credit (including
trade letters of credit) securing obligations (other than obligations
described in (i) or (ii) above or (v) , (vi) or (vii) below) entered
into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if drawn upon, to the
extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (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 Capitalized Lease Obligations of such Person,
(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 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 the maximum
liability at such time with respect to contingent obligations upon the
26
occurrence of the contingency giving rise to the obligation, which, in
the case of a Guarantee, shall be the outstanding balance of the
Guaranteed Indebtedness, PROVIDED (A) that the amount outstanding at
any time of any Indebtedness issued with original issue discount is the
face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at the time of its
issuance as determined in conformity with GAAP, (B) that money borrowed
and set aside at the time of the Incurrence of any Indebtedness in
order to prefund the payment of the interest on such Indebtedness shall
not be deemed to be "Indebtedness" so long as such money is held to
secure the payment of such interest and (C) that Indebtedness.
"INDENTURE"
means the Senior Euro Notes Indenture dated as of 19th March, 1999 and
entered into by the Company (as issuer) with The Bank of New York (as
trustee) as originally executed or as it nay be amended or supplemented
from time to time by one or more indentures supplemental thereto
entered into pursuant to the applicable provisions thereof.
"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, option or future contract or other
similar agreement or arrangement.
"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 extensions of credit 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 Material 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, motes, debentures or other
similar instruments issued by, such Person and shall include (i) the
designation of a Material Subsidiary as an Unrestricted Subsidiary and
(ii) the fair market value of the Capital Stock (or any other
Investment), held by the Company or any of its Material Subsidiaries,
of (or in) any Person that has ceased to be a Material Subsidiary,
including, without limitation, by reason of any transaction permitted
by clause (iii) of Paragraph 2.3 hereof; PROVIDED that the fair market
value of the Investment remaining in any Person that has ceased to be a
Material Subsidiary shall not exceed the aggregate amount of
Investments previously made in such Person valued at the time such
Investments were made less the net reduction of such Investments. For
purposes of the definition of "Unrestricted Subsidiary" and Paragraph
2.2 hereof;
27
"Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its
Material Subsidiaries)) of any Material Subsidiary at the time that
such Material Subsidiary is designated an Unrestricted Subsidiary, (ii)
the fair market value of the assets (net of liabilities (other than
liabilities to the Company or any of its Material Subsidiaries)) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary
is designated a Material Subsidiary shall be considered a reduction in
outstanding Investments and (iii) any property transferred to or from
an Unrestricted Subsidiary shall be valued at its fair market value at
the time of such transfer.
"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 or
any agreement to give any security interest).
"MATERIAL SUBSIDIARY"
means the Lessee or Permitted Sub-Lessee and any other Subsidiary of
the Company other than an Unrestricted Subsidiary.
"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 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
Material Subsidiary) 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
Material Subsidiaries, taken as a whole, (iii) payments made or
required to be 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, (iv) payments made or required to be made to
Persons having a beneficial interest in the assets subject to the Asset
Sale, and (v) appropriate amounts to be provided by the Company cc any
Material Subsidiary 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 Material Subsidiary) and
proceeds from the conversion of other property received when converted
to cash or cash equivalents, net of attorney's 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 as a result thereof.
28
"NOTES"
means any of the Notes, as defined in the Indenture or any other
indenture entered into by the Company, that are authenticated and
delivered under any such indenture and remain outstanding as at the
date of this Lease Guarantee. For all purposes of this Schedule, the
term "Notes" shall include any Exchange Notes to be issued and
exchanged for any Notes.
"OFFER TO PURCHASE"
means an offer to purchase Notes by the Company from the Holders
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
Notes validly tendered will be accepted for payment on a PRO RATA
basis; (ii) the purchase price and the date of purchase (which shall be
a Business Day no earlier than 30 days nor later than 60 days from the
date such notice is mailed) (the "PAYMENT DATE"); (iii) that any Note
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 Note 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 Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address 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
Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that
Holders whose Notes are being purchased only in part will be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; PROVIDED that each Note purchased and each new Note issued
shall be in a principal amount of Euro 1,000 or an integral multiple
thereof. On the Payment Date, the Company shall (i) accept for payment
on a PRO RATA basis Notes 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 Notes or portions thereof so accepted;
and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the
Company. The Paying Agent shall promptly mail to the Holders of Notes
so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Note
equal in principal amount to any unpurchased portion of the Note
surrendered; PROVIDED that each Note purchased and each new Note issued
shall be in a principal amount of Euro 1,000 or an integral multiple
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-l 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 Notes 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 President, the Chief Executive Officer,
the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary
of the Company.
29
"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 pursuant to TIA Section 314(a)(4)) shall include
the statements provided for in TIA Section 314(e).
"PAYING AGENT"
has the meaning provided in Section 2.4 of the Indenture.
