Exhibit 99.1
The Date of this Solicitation of Consents is July 20, 2001
SOLICITATION OF CONSENTS
by
WAM!NET INC.
With Respect To Its
13-1/4% Senior Discount Notes due 2005
(Cusip No. 933590-AB-7)
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THIS CONSENT SOLICITATION WILL EXPIRE AT 12:00 NOON, NEW YORK CITY
TIME, ON JULY 30, 2001, UNLESS EXTENDED (AS SO EXTENDED, THE "EXPIRATION DATE").
CONSENTS MAY BE REVOKED AT ANY TIME PRIOR TO THE DATE ON WHICH THE TRUSTEE
RECEIVES AN OFFICERS' CERTIFICATE FROM THE ISSUER NOTIFYING THE TRUSTEE THAT
RECORD HOLDERS OF THE REQUISITE PRINCIPAL AMOUNT OF NOTES (AS DEFINED) HAVE
DELIVERED (AND NOT REVOKED) CONSENTS, WHICH NOTIFICATION MAY BE DELIVERED TO THE
TRUSTEE AT ANY TIME PRIOR TO THE EXPIRATION DATE.
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WAM!NET Inc. (the "Issuer") hereby solicits the consent (the
"Consent") of the holders of record ("Record Holders") at the close of business
on July 16, 2001 (the "Record Date") of its 13-1/4% Senior Discount Notes due
2005 (the "Notes") to the amendments (the "Indenture Amendments") of certain
provisions of the indenture (the "Indenture") between the Issuer and First Trust
National Association, as trustee (the "Trustee") in connection with a senior
secured discounted debt and equity financing arrangement in the amount of
approximately $115 million (the "Cerberus Financing") proposed to be entered
into between the Issuer and certain of its affiliates and Cerberus Capital
Management, L.P. and/or certain of its affiliates and designees ("Cerberus").
The consummation of the Cerberus Financing is conditioned upon, among other
things, receipt of Consents from the Requisite Principal Amount of Notes
(defined below) solicited hereby. There can be no assurance that such conditions
will be satisfied or waived and, accordingly, that the Cerberus Financing will
occur.
The solicitation of Consents shall be conducted pursuant to the terms
set forth in this Solicitation of Consents, the Form of Consent and any
supplemental materials attached hereto or provided prior to the Expiration Date
(which collectively constitute the "Consent Solicitation"). No payment will be
made to the Record Holders in connection with this Consent Solicitation. If
Record Holders of a majority in aggregate outstanding principal face amount of
Notes (exclusive of Notes held by the Issuer or its affiliates) deliver and do
not revoke Consents (the "Requisite Principal Amount of Notes"), the Issuer and
the Trustee will promptly execute a supplemental indenture reflecting the
Indenture Amendments (the "Supplemental Indenture").
Consequently, if sufficient Consents are received, the Supplemental Indenture
may be entered into and become effective prior to the Expiration Date. However,
the Indenture Amendments will become operative only when the Trustee receives an
officers' certificate confirming the consummation of the Cerberus Financing.
Consents are being solicited from all Record Holders. As of the date
hereof, there were outstanding $208,530,000 aggregate principal face amount of
Notes, none of which were held by the Issuer or its affiliates. Funds and
accounts managed directly or indirectly by Cerberus are the beneficial/record
owners of $87,380,000 aggregate principal face amount of Notes, representing
41.9% of the outstanding aggregate principal face amount of Notes. On behalf of
such funds and accounts, Cerberus has delivered to the Issuer (and will not
revoke) its Consent with respect to all of such Notes. Such funds and accounts
are also the beneficial/record owners of 2,906,977 shares of the Issuer's Class
E Convertible Preferred Stock. Ableco Finance LLC (an affiliate of Cerberus) is
a member of the lender group that has entered into a $30 million revolving
credit facility with the Issuer, the Issuer's wholly-owned subsidiary, WAM!NET
Government Services, Inc. ("WGSI"), and certain other subsidiaries of the Issuer
(hereinafter, the "Borrowers"), pursuant to the Loan and Security Agreement,
dated February 13, 2001 (the "Foothill Credit Facility"), by and among the
Borrowers, the financial institutions signatories thereto and Foothill Capital
Corporation as agent to the lenders.
In addition, on April 27, 2001, Foothill Capital Corporation and
Ableco Finance LLC (an affiliate of Cerberus), provided the Borrowers with a
secured loan in the aggregate principal amount of $2,400,000 (the "Term A Loan")
pursuant to an amendment to the Foothill Credit Facility. The terms of the Term
A Loan are substantially similar to the terms of the Foothill Credit Facility.
On May 15 and May 30, 2001, Madeleine L.L.C. ("Madeleine"), an
affiliate of Cerberus, provided additional secured financing to the Borrowers in
the aggregate principal amounts of $3,240,000 and $4,350,000, respectively, (the
"Term B Loans"). The Term B Loans were provided to the Issuer and WGSI pursuant
to Amendment No. 2 and Amendment No. 3 to the Foothill Credit Facility (the
"Term B Amendments"). Under the Term B Amendments, Madeleine has the right to
convert (i) $3,500,000 of the Term B Loans into 15% of the issued and
outstanding common stock of the Issuer on a fully diluted basis and (ii)
$3,500,000 of the Term B Loans into 15% of the issued and outstanding common
stock of WGSI on a fully diluted basis. Madeleine also received warrants to
purchase (i) 15% of the issued and outstanding common stock of the Issuer on a
fully diluted basis for an exercise price of $3,500,000 and (ii) 15% of the
issued and outstanding common stock of WGSI on a fully diluted basis for an
exercise price of $3,500,000. To the extent Madeleine exercises its conversion
rights, the shares it may purchase under the warrants are reduced on a pro rata
basis.
The Issuer, WGSI and the other Borrowers have entered into certain
amendments, and propose to enter into a series of further amendments
(collectively, the "Term C Amendments"), to the Foothill Credit Facility,
pursuant to which Madeleine will provide the Borrowers with additional secured
financing of up to $26,500,000 (the "Term C Loan"). The Term C Loan is to be
provided in tranches, with each tranche being made pursuant to a separate
amendment to the Foothill Credit Facility. As of June 29, 2001, three tranches
under the Term C Loan have been made in an aggregate principal amount of
$9,978,880 (the "Existing Tranches").
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Under the terms of the Term C Amendments (assuming the parties agree
to enter into amendments for the remaining portion of the Term C Loan),
Madeleine would have the right to convert (i) $8,500,000 of the Term C Loan into
34% of the issued and outstanding common stock of the Issuer on a fully diluted
basis and (ii) $24,500,000 of the Term C Loans into 34% of the issued and
outstanding common stock of WGSI on a fully diluted basis. Madeleine may pay the
difference between outstanding amount of the Term C Loan and the conversion
price in cash. Madeleine would also receive warrants to purchase (i) 34% of the
issued and outstanding common stock of the Issuer on a fully diluted basis for
an exercise price of $8,500,000 and (ii) 34% of the issued and outstanding
common stock of WGSI on a fully diluted basis for an exercise price of
$24,500,000. As of June 29, 2001, under the Existing Tranches, Madeleine has the
right to convert a portion of the Term C Loan into 17.8% of the common stock of
the Issuer and 17.8% of the common stock of WGSI, and has received warrants to
purchase such percentages of common stock from the Issuer and WGSI in each case
on a fully diluted basis. To the extent Madeleine exercises its conversion
rights, the shares it may purchase under the warrants would be reduced on a pro
rata basis.
With respect to the voting power of the shares of the Issuer's common
stock which would be issued to Madeleine upon the exercise of the conversion
rights or warrants issued pursuant to the Term B Amendments and Term C
Amendments as described above ("Exercised Common Stock"), Madeleine has agreed
that it will not, together with Cerberus (based solely on Cerberus' ownership of
the Issuer's Class E Preferred Stock), be entitled to more than the number of
votes equal to 49.9% of the voting power of the Issuer's common stock
outstanding on the record date for which a vote is being taken. Therefore, to
the extent that Madeleine's ownership of Exercised Common Stock would entitle
Madeleine and Cerberus (based solely on Cerberus' ownership of Class E Preferred
Stock) to voting power in excess of 49.9%, the combined voting power of the
Exercised Common Stock and the Class E Preferred Stock will be reduced to that
percentage. Additionally, the number of shares of Exercised Common Stock which
may be issued to Madeleine pursuant to exercise of the conversion rights or
warrants is limited so that Madeleine and Cerberus shall not be the beneficial
owner (as determined in accordance with Rules 13d-3 and 13d-5 under the Exchange
Act) directly or indirectly, of more than 35% of all issued and outstanding
shares of Issuer's common stock.
The Issuer has various commercial relationships with Winstar
Communications, Inc. and its subsidiaries, Winstar Wireless, Inc. and Winstar
Credit Corp. (the three Winstar entities being collectively referred to as
"Winstar"). In early 2001 the parties each claimed the other was in default of
the terms and conditions of the commercial agreements and sought to terminate
the commercial agreements.