"PERMITTED INVESTMENT"
means (i) an Investment in the Company or a Material Subsidiary or a
Person which will, upon the making of such Investment, become a
Material Subsidiary or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to the Company
or a Material Subsidiary; PROVIDED that such Person's primary business
is related, ancillary or complementary to the businesses of the Company
or any of its Material Subsidiaries on the date of such Investment;
(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) Investments received in the bankruptcy or reorganization of a
Person or any exchange of such Investment with the issuer thereof or
taken in settlement of or other resolution of claims or disputes or
acquired as the result of foreclosure of any secured Investment and, in
each case, extensions, modifications and renewal thereof; (v)
Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and worker's compensation, performance
and other similar deposits; (vi) Interest Rate Agreements and Currency
Agreements designed solely to protect the Company or its Material
Subsidiaries against fluctuations in interest rates or foreign currency
exchange rates; (vii) loans or advances to officers or employees of the
Company or any Material Subsidiary that do not in the aggregate exceed
$1 million at any time outstanding; (viii) investments consisting of
securities issued by or beneficial interests in a special purpose
entity referred to in clause (f) of the definition of "Asset Sale" and
which are received in exchange for assets that are transferred by the
Company or a Material Subsidiary to such special purpose entity and
used for the purpose referred to therein; (ix) Investments as a result
of consideration received in connection with an Asset Sale made in
compliance with Paragraph 2.8 hereof, and (x) securities set aside at
the time of Incurrence of Indebtedness in order to prefund the payment
of interest on such Indebtedness.
"PERMITTED JOINT VENTURE"
means any joint venture between the Company or any Material Subsidiary
and (i) any Person, other than a Subsidiary, engaged in the provision
or sale of telecommunications services or (ii) any Person engaged as an
independent sale representative of the Company; PROVIDED that, prior to
making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the
Company.
30
"PERMITTED WHOLESALE CONSORTIUM"
means any Person in which the Company invests for the principal purpose
of leasing or otherwise acquiring transmission rights with respect to
long distance telecommunications; PROVIDED that, prior to making any
Investment in such a Person, the Company's Board of Directors shall
have determined that such Investment will afford the Company greater
economic benefits than it could otherwise obtain from other sources of
transmission rights.
"PERSON"
means an individual, a corporation, a partnership, a limited liability
company, a joint venture, an association, a trust, an unincorporated
organization or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"POTENTIAL EVENT OF DEFAULT"
means any event that is, or after notice or passage of time or both
would be, an Event of Default.
"PREFERRED STOCK" or "PREFERRED STOCK"
means, with respect to any Person, any and all shares, interests,
participation 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 date of this Indenture, including,
without limitation, all series and classes of such preferred or
preference stock.
"SECURITIES ACT"
means the Securities Act of 1933, as amended.
"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 instalment of
principal of such debt security is due and payable and (ii) with
respect to any scheduled instalment of principal of or interest on any
debt security, the date specified in such debt security as the fixed
date on which such instalment is due and payable.
"STRATEGIC SUBORDINATED INDEBTEDNESS"
means Indebtedness of the Company Incurred to finance the acquisition
of a Person engaged in a business that is related, ancillary or
complementary to the business conducted by the Company or any of its
Material Subsidiaries, which Indebtedness by its terms, or by the terms
of any agreement or instrument pursuant to which such Indebtedness is
Incurred, (i) is expressly made subordinate in right of payment to the
Notes and (ii) provides that no payment of principal, premium or
interest on, or any other payment with respect to, such Indebtedness
may be made prior to the payment in full of all of the Company's
obligations under the Notes; PROVIDED that such Indebtedness may
provide for and be repaid at any time from the proceeds of a capital
contribution, the sale of Capital Stock (other than Disqualified Stock)
of the Company, or other Strategic Subordinated Indebtedness Incurred
after the Incurrence of such Indebtedness.
31
"SUBSIDIARY"
means, with respect to any Person, any corporation, association or
other business entity of which 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.
"TEMPORARY CASH INVESTMENT"
means any of the following: (i) direct obligations of the United States
of America or any agency thereof or obligations fully and
unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits,
bankers' acceptances, certificates of deposit and money market
deposits, in each case maturing within one year of the date of
acquisition thereof and issued by a bank or trust company which is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of
America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign
currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act), or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii)
repurchase obligations with a term of not more than 30 days for
underlying 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 one year
after the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America with a rating at the time as
of which any investment therein is made of "P-2" (or higher) according
to Xxxxx'x or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year or less from the date of acquisition issued or
fully and unconditionally guaranteed by any state, commonwealth or
territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P
or Xxxxx'x, and (vi) shares or other interests in an investment company
the assets of which consist solely of (A) securities of the type
described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Xxxxx'x or Fitch
Investor Services, Inc.
"TIA"
means, the Trust Indenture Act of 1939 (15 U.S. Code xx.xx.
77aaa-77bbb), as amended from time to time.
"TRADE PAYABLES"
means, with respect to any Person, any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed
or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods
or services.
32
"TRANSACTION DATE"
means, with respect to the Incurrence of any Indebtedness by the
Company or any of its Material 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 Indenture until a successor
replaces it in accordance with the provisions of Article Seven of the
Indenture, and thereafter means such successor.
"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 Material Subsidiary (including any newly acquired or
newly formed Subsidiary of the Company) 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 Material
Subsidiary; PROVIDED that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so
designated shall be deemed an "Incurrence" of such Indebtedness and an
"Investment" by the Company or such Material Subsidiary (or both, if
applicable) at the time of such designation; (B) either (1) the
Subsidiary to be so designated has total assets of $1,000 or less or
(2) if such Subsidiary has assets greater than $1,000, such designation
would be permitted under Clause 2.2 hereof and (C) if applicable, the
Incurrence of Indebtedness and the Investment referred to in Clause (A)
of this proviso would be permitted under Clause 2.1 hereof and Clause
2.2 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Material Subsidiary; PROVIDED that (i) no Default or
Event of Default shall have occurred and be continuing at the time of
or after giving effect to such designation and (ii) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately
after such designation would, if Incurred at such time, have been
permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of this Lease Guarantee. Any such designation by the
Board of Directors shall be evidenced to the Lessor by promptly filing
with the Lessor a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"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.