The Issuer and Winstar have been engaged in discussions to settle
disputes relating to the commercial agreements The parties are currently
discussing a settlement of such disputes (the "Winstar Settlement") which
provides, among other things, that (1) the Issuer would pay Winstar $1 million
upon the signing of the settlement agreement and an additional $4 million on the
closing of the Cerberus Financing, (2) the Issuer would issue to Winstar a
secured senior note in the principal amount of $7.5 million at the closing of
the Cerberus Financing, which note would bear interest at the rate of 12.75% per
annum with principal payments due in January 2003 and, possibly, thereafter, (3)
the Issuer would return certain network equipment (primarily radios) to Winstar,
relinquish various circuits and other network assets and move out
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of various collocation sites on a prescribed schedule, (3) the parties would
execute mutual releases, (4) Winstar would give its consent under the terms of
the securities purchase agreement by and between the Issuer and Winstar, dated
as of December 31, 1999, to the modification of the Indenture pursuant to the
provisions of the Supplemental Indenture described herein, and (5) Winstar would
relinquish a number of its rights, including the right to designate directors of
the Issuer. The Issuer believes that it will recognize a gain of approximately
$10 million if the settlement were to be entered into on these terms. There is
no assurance that this settlement agreement will be entered into or that the
terms of any such agreement will be similar to those discussed above. It is
contemplated that any settlement agreement with Winstar, even if entered into,
will be subject to certain conditions, including the approval of any bankruptcy
court having jurisdiction over Winstar.
Any record Holder who consents to the indenture Amendments by
delivering a Consent thereby also waives any requirement that the Issuer obtain
a fairness opinion from an Independent Financial Advisor (as such term is
defined in the Indenture) stating that any settlement with Winstar, whether or
not the terms are substantially similar to the terms described above, are fair
to the Issuer from a financial point of view (the "Waiver").
Attached hereto are (i) the form of Supplemental Indenture relating to
the Indenture Amendments (Annex A hereto) and (ii) the Consent Form. Capitalized
terms used herein without definition shall have the respective meanings assigned
thereto in the Indenture.
SUMMARY
Business - Financial Condition; Overview of the Financing; Certain Matters;
Potential Benefits and Risks to Noteholders.
Business - Financial Condition.
The Issuer owns and operates an integrated global Information
Technology (IT) infrastructure that it markets and sells as a utility to
commercial and government customers. In the commercial marketplace, the Issuer's
global customer base is primarily composed of companies in the entertainment,
broadcast, advertising, publishing, printing, retail, financial services, and
consumer good industries. In 2000, the Issuer initiated direct sales to the U.S.
government, having received approval to sell on the General Services
Administration ("GSA") Schedule for Electronic Commerce Services. The GSA
listing permits federal government entities to purchase the Issuer's services
without the need for lengthy and time-consuming bidding or request-for-proposal
procedures.
WGSI is a subcontractor to Electronic Data Systems Corporation ("EDS")
for the $6.9 billion Navy Marine Corps Intranet ("NMCI") contract awarded to EDS
on October 6, 2000. As a tier one subcontractor, WGSI has contracted with EDS to
provide network design, installation and management services for base area and
local area networks at more than 300 Navy and Marine Corps bases throughout the
U.S., Iceland, Puerto Rico, Guam, Hawaii and Cuba. WGSI's subcontract is
terminable by EDS (i) for cause if WGSI materially or repeatedly defaults in
performance continuing uncured after 20 days written notice, or (ii) without
cause if, and to the extent that, the Navy cancels or terminates the NMCI
contract. In the event of
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cancellation or termination, the Navy must pay cancellation or termination
charges in an amount to be negotiated among the parties.
WGSI's subcontract with EDS has an initial term of five years.
Assuming the completion of the subcontract with EDS over its current five year
term, WGSI expects to recognize approximately $750 million to $950 million in
revenue under the NMCI contract, inclusive of $11.0 million of revenue
recognized through June 30, 2001.
The Issuer has incurred net losses and experienced negative cash flow
from operating activities since inception. The Issuer's current cash resources
and available borrowings are insufficient to fund current operations. There is
substantial doubt that the Issuer will be able to continue as a going concern
unless it raises additional debt or equity capital. Currently, the Issuer is in
arrears with respect to certain trade payables and other debt obligations and
requires additional working capital to satisfy those obligations. Over the past
few months, the Issuer has implemented a variety of strategies with respect to
its commercial business in an effort to streamline operations, reduce operating
costs and conserve its cash. These strategies include downsizing of the Issuer's
employee population, restructuring the Issuer's European operations and focusing
its efforts in the commercial business on further penetrating its existing
customer base.
The Issuer has had numerous discussions with potential financial and
strategic investors, partners and acquirors with respect to a variety of
potential financing and acquisition transactions. The Cerberus Financing is the
only transaction which has progressed to the letter of intent stage. There can
be no assurance that the Cerberus Financing will be consummated or that funds
from other sources will be available on terms acceptable to the Issuer or at
all. If the Issuer is not successful in obtaining additional funding, WGSI's
ability to perform its obligations under the NMCI contract will be jeopardized
and the Issuer will not be able to continue as a going concern. In such event,
the Issuer will likely pursue a voluntary petition for relief under chapter 11
of the U.S. Bankruptcy Code.
Overview of the Financing.
The following is a description of the expected terms of the Cerberus
Financing as described in the letter of intent. These terms may be different
from the terms of the final form of the Cerberus Financing. The substance of any
term described herein is qualified in its entirety to the final form of the
Cerberus Financing.