"WHOLLY OWNED"
means, with respect to any Subsidiary of any Person, the ownership of
all of the outstanding Capital Stock of such Subsidiary (other than any
director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
33
1.2 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;
(vi) "herein," `hereof' and other words of similar import refer to
this Schedule as a whole and not to any particular Paragraph
or other subdivision; and
(vii) all references to Paragraphs refer to Paragraphs of this
Schedule unless otherwise indicated.
2. COVENANTS
2.1 LIMITATION ON INDEBTEDNESS
(a) The Company will not, and will not permit any of its Material
Subsidiaries to, Incur any Indebtedness (other than the Notes,
any Indebtedness under the Transaction Documents and
Indebtedness existing on 19th March, 1999); PROVIDED 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 Consolidated
Leverage Ratio would be greater than zero and less than 6:1.
Notwithstanding the foregoing, the Company and any Material
Subsidiary (except as specified below) may Incur each and all
of the following:
(i) Indebtedness outstanding at any time in an aggregate
principal amount not to exceed $100 million of
Indebtedness that is PARI PASSU with or subordinated
to the Notes and the Transaction Documents and $150
million of Indebtedness that is subordinated to the
Notes and the Transaction Documents, less any amount
of such Indebtedness permanently repaid as provided
under paragraph 2.8 below;
(ii) Indebtedness owed:
(A) by any Material Subsidiary to the Company or
another Material Subsidiary; or
(B) by the Company to any Material Subsidiary;
PROVIDED that any event which results in any such
Material Subsidiary ceasing to be a Material
Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or another
Material Subsidiary) shall be deemed, in each case,
to constitute an Incurrence of such Indebtedness not
permitted by this Paragraph 2.1(a)(ii);
34
(iii) Indebtedness issued in exchange for, or the net
proceeds of which are used to repay, redeem, defease,
refinance, refund, extend, renew, replace, discharge
or otherwise retire any then outstanding Indebtedness
(other than Indebtedness Incurred under Paragraph
2.1(a) sub paragraph (i), (ii), (iv), (vi), (viii),
(xi) or (xii)) and any refinancings thereof in an
amount not to exceed the amount so refinanced or
refunded (plus premiums, penalties, accrued interest,
fees and expenses); PROVIDED that Indebtedness the
proceeds of which are used to refinance or refund the
Notes and for the Transaction Documents or
Indebtedness that is PARI PASSU with, or subordinated
in right of payment to, the Notes and the Capital
Outstanding under the Transaction Documents shall
only be permitted under this sub paragraph (iii) if:
(A) in case the Notes or, as the case may be,
the Capital Outstanding under the
Transaction Documents are refinanced in part
or the Indebtedness to be refinanced is PARI
PASSU with the Notes and the Capital
Outstanding under the Transaction Documents,
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 Notes or, as the case may be,
the Capital Outstanding under the
Transaction Documents;
(B) in case the Indebtedness to be refinanced is
subordinated in right of payment to the
Notes and the Capital Outstanding under the
Transaction Documents, such new
Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to
which such new Indebtedness is issued or
remains outstanding, is expressly made
subordinate in right of payment to the Notes
and the Capital Outstanding under the
Transaction Documents at least to the extent
that the Indebtedness to be refinanced is
subordinated to the Notes and the Capital
Outstanding under the Transaction Documents;
and
(C) such new Indebtedness, determined as of the
date of Incurrence of such new Indebtedness,
does not mature prior to the end of the
Final Initial Term or, if earlier, 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 that in no event may Indebtedness of
the Company be refinanced by means of any
Indebtedness of any Material Subsidiary pursuant to
this sub paragraph (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 that such agreements:
35
(a) are designed solely to protect the
Company or any of its Material
Subsidiaries against fluctuations
in foreign currency exchange rates
or interest rates; and
(b) 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 its Material Subsidiaries
pursuant to such agreements, in any
case Incurred in connection with
the disposition of any business,
assets or Material Subsidiary
(other than Guarantees of
Indebtedness Incurred by any Person
acquiring all or any portion of
such business, assets or Material
Subsidiary for the purpose of
financing such acquisition), in a
principal amount not to exceed the
gross proceeds actually received by
the Company or any Material
Subsidiary in connection with such
disposition;
(v) Indebtedness of the Company, to the extent the net
proceeds thereof are promptly:
(A) used to purchase the Notes tendered in an
Offer to Purchase made as a result of a
Change in Control; or
(B) used to exercise the prepayment right in
respect of the Capital Outstanding (or the
relevant part thereof) in accordance with
Clause 16.3 of the Master Lease Purchase
Agreement;
(vi) Guarantees of the Notes, the Lease Guarantee and
Guarantees of Indebtedness of the Company by any
Material Subsidiary PROVIDED the Guarantee of such
Indebtedness is permitted by and made in accordance
with Section 4.07 of the Indenture;
(vii) Indebtedness (including Guarantees) Incurred to
finance the cost (including the cost of design,
development, acquisition, construction, installation,
improvement, transportation or integration) of
acquiring equipment, inventory or network assets
(including acquisitions by way of Capitalised Lease
and acquisitions of the Capital Stock of a Person
that becomes a Material Subsidiary to the extent of
the fair market value of the equipment, inventory or
network assets so acquired) by the Company or a
Material Subsidiary after the date upon which the
Master Lease Purchase Agreement is executed by the
Lessor and the Lessee;
(viii) Indebtedness of the Company not to exceed, at any one
time outstanding, two times:
(A) the Net Cash Proceeds received by the
Company after 19th March, 1999 as a capital
contribution or from the issuance and sale
of its Capital Stock (other than
36
Disqualified Stock) to a Person that is not
a Subsidiary of the Company, to the extent:
(I) such capital contribution or Net
Cash Proceeds have not been used
pursuant to paragraph 2.2(iv)(C)(2)
or sub-paragraph (iii), (iv), (vi)
or (vii) of paragraph 2.2(iv)(C) of
this Schedule to make a Restricted
Payment; and
(II) if such capital contribution or Net
Cash Proceeds are used to
consummate a transaction pursuant
to which the Company Incurs
Acquired Indebtedness, the amount
of such Net Cash Proceeds exceeds
one-half of the amount of Acquired
Indebtedness so Incurred; and
(B) 80% of the fair market value of property
(other than cash and cash equivalents)
received by the Company after 19th March,
1999 from the sale of its Capital Stock
(other than Disqualified Stock) to a Person
that is not a Subsidiary of the Company, to
the extent:
(I) such capital contribution or sale
of Capital Stock has not been used
pursuant to sub-paragraph (iii),
(iv), (vi) or (vii) of paragraph
2.2(iv)(C) hereof to make a
Restricted Payment; and
(II) if such capital contribution or
Capital Stock is used to consummate
a transaction pursuant to which the
Company Incurs Acquired
Indebtedness, 80% of the fair
market value of the property
received exceeds one-half of the
amount of Acquired Indebtedness so
Incurred PROVIDED that such
Indebtedness does not mature prior
to the end of the Final Initial
Term and has an Average Life longer
than the Capital Outstanding under
the Transaction Documents;
(ix) Acquired Indebtedness;
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and
letters of credit, all in the ordinary course of
business, in an aggregate amount outstanding at any
time of up to $10 million;
(xii) Indebtedness arising from the honouring by a bank or
other financial institution of a check, or similar
instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds
in the ordinary course of business, PROVIDED that
such Indebtedness is extinguished within three
Business Days of Incurrence.
(b) Notwithstanding any other provision of this Paragraph 2.1, the
maximum amount of Indebtedness that the Company or a Material
Subsidiary may Incur pursuant to this Paragraph 2.1 shall not
be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the
exchange rates of currencies.
37
(c) For purposes of determining any particular amount of
Indebtedness under this Paragraph 2.1, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred
to in Paragraph 2.1 shall not be treated as Indebtedness. For
purposes of determining compliance with this Paragraph 2.1, in
the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in
sub-paragraphs (i) to (xii) of Paragraph 2.1(a), the Company,
in its sole discretion, shall classify, and from time to time
may reclassify, such item of Indebtedness and only be required
to include the amount and type of such Indebtedness in one of
such clauses.
2.2 LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any Material Subsidiary,
directly or indirectly to:
(i) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than dividends or
distributions payable solely in shares of its Capital Stock
(other than Disqualified Stock) or in options, warrants or
other rights to acquire shares of such Capital Stock and PRO
RATA dividends or distributions on Common Stock of Material
Subsidiaries held by minority stockholders) held by Persons
other than the Company or any of its Material Subsidiaries;
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of:
(A) the Company or an Unrestricted Subsidiary (including
options, warrants or other rights to acquire such
shares of Capital Stock) held by any Person; or
(B) a Material Subsidiary (including options, warrants or
other rights to acquire such shares of Capital Stock)
held by any Affiliate of the Company (other than a
Wholly Owned Material Subsidiary) or any holder (or
any Affiliate of such holder) of 5% or more of the
Capital Stock 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
amounts outstanding under the Transaction Documents; or
(iv) make any Investment (after 19th March 1999), other than a
Permitted Investment, in any Person (such payments or any
other actions described in subparagraphs (i) through (iv)
above being collectively "RESTRICTED PAYMENTS")
if, at the time of, and after giving effect to, the proposed Restricted
Payment:
(A) a Potential Event of Default or Event of Default
shall have occurred and be continuing;
(B) the Company could not Incur at least $1.00 of
Indebtedness under Paragraph 2.1(a); or
(C) the aggregate amount of all Restricted Payments (the
amount, if other than in cash, to be determined in
good faith by the Board of Directors, whose
38
determination shall be conclusive and evidenced by a
Board Resolution) made after 19th March, 1999 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 the amount of such loss) (determined
by excluding income resulting from transfers
of assets by the Company or a Material
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 19th March,
1999 and ending on the last day of the last
fiscal quarter preceding the Transaction
Date for which reports have been filed with
the Commission or provided to the Lessor
pursuant to Clause 6.3 of the Guarantee;
PLUS
(2) the aggregate Net Cash Proceeds received by
the Company after 19th March, 1999 as a
capital contribution or from the issuance
and sale permitted by the Indenture of its
Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary
of the Company, including an issuance or
sale permitted by this Guarantee of
Indebtedness of the Company for cash
subsequent to 19th March, 1999 upon the
conversion of such Indebtedness into Capital
Stock (other than Disqualified Stock) 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 Disqualified
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 end of the Final Initial Term),
in each case except to the extent such Net
Cash Proceeds are used to Incur Indebtedness
pursuant to sub-paragraph (viii) of
Paragraph 2.1(b); PLUS
(3) an amount equal to the net reduction in
Investments (other than reductions in
Permitted Investments) 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 Material
Subsidiary or from the Net Cash Proceeds
from the return of capital, redemption, or
sale of any such Investment (except, in each
case, to the extent any such payment or
proceeds are included in the calculation of
Adjusted Consolidated Net Income), or from
redesignations of Unrestricted Subsidiaries
as Material Subsidiaries (valued in each
case as provided in the definition of
"INVESTMENTS"), or from the release of any
Guarantee that constituted a Restricted
Payment, to the extent of such release, not
to exceed, in each case, the amount of
Investments previously made by the Company
or any Material Subsidiary in such Person or
Unrestricted Subsidiary.