The Issuer and WGSI have entered into a letter of intent with Cerberus
with respect to the Cerberus Financing. The total amount of cash available under
the Cerberus Financing is expected to be $100 million. Interest on the Cerberus
Financing shall accrue at a rate of 35% per annum. In addition, the Cerberus
Financing will be issued at a discount so that the principal amount of the
Cerberus Financing (assuming that the full $100 million is drawn) will accrete
to approximately $115 million by June 30, 2004. It is expected that the closing
of the Cerberus Financing will occur on or about July 31, 2001. Consummation of
the Cerberus Financing is subject to a number of conditions, including the
obtaining of all requisite governmental clearances.
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Pursuant to the terms of the Cerberus Financing, Cerberus shall also
have the right, at its sole discretion, to convert up to $37.5 million of the
accreted principal amount outstanding under the facility into a series of
preferred stock of the Issuer whose terms and preferences are substantially
similar to the Issuer's Series E Convertible Preferred Stock, which shall be
convertible into 49% of the issued and outstanding common stock of the Issuer,
on a fully diluted basis, and to convert up to $22.27 million of the accreted
principal amount outstanding under the facility into Series 2 Preferred
Interests (defined below) of WGSI. In addition, the Issuer will issue to
Cerberus or its designees a five-year warrant which will grant Cerberus or its
designees the right to purchase a series of preferred stock of the Issuer
substantially identical to the Issuer's Class E Convertible Preferred Stock
convertible into up to 49% of the outstanding common stock of the Issuer (such
warrant being referred to hereafter as the "Issuer Warrant"), on a fully diluted
basis at an aggregate purchase price of $37.5 million. To the extent Cerberus
exercises its conversion right under the Cerberus Financing, the percentage of
total number of shares of common stock of the Issuer which may be purchased by
the exercise of the Issuer Warrant shall be reduced on a pro rata basis.
In addition, on the Closing Date, the Issuer shall cause to be issued
to Cerberus or its designees a series of convertible preferred stock (the
"Series 1 Preferred Stock") of WGSI which shall entitle the holders thereof to
receive, as dividends thereon, 19.9% of the dividends of WGSI. The Series 1
Preferred Stock shall be convertible, at the option of the holder, into 19.9% of
the total issued and outstanding common stock of WGSI, on a fully diluted basis.
In addition, it is expected that 100% of the cash flow of WGSI shall be paid as
dividends on the common stock, the Series 1 Preferred Stock and the Series 2
Preferred Interests (defined below). The consent of the holders of certain
securities issued or issuable pursuant to the terms of the Cerberus Financing
shall be required in order for WGSI to take certain corporate actions. As soon
as practicable after the Closing Date, the Issuer shall cause WGSI to reorganize
as a limited liability company.
On the Closing Date, the Issuer shall also issue to Cerberus and its
designees a five-year warrant (the "WGSI Warrant") which grants Cerberus or its
designees the right to exercise such warrant for a price of $22.27 million for a
series of convertible preferred interests (the "Series 2 Preferred Interests")
whose terms and preferences are substantially identical to those of the Series 1
Preferred Stock except that the liquidation preference of the Series 2 Preferred
Interests shall be $22.27 million. In addition, the Series 2 Preferred Interests
shall have the right to receive 29.1% of the distributions of WGSI from the date
of issuance and shall be convertible into 29.1% of the common membership
interests of WGSI, on a fully diluted basis. To the extent Cerberus exercises
its conversion right under the Cerberus Financing with respect to the Series 2
Preferred Stock, the percentage of total number of shares of common stock of
WGSI which may be purchased by the exercise of the WGSI Warrant shall be reduced
on a pro rata basis.
In connection with the Term B Loans, Cerberus's affiliate, Madeleine,
received the right to convert $3,500,000 of the aggregate principal amount
outstanding under the Term B Loans into 15% of the issued and outstanding common
stock, on a fully diluted basis, of the Issuer and also received the right to
convert $3,500,000 of the aggregate principal amount outstanding under the Term
B Loans into 15% of the issued and outstanding common stock, on a fully diluted
basis, of WGSI. In addition, the Issuer and WGSI have each issued a warrant (the
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"Term B Warrants") to Madeleine, which gives Madeleine the right to purchase up
to 15% of the issued and outstanding common stock, on a fully diluted basis, of
the Issuer and WGSI for a purchase price of $3,500,000 per warrant. To the
extent Madeleine exercises its conversion right under the Term B Loans, the
percentage of total number of shares of common stock of the Issuer and WGSI
which may be purchased by the exercise of the Term B Warrants shall be reduced
on a pro rata basis.
Assuming the parties agree to enter into further amendments for the
remaining portion of the Term C Loan, Madeleine will receive the right to
convert up to $8,500,000 of the aggregate principal amount outstanding under the
Term C Loan into 34% of the issued and outstanding common stock, on a fully
diluted basis, of the Issuer and also receive the right to convert up to
$24,500,000 of the aggregate principal amount outstanding under the Term C Loan
into 34% of the issued and outstanding common stock, on a fully diluted basis,
of WGSI. Madeleine may pay the difference between the outstanding amount of the
Term C Loan and the conversion price in cash. In addition, the Issuer and WGSI
will each issue warrants (the "Term C Warrants") to Madeleine, which give
Madeleine the right to purchase up to 34% of the issued and outstanding common
stock, on a fully diluted basis, of the Issuer for a purchase price of
$8,500,000 and up to 34% of the issued and outstanding common stock, on a fully
diluted basis, of WGSI for a purchase price of $24,500,000. As of June 29, 2001,
under the Existing Tranches, Madeleine has the right to convert a portion of the
Term C Loan into 17.8% of the common stock of the Issuer and 17.8% of the common
stock of WGSI, and has received warrants to purchase such percentages of common
stock from the Issuer and WGSI in each case on a fully diluted basis. To the
extent Madeleine exercises its conversion right under the Term C Loan, the
percentage of total number of shares of common stock of the Issuer and WGSI
which may be purchased by the exercise of the Term C Warrants shall be reduced
on a pro rata basis.
With respect to the voting power of the Exercised Common Stock,
Madeleine has agreed that it will not, together with Cerberus (based solely on
Cerberus' ownership of the Issuer's Class E Preferred Stock), be entitled to
more than the number of votes equal to 49.9% of the voting power of the Issuer's
common stock outstanding on the record date for which a vote is being taken.
Therefore, to the extent that Madeleine's ownership of Exercised Common Stock
would entitle Madeleine and Cerberus (based solely on Cerberus' ownership of
Class E Preferred Stock) to voting power in excess of 49.9%, the combined voting
power of the Exercised Common Stock and the Class E Preferred Stock will be
reduced to that percentage.
Pursuant to the terms of the Cerberus Financing, the aggregate
principal amount outstanding under the Term A Loan, Term B Loans and Term C Loan
will be reduced from the amount of cash available which the Issuer may draw down
under the Cerberus Financing.
The Cerberus Financing will provide that Cerberus and its Affiliates
and designees may own a maximum 49% of the issued and outstanding common stock
of Issuer, on a fully diluted basis, and 49% of the issued and outstanding
common stock or ownership interests (as applicable) of WGSI, on a fully diluted
basis, including the conversion rights of the Series E Preferred Stock, the Term
B Warrants, the Term C Warrants, the Issuer Warrant, the WGSI Warrant, the
Series 1 Preferred Stock, the Series 2 Preferred Interests, the conversion
rights under the Term B Loans, the Term C Loans or the Cerberus Financing, and
any other capital
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stock, ownership interest, convertible indebtedness, option, warrant, or other
security convertible into or exchangeable for any equity or ownership interest
of the Issuer or WGSI, as applicable.
Each holder of Notes (a "Noteholder") should carefully review the
information contained in this Consent Solicitation prior to making a decision to
furnish a Consent and should particularly consider the following matters:
Principal Potential Benefits to Noteholders.
o The funds available under the Cerberus Financing will
permit the Issuer to continue to fund and operate its business
and will provide WGSI with sufficient cash to service the NMCI
contract.
o Assuming that the Issuer successfully implements its
current cost reduction strategies without material diminution in
the commercial business and assuming that WGSI is able to perform
its obligations under the NMCI contract, the Issuer anticipates
that WGSI will experience positive cash flow in 2002 and that the
Issuer will experience positive cash flow on a consolidated basis
in 2002.
o Without the additional cash resources and available
borrowings under the Cerberus Financing, the Issuer will not be
able to satisfy its trade obligations, and WGSI will not have
sufficient resources to fund its obligations under the
subcontract between WGSI and EDS. In such event, the Issuer would
likely pursue a voluntary petition for relief under Chapter 11 of
the U.S. Bankruptcy Code.
Principal Potential Risks to Noteholders.
o As a result of the Cerberus Financing, the obligations
of the Issuer under the Notes will be subordinated to
substantially greater liabilities of the Issuer, all of which
will be secured.
o The Issuer is highly leveraged. As of May 31, 2001, the Issuer
had approximately $480 million of outstanding debt, including
$174 million of redeemable preferred stock, $173 million of which
is redeemable in 2008. The Cerberus Financing will result in an
additional liability of up to $100 million to the Issuer, before
interest payments and accretion of the original issue discount,
all of which will be secured by substantially all of the assets
of the Issuer and WGSI. This substantial indebtedness will
require that the Issuer and WGSI devote substantially all of the
cash they receive from their operating and financing activities
to make debt service payments, thereby reducing the amount of
funds available for other activities.
o At the Closing Date, Cerberus and its designees, through their
ownership of the Series 1 Preferred Stock will be entitled to
receive 19.9% of all cash flow of WGSI. In addition, upon the
exercise of the WGSI Warrant, Cerberus and
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its designees will be entitled to receive, through their ownership of the Series
2 Preferred Stock, an additional 29.9% of the cash flow of WGSI. In light of
such a significant portion of WGSI's cash flow being distributed to Cerberus and
its designees, there can be no assurances that WGSI will be able to distribute
sufficient cash to the Issuer in order to fund the Issuer's operating and
financing activities, or to fund its own operating and financing activities.
o The operating and financial restrictions and covenants
in the Cerberus Financing may adversely affect the Issuer's and
WGSI's ability to finance future operations and capital needs.