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;
39
(ii) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in
right of payment to the Notes and the amounts outstanding
under the Transaction Documents including premium; if any, and
accrued and unpaid interest, with the proceeds of, or in
exchange for, Indebtedness Incurred under Paragraph
2.1(a)(iii) of this Schedule;
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or
options, warrants or other rights to acquire such Capital
Stock) in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares
of Capital Stock (other than Disqualified Stock) of the
Company (or options, warrants or other rights to acquire such
Capital Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for
value of Indebtedness of the Company which is subordinated in
right of payment to the Notes and the amounts outstanding
under the Transaction Documents in exchange for, or out of the
proceeds of a capital contribution or a substantially
concurrent offering of, shares of the Capital Stock (other
than Disqualified Stock) of the Company (or options, warrants
or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant
to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with
the provisions of Paragraph 2.16;
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the
Company or any of its Material Subsidiaries on the date of
such Investments; PROVIDED that the aggregate amount of
Investments made pursuant to this sub-paragraph (vi) does not
exceed $30 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds
from the issuance and sale of such Capital Stock, PROVIDED
that such proceeds are so used within 180 days of the receipt
thereof;
(viii) the redemption, repurchase, retirement or other acquisition of
any Capital Stock of the Company (or options, warrants or
other rights to acquire such Capital Stock) from an employee
or former employee of the Company or any of its Subsidiaries
(or from such person's estate, heirs or representatives) in
connection with such employee's death, disability or
termination of employment, PROVIDED that the aggregate amount
expended pursuant to this paragraph does not exceed $1 million
per annum plus the cumulative amount of such per annum limit
not used in prior years and the cash proceeds from such
Investments, PROVIDED that such proceeds are used within 180
days of the receipt thereof;
(ix) Investments in Permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment,
the sum of:
(A) 10% of the consolidated revenue of the Company
(excluding with respect to Persons in whom an equity
interest is owned by Persons other than the Company
and its Material Subsidiaries, the PRO RATA share of
such revenue attributable to such other equity
holders) accrued on a cumulative basis during the
40
period (taken as one accounting period) beginning on
the first day of the first full fiscal quarter
immediately following 19th March, 1999 and ending on
the last day of the last fiscal quarter preceding the
date of such Investment; and
(B) the Net Cash Proceeds from the disposition of the
Company's interest in any such Permitted Wholesale
Consortium or Permitted Joint Venture; and
(x) other Restricted Payments in an aggregate amount not to exceed
$10 million, increased by the amount of any Restricted Payment
made pursuant to this Paragraph 2.2 (iv) to (x) that is an
Investment and is not outstanding,
PROVIDED that, except in the case of sub-paragraph (i) and (iii), no
Potential Event of Default or Event of Default shall have occurred and
be continuing or occur as a consequence of the actions or payments set
forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in sub-paragraph (ii)
thereof, an exchange of Capital Stock for Capital Stock or Indebtedness
referred to in sub-paragraph (iii) or (iv) thereof and an Investment
referred to in clause (vi) thereof), and the Net Cash Proceeds from any
capital contribution or any issuance of Capital Stock referred to in
Paragraph 2.2(iv)(C), (ii), (iii), (iv) and (vi), shall be included in
calculating whether the conditions of Paragraph 2.2(iv)(C) 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 repayment of Capital Outstanding under the Transaction
Documents or the redemption, repurchase or other acquisition of
Indebtedness that is PARI PASSU with the Capital Outstanding under the
Transaction Documents, then the Net Cash Proceeds of such issuance
shall be included in Paragraph 2.2(iv)(C) only to the extent such
proceeds are not used for such redemption, repurchase or other
acquisition of Indebtedness.
Any Restricted Payments made in other than cash shall be valued at fair
market value. The amount of any Investment "outstanding" at any time
shall be deemed to be equal to the amount of such Investment on the
date made, less the return of capital, repayment of loans, return on
capital and release of Guarantees, in each case of or to the Company
and its Material Subsidiaries with respect to such Investment (up to
the amount of such investment on the date made).
2.3 LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF MATERIAL
SUBSIDIARIES
The Company will not sell, and will not permit any Material Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock
of a Material Subsidiary (including options, warrants or other rights
to purchase shares of such Capital Stock)
EXCEPT:
(i) to any Company or a Wholly Owned Material Subsidiary;
(ii) issuances of director's qualifying shares or sales to
non-United States of America nationals of shares of Capital
Stock of non-United States of America Material Subsidiaries,
to the extent required by applicable law;
(iii) if, immediately after giving effect to such issuance or sale,
such Material Subsidiary would no longer constitute a Material
Subsidiary and any Investment in such Person remaining after
41
giving effect to such issuance or sale would have been
permitted to be made under paragraph 2.2 if made on the date
of such issuance or sale;
(iv) a pledge or hypothecation of or Lien on any Capital Stock of a
Subsidiary to the extent not prohibited under paragraph 2.6;
or
(v) sales by the Company or Material Subsidiaries of Common Stock
of a Material Subsidiary, PROVIDED that the Company or such
Material Subsidiaries apply the Net Cash Proceeds, if any, of
any such sale in accordance with paragraph 2.8(b)(i),
sub-paragraphs (A) or (B).