Such restrictions and covenants will limit the Issuer's and
WGSI's ability to borrow more funds (other than those available
under the Cerberus Financing) and engage in asset sales, mergers
and other transactions.
SUMMARY OF INDENTURE AMENDMENTS
The Notes
The Notes were issued pursuant to the Indenture, dated as of March 5,
1998, between the Issuer and the Trustee. The Notes are not listed on any
securities exchange and, to the extent traded, are traded in the
over-the-counter markets. As of the date hereof, there were $208,530,000
aggregate principal face amount of Notes outstanding.
Description of the Indenture Amendments
The Issuer proposes to amend the Indenture to permit the Cerberus
Financing and provide for the other matters referred to below. The provisions
which the Issuer proposes to modify are set forth in full in the form of
Supplemental Indenture which is attached hereto as Annex A. The descriptions set
forth below only briefly summarize the substantive Indenture Amendments, do not
purport to be complete and are subject to, and qualified in their entirety by
reference to the form of Supplemental Indenture. The form of Supplemental
Indenture reflects the substance and not the particular form of the Indenture
Amendments. All statements herein regarding the substance of any provisions of
the Indenture Amendments and the Supplemental Indenture are qualified in their
entirety by reference to those instruments.
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The Indenture Amendments would modify the following provisions of the
Indenture:
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Substance of
Pertinent Substance of Proposed
Indenture Section Provision Current Provision Amendment
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Section 1.01 Definition of "Asset Specifically excludes Clarifies that the
Sale". certain transactions from issuance of securities by
the definition of "Asset an Unrestricted
Sale". Subsidiary are excluded
from the definition of
"Asset Sale".
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Section 1.01 Definition of Specifically excludes Excludes obligations
"Indebtedness" certain holders from the under the Company's Net
definition of Lease with CCPRE-EGAN
"Indebtedness" from the definition of
Indebtedness
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Section 1.01 Definition of "Permitted Limited the definition of Includes term loans and
Credit Facility". "Permitted Credit Facility" revolving credit
to loans entered into with facilities entered into
commercial banks and with any party.
financial institutions.
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Section 1.01 Definition of "Permitted Defines certain parties Includes Cerberus as a
Holders". that are exempt from the "Permitted Holder."
beneficial ownership
trigger of the "Change of
Control Provision" of the
Indenture.
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Substance of
Pertinent Substance of Proposed
Indenture Section Provision Current Provision Amendment
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Section 1.01 Definition of "Permitted Limited the amount of Increases the amount of
Indebtedness" clause (h). Indebtedness permitted Indebtedness permitted
under Permitted Credit under Permitted Credit
Facilities to $50 million Facilities to $250
outstanding at any one million (without regard
time. to interest whether
accrued, capitalized,
accreted or otherwise).
Permits the Company to
guarantee and secure the
Indebtedness of the
Company and/or any of its
subsidiaries
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Section 1.01 Definition of "Permitted New provision. Allows any investment by
Investments" clause (g). the Company or a Restricted
Subsidiary in WGSI up to
$75 million to be included
in the definition of
Permitted Investment.
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Section 1.01 Definition of "Permitted Defines liens securing Requires that the Liens
Liens" clause (h). Permitted Credit Facilities attach within 180 days of
which qualify as Permitted the establishment of the
Indebtedness and which Permitted Credit
liens attach within 180 Facility. Includes Liens
days of the date such related to the Winstar
Indebtedness is incurred. Settlement described in
this Consent Solicitation.
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Substance of
Pertinent Substance of Proposed
Indenture Section Provision Current Provision Amendment
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 1.01 Definitions of "Cerberus" New definitions with See Form of First
and "WGSI". respect to these terms. Supplemental Indenture
attached hereto as Annex
A for a description of
these definitions.
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 10.13 Limitation on Restricted Clause (vi) of the third Increases the permitted
Payments paragraph of Section 10.13 amount of Investments
exempts Investments in under the provision to
certain ventures in an $25 million.
amount not to exceed $12.5
million of investments.