2.4 LIMITATION ON ISSUANCES OF GUARANTEES BY MATERIAL SUBSIDIARIES
The Company will not permit any Material Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is PARI
PASSU with or subordinate in right of payment to the Notes or the
amounts outstanding under the Transaction Documents ("Guaranteed
Indebtedness"), unless:
(i) such Material Subsidiary simultaneously executes and delivers
a supplement to this Lease Guarantee providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the amounts
outstanding under the Transaction Documents by such Material
Subsidiary; and
(ii) such Material 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 Material Subsidiary as
a result of any payment by such Material Subsidiary under its
Subsidiary Guarantee;
PROVIDED that this paragraph shall not be applicable to any Guarantee
of any Material Subsidiary that existed at the time such Person became
a Material Subsidiary and was not Incurred in connection with, or in
contemplation of, such Person becoming a Material Subsidiary. If the
Guaranteed Indebtedness is
(A) PARI PASSU with the Capital Outstanding under the Transaction
Documents, then the Guarantee of such Guaranteed Indebtedness
shall be PARI PASSU with, or subordinated to, the Subsidiary
Guarantee; or
(B) subordinated to the Capital Outstanding under the Transaction
Documents, 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 Capital Outstanding under the Transaction Documents.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Material
Subsidiary may 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 any Company, of all of the Company's and each Material
Subsidiary's Capital Stock in, or all or substantially all the
assets of, such Material Subsidiary (which sale, exchange or
transfer is not prohibited by the Indenture); or
42
(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.
2.5 LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
(a) The Company will not, and will not permit any Material 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
Material Subsidiary, except upon fair and reasonable terms no less
favorable to the Company or such Material 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.
(b) 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 Material Subsidiary delivers to the Lessor a written
opinion of a nationally recognised investment banking firm
stating that the transaction is fair to the Company or such
Material Subsidiary from a financial point of view;
(ii) any transaction solely between the Company and any of its
Material Subsidiaries or solely between Material Subsidiaries;
(iii) the payment of reasonable and customary regular 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;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary
course of business in connection with services actually
rendered and consistent with past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on 19th March, 1999; or
(vii) any Restricted Payments not prohibited by Paragraph 2.2 of the
Indenture.
Notwithstanding the foregoing, any transaction or series of related
transactions covered by the sub-paragraph (a) of this paragraph 2.5 and
not covered by sub-paragraphs (b)(ii) through (b)(v) of this Paragraph,
the aggregate amount of which exceeds $2.0 million in value, must be
approved or determined to be fair in the manner provided for in
sub-paragraph (b)(i) (A) or (B) of this Paragraph 2.5.
43
2.6 LIMITATION ON LIENS
The Company will not, and will not permit any Material Subsidiary to,
create, incur, assume or suffer to exist any Lien on any of its assets
or properties of any character (including, without limitation,
licenses), or any shares of Capital Stock or Indebtedness of any
Material Subsidiary, without making effective provision for all
obligations under the Transaction Documents and all other amounts due
under this Lease Guarantee to be directly secured equally and rateably
with (or, if the obligation or liability to be secured by such Lien is
subordinated in right of payment of the amounts outstanding under the
Transaction Documents, prior to) the obligation or liability secured by
such Lien.
The foregoing limitation does not apply to:
(i) Liens existing on 19th March, 1999;
(ii) Liens granted after 19th March, 1999 on any assets or Capital
Stock of the Company or their Material Subsidiaries created in
favour of the Holders or the Lessor;
(iii) Liens with respect to the assets of a Material Subsidiary
granted by such Material Subsidiary to the Company or a Wholly
Owned Material Subsidiary to secure Indebtedness owing to the
Company or such other Material Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under
paragraph 2.1(a)(iii) which is Incurred to refinance secured
Indebtedness; PROVIDED that such Liens do not extend to or
cover any property or assets of the Company or any Material
Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Material Subsidiary securing Indebtedness of such Material
Subsidiary permitted under paragraph 2.1;
(vi) Liens on the Capital Stock of Material Subsidiaries that own a
substantial portion of assets financed with Indebtedness
Incurred under paragraph 2.1(a)(vii) if such liens secure only
such Indebtedness; or
(vii) Permitted Liens.
2.7 LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Material Subsidiary to,
enter into any sale-leaseback transaction involving any of its assets
or properties whether now owned or hereafter acquired, whereby the
Company or its Material Subsidiary sells or transfers such assets or
properties and then or thereafter leases such assets or properties or
any part thereof or any other assets or properties which the Company or
its Material Subsidiary, as the case may be, intends to use for
substantially the same purpose or purposes as the assets or properties
sold or transferred; PROVIDED that a sale-leaseback transaction shall
not include any lease in connection with which any Company or its
Material Subsidiary acquires assets or property in anticipation of the
substantially contemporaneous sale or transfer to the lessor under such
lease.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
44
(ii) the lease secures or relates to industrial revenue or
pollution control bonds;
(iii) the transaction is solely between a Company and any of its
Material Subsidiary or solely between Material Subsidiaries;
or
(iv) the Company or any of its Material Subsidiary, within 12
months after the sale or transfer of any assets or properties
is completed, applies an amount not less than the net proceeds
received from such sale in accordance with paragraph
2.8(b)(i), sub-paragraph (A) or (B).