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 10.14 Limitation on Transaction Requires certain approvals Increases the dollar
with Affiliates of the Board of Directors thresholds beyond which
and fairness opinions from transactions with
financial advisors for Cerberus will require
certain transactions with certain approvals and
Affiliates and persons who exempts Cerberus from the
own 10% or more of the requirement of a fairness
common stock of the Issuer. opinion for Affiliate
Transactions.
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 10.15 Disposition of Proceeds Regulates the use of Clarifies that cashless
of Asset Sales proceeds of Asset Sales by exercise of options and
the Company and the warrants and the
Restricted Subsidiaries. forgiveness of Indebtedness
shall be treated as Cash or
Cash Equivalents for the purposes
of Section 10.15.
--------------------------- --------------------------- ----------------------------- ---------------------------
-12-
--------------------------- --------------------------- ----------------------------- ---------------------------
Substance of
Pertinent Substance of Proposed
Indenture Section Provision Current Provision Amendment
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 10.20 Limitation on Provides for certain Permits the Company and
Designations of approvals and any Restricted Subsidiary to
Unrestricted Subsidiaries requirements to be met guarantee, cross-default to
prior to the designation and otherwise become directly
of a subsidiary of the and indirectly liable for the
Company as an Indebtedness of an Unrestricted
"Unrestricted Subsidiary", Subsidiary so long as such
and prohibits the Company Indebtedness is incurred pursuant
and any Restricted to a Permitted Credit Facility
Subsidiary from or such liability is otherwise
guaranteeing, allowing permitted under the Indenture.
for cross-defaults In addition, the provision has
with or otherwise becoming been amended to clarify that
directly or indirectly the designation of WGSI as
liable for the an Unrestricted Subsidiary shall
Indebtedness of any not be affected by the conversion
Unrestricted Subsidiary. or other reorganization of WGSI
that results in WGSI becoming a
limited liability company.
--------------------------- --------------------------- ----------------------------- ---------------------------
-13-
--------------------------- --------------------------- ----------------------------- ---------------------------
Substance of
Pertinent Substance of Proposed
Indenture Section Provision Current Provision Amendment
--------------------------- --------------------------- ----------------------------- ---------------------------
Section 10.22 Issuance of Guarantees by Requires that any Permits Restricted
Material Restricted Restricted Subsidiary that Subsidiaries to Guarantee
Subsidiaries; Limitations Guarantees the Indebtedness the Indebtedness of the
on Guarantees by Other of any other person must Company and any
Restricted Subsidiaries execute a Supplemental Subsidiary incurred under
Indenture and become and a Permitted Credit
Subsidiary Guarantor under Facility without the
the Indenture. requirement of becoming a
Subsidiary Guarantor
under the Indenture.
--------------------------- --------------------------- ----------------------------- ---------------------------
Terms of the Consent Solicitation
Pursuant to the terms of the Consent Form, the completion, execution
and delivery thereof will constitute a Consent. For the Indenture Amendments to
become effective, Record Holders of the Requisite Principal Amount must deliver
Consents and the Supplemental Indenture must be executed by the Issuer and the
Trustee. Funds and accounts managed directly or indirectly by Cerberus are the
beneficial/record owners of approximately $87,380,000 aggregate principal face
amount of the Notes, representing 41.9% of the aggregate principal face amount
of the Notes. Cerberus has delivered to the Issuer, on behalf of such funds and
accounts, a Consent with respect to all Notes beneficially owned or held of
record by such funds and accounts. The date of the execution of the Supplemental
Indenture will be as soon as practicable after certification to the Trustee by
the Issuer that Consents fully executed by the Record Holders of the Requisite
Principal Amount have been received and not revoked. The Issuer may make such
certification and enter into the Supplemental Indenture as promptly as
practicable after Consents which have not theretofore been revoked are received
from Record Holders representing the Requisite Principal Amount. Consequently,
if Consents in respect of the Requisite Principal Amount are received, the
Supplemental Indenture may be entered into and become effective prior to the
Expiration Date. However, the Indenture Amendments will become operative only
when the Trustee receives an officers' certificate confirming the consummation
of the Cerberus Financing. Noteholders will be notified of such effectiveness as
required under the Indenture.
Only Record Holders of Notes as of the Record Date can deliver valid
Consents. With respect to Notes that are held of record by The Depository Trust
Company ("DTC"), participants in DTC identified on the DTC security position
listing for the Notes may execute and deliver a Consent with respect to the
principal amount of Notes specified as held by such participant as of the Record
Date on such DTC security position listing, in accordance with
-14-
DTC's omnibus proxy procedures. Subsequent transfers of Notes (whether or not
held of record by DTC) will not have the effect of revoking any Consent
theretofore given by such Record Holder, and such Consent will remain valid
unless validly revoked by the Record Holder. See "Revocation of Consents" below.
The Issuer reserves the right to extend the Expiration Date, to
otherwise amend the Consent Solicitation in any respect, and to terminate the
Consent Solicitation. Any such extension, amendment or termination may be made
by press release or such other means as the Issuer deems appropriate.