2.8 LIMITATION ON ASSET SALES
(a) The Company will not, and will not permit any of its Material
Subsidiaries to, consummate any Asset Sale, unless:
(i) the consideration received by the Company or such Material
Subsidiary is at least equal to the fair market value of the
assets sold or disposed of; and
(ii) at least 75% of the consideration received consists of cash or
Temporary Cash Investments.
(b) In the event and to the extent that the Net Cash Proceeds received by
the Company or any of its Material Subsidiaries from one or more Asset
Sales occurring on or after the date hereof 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 filed with the Commission), then the
Company shall or shall cause its relevant Material Subsidiary to:
(i) within 12 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 any Material
Subsidiary providing a Subsidiary Guarantee pursuant
to paragraph 2.4 or Indebtedness of any other
Material Subsidiary, in each case owing to a Person
other than a Company or any of its Material
Subsidiaries; or
(B) invest an equal amount, or the amount not so applied
pursuant to sub-paragraph (A) above (or enter into a
definitive agreement committing to so invest within
12 months after the date of such agreement), either
in property or assets (other than current 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, in either case
similar or related to the nature or type of the
property and assets of, or the business of, the
Company or any of its Material 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 12-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 Paragraph 2.8. The amount of such
excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set
45
forth in clause (i) of the preceding sentence and not applied
as so required by the day prior to 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 a prepayment of Capital
Outstanding pursuant to this Paragraph 2.8 totals at least $10 million,
the Company must exercise, not later than the fifteenth Business Day of
such month, the prepayment right in respect of the Capital Outstanding
(or part thereof) in accordance with Clause 16.3 (Voluntary
Termination) of the Master Lease Purchase Agreement equal to the Excess
Proceeds on such date.
2.9 PROHIBITION ON SALE OR OTHER DISPOSAL OF EQUIPMENT
The Company will not, and will not permit any of its Material
Subsidiaries, to sell or otherwise dispose (or purport so to do) any of
the Equipment other than in accordance with the provisions of Clause
16.3 (Voluntary Termination) of the Master Lease Purchase Agreement.
2.10 CHANGE OF CONTROL
The Company would not permit or effect a Change of Control in respect
of itself, the other Guarantor (if any), the Lessee or any of the
Permitted Sub-Lessees unless, concurrently with, or prior to, such
Change of Control being consummated, the Lessee exercises, or has
exercised, the prepayment right under Clause 16.3 (Voluntary
Termination) of the Master Lease Purchase Agreement in respect of such
amount of the Capital Outstanding as is equal to:
(a) in the case of a proposed Change of Control of the Company,
the other Guarantor (if any), or the Lessee the whole of the
Capital Outstanding;
(b) in the case of a proposed Change of Control of any of the
Permitted Sub-Lessees, so much of the Capital Outstanding as
relates to the Equipment sub-leased to that Permitted
Sub-Lessee,
and the Lessee has unconditionally and irrevocably paid to the Lessor
an amount equal to the Capital Outstanding (or the relevant part
thereof) together with all the other amounts referred to in Clause 16.3
(Voluntary Termination) of the Master Lease Purchase Agreement.
2.11 EXISTENCE
Except as otherwise provided or permitted in this Schedule, 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
Material Subsidiaries in accordance with the respective organisational
documents of the Company and each such Subsidiary (as the same may be
amended from time to time) 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 that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Material
Subsidiary, if the maintenance or preservation thereof is no longer
desirable in the conduct of the business of the Company and its
Material Subsidiaries taken as a whole.
46
2.12 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 labour, materials and supplies
that, if unpaid, might by law become a Lien upon the property
of the Company or any such Subsidiary;
PROVIDED 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 or validity of which is being contested
in good faith by appropriate proceedings, for which adequate reserves
have been established.
2.13 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 Material Subsidiaries, to be
maintained and kept in good condition, repair and working order
(ordinary wear and tear excepted) 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 that nothing in this Paragraph 2.13 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
Material Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by
corporations similarly situated and owning like properties, 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 Material Subsidiary, as the case may be, is then conducting
business.
2.14 COMPLIANCE CERTIFICATES
The principal accounting officer and the principal financial officer of
the Company shall certify to the Lessor in writing, on or before a date
not more than 90 days after the end of each fiscal year of the Company,
that a review has been conducted of the activities of the Company and
its Material Subsidiaries and the Company's and its Material
Subsidiaries' performance under this Lease Guarantee and that the
Company has fulfilled all obligations hereunder, or, if there has been
a default in the fulfilment of any such obligation, specifying each
such default and the nature and status thereof. The Company shall also
47
notify the Lessor of any default or defaults in the performance of any
covenants or agreements under this Lease Guarantee.
2.15 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 amounts
outstanding from time to time under the Transaction Documents as
contemplated herein, wherever enacted, now or at any time hereafter in
force, or that may affect the covenants or the performance of this
Lease Guarantee; and (to the extent that it may lawfully do so) the
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 Lessor, but will suffer
and permit the execution of every such power as though no such law had
been enacted.
2.16 WHEN COMPANY MAY MERGE, ETC.
(a) The Company will not, and will not permit the Lessee or any
Permitted Sub-Lessee to, 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 or permit any
Person to merge with or into the Company or the Lessee or such
Permitted Sub-Lessee unless:
(i) the Company or the Lessee or such Permitted
Sub-Lessee or another member of the Company's Group
shall be the continuing Person, or:
(A) the Person (if other than the Company or the
Lessee or such Permitted Sub-Lessee) formed
by any such consolidation involving the
Company or into which the Company is merged
or that acquired or leased such property and
assets of the Company or the Lessee or such
Permitted Sub-Lessee shall be a corporation
organised and validly existing under the
laws of the United States of America or any
jurisdiction thereof or a company or
corporation organised and validly existing
under the laws of the jurisdiction of the
entity with which such merger is made; and
(B) the Person (if other than the Company or the
Lessee or such Permitted Sub-Lessee) shall
expressly assume, by supplemental
agreements, executed and delivered to the
Lessor, all of the obligations of the
Company, the Lessee or the Permitted
Sub-Lessee, as the case may be, under each
of the Transaction Documents to which the
Company or the Lessee or such Permitted
Sub-Lessee is a party;
(ii) immediately after giving effect to such transaction,
no Potential Event of Default or Event of Default
shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction
on a PRO FORMA basis:
(A) if the Company is merging or selling,
conveying, transferring, leasing or
otherwise disposing of all or substantially
all of its assets, the Consolidated New
48
Worth of the company becoming the successor
obligor under the Transaction Documents must
be at least equal to the Consolidated Net
Worth of the Company and its Material
Subsidiaries immediately prior to the
merger; and
(B) if the Lessee or a Permitted Sub-Lessee is
merging or selling, conveying, transferring,
leasing or otherwise disposing of all or
substantially all of its assets, the
Consolidated Net Worth of the Company and
its Material Subsidiaries after such merger
must be at least equal to the Consolidated
Net Worth of the Company and its Material
Subsidiaries immediately prior to such
merger and the ownership interest of the
Company in the company becoming the
successor obligor under the Transaction
Documents must have a share of the
Consolidated Net Worth of such successor
obligor which is at least equal to the share
of the Consolidated Net Worth of the Lessee
or, as the case may be, the Permitted
Sub-Lessee owned by the Company (directly or
indirectly, legally or beneficially)
immediately prior to the merger;
(iv) immediately after giving effect to such transaction
on a PRO FORMA basis, the Company, or any Person
becoming the successor obligor to the Company under
the Transaction Documents, as the case may be, could
Incur at least $1.00 of Indebtedness under paragraph
2.1(a); PROVIDED that this sub-paragraph (iv) shall
not apply to (1) a consolidation, merger or sale of
all (but not less than all) of the assets of the
Company if all Liens and Indebtedness of the Company
or any Person becoming the successor obligor to the
Company under the Transaction Documents, as the case
may be, and its Restricted Subsidiaries outstanding
immediately after such transaction would, if Incurred
at such time, have been permitted to be Incurred (and
all such Liens and Indebtedness, other than Liens and
Indebtedness of the Company and its Restricted
Subsidiaries outstanding immediately prior to the
transaction, shall be deemed to have been Incurred)
for all purposes of this Indenture or (2) a
consolidation, merger or sale of all or substantially
all of the assets of the Company if, immediately
after giving effect to such transaction on a PRO
FORMA basis, the Company or any Person becoming the
successor obligor under the Transaction Documents
shall have a Consolidated Leverage Ratio equal to or
less than the Consolidated Leverage Ratio of the
Company immediately prior to such transaction; and
(v) the Company or the Lessee or such Permitted
Sub-Lessee delivers to the Lessor an Officers'
Certificate (attaching the arithmetic computations to
demonstrate compliance with sub-paragraphs (iii) and
(iv) above) and Opinion of Counsel, in each case
stating that such consolidation, merger or transfer
and such supplemental indenture complies with this
provision and that all conditions precedent provided
for herein relating to such transaction have been
complied with;
PROVIDED, HOWEVER, that sub-paragraphs (iii) and (iv) above do
not apply if, in the good faith determination of the Board of
Directors, 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 or the Lessee
or such Permitted Sub-Lessee; and PROVIDED FURTHER that any
such transaction shall not have as one of its purposes the
evasion of the foregoing limitations.
49
(b) 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 or the Lessee or such Permitted Sub-Lessee in
accordance with Paragraph 2.16(a), the successor Person formed by such
consolidation or into which the Company or the Lessee or such Permitted
Sub-Lessee 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 or the Lessee or
such Permitted Sub-Lessee under the Transaction Documents with the same
effect as if such successor Person had been named as the Company or the
Lessee or such Permitted Sub-Lessee herein.
50
SIGNATORIES
COMPANY
EXECUTED as a deed by )
VIATEL, INC. )
a company duly incorporated )
in the state of New York )
acting by Xxxxx X. Xxxx )
and Xxxxx X. Xxxxxxxx, Xx. )
acting under the )
authority of that company )
XXXXX X. XXXX
............................................
Director
XXXXX X. XXXXXXXX, XX.
............................................
Director
LESSOR
DRESDNER KLEINWORT XXXXXX FINANCE LIMITED
By:
XXXXX XXXX XXXXXXX
(AUTHORISED SIGNATORY)
XXXXXXX XXXXXXXX XXXXX
(AUTHORISED SIGNATORY)