Delivery of Consent Form
Requests for assistance in filling out and delivering Consents or
requests for additional copies of this Consent Solicitation Statement or the
consent letter may be directed to the Information and Tabulation Agent.
Deliveries of Consents with respect to Notes should be made to the
Information and Tabulation Agent at the address or facsimile number set forth
below (facsimile transmissions must be followed by physical delivery prior to
the Expiration Date).
The Information and Tabulation Agent for the Solicitation is:
D.F. King & Co., Inc.
By Hand, Mail or Overnight Delivery:
77 Water Street
20th Floor
New York, NY 10005
Attn: Edward McCarthy
By Facsimile Transmission:
(212) 952-0137
To Confirm Receipt Please Call:
(212) 269-5550
Any questions regarding the Issuer, this Consent Solicitation or
requests for assistance may be directed to the Chief Financial Officer of the
Issuer, Terri F. Zimmerman, at (651) 256-5100. Holders of Notes should also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning this Consent Solicitation.
-15-
Revocation of Consents
Any Record Holder who has delivered a Consent may revoke such Consent
by delivering written notice of such revocation so that it is received by the
Issuer at any time prior to the date on which the Trustee receives an officers'
certificate from the Issuer notifying the Trustee that the holders of the
Requisite Principal Amount have delivered (and not revoked) Consents, which may
be prior to the Expiration Date. The term "Expiration Date" means 12:00 noon,
New York City time, on July 30, 2001, unless and until the Issuer, in its sole
discretion, shall have extended the period of time during which the Consent
Solicitation is open, in which event the term "Expiration Date" shall mean the
latest time and date that the Consent Solicitation, as so extended by the
Issuer, shall expire. To be effective, any notice of revocation must indicate
the certificate number or numbers of Notes to which it relates and the aggregate
principal face amount represented by such Notes and be signed by the Noteholder
in the same manner as the original Consent Form.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax
consequences likely to result from the Consent Solicitation and adoption of the
Indenture Amendments under existing federal income tax law, which is subject to
change, possibly retroactively. This summary does not discuss all aspects of
federal income taxation that may be relevant to a particular Noteholder in light
of his personal investment circumstances or to certain types of Noteholders
subject to special treatment under the federal income tax laws (for example,
financial institutions, insurance companies, tax-exempt organizations and
foreign taxpayers) and it does not discuss any aspects of state, local or
foreign tax laws. Noteholders are advised to consult their tax advisors as to
the specific tax consequences of the Consent Solicitation and adoption of the
Indenture Amendments, including the application and effect of federal, state,
local and foreign income and other tax laws.
Adoption of Indenture Amendments
The adoption of the Indenture Amendments will not constitute a
"significant modification" of the terms of the Notes for federal income tax
purposes. Accordingly, adopting the Indenture Amendments will have no federal
income tax consequences to the Issuer or Noteholders.
FEES AND EXPENSES
The Issuer will, upon request, reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred by such
persons in forwarding any of the materials in respect of the Consent
Solicitation to the beneficial owners of Notes held by any such person or
nominee or in a fiduciary capacity. Except as aforesaid, no broker, dealer,
commercial bank or trust company has been authorized to act as the agent of the
Issuer for purposes of the Consent Solicitation.
-16-
MISCELLANEOUS
The Issuer is not aware of any jurisdiction where the making of the
Consent Solicitation is not in compliance with the laws of such jurisdiction. If
the Issuer becomes aware of any jurisdiction where the making of the Consent
Solicitation would not be in compliance with such laws, the Issuer will make a
good faith effort to comply with any such laws or seek to have such law declared
inapplicable to the Consent Solicitation. If, after such good faith effort, the
Issuer cannot comply with any such applicable laws, the Consent Solicitation
will not be made to (nor consents be accepted, from or on behalf of) Noteholders
residing in such jurisdictions.
AVAILABLE INFORMATION
The Company is subject to the periodic and other informational
requirements of the Exchange Act, and in accordance therewith files reports and
other information with the Commission. Such reports and other information can be
inspected and copied at the public reference facility maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such materials can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy statements and information
statements and other materials that are filed through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
-17-
Annex A
- --------------------------------------------------------------------------------
FORM OF FIRST SUPPLEMENTAL INDENTURE
WAM!NET INC.
Issuer
and
FIRST TRUST NATIONAL ASSOCIATION
Trustee
-----------------------
Dated as of July , 2001
-----------------------
$208,530,000
13 1/4% Senior Discount Notes due 2005
- --------------------------------------------------------------------------------
FIRST SUPPLEMENTAL INDENTURE, dated as of July ___, 2001, between
WAM!NET Inc. and First Trust National Association, a national banking
association, as Trustee under the Indenture, dated as of March 5, 1998 (the
"Indenture"), between the Issuer and the Trustee relating to the Issuer's
$208,530,000 aggregate principal face amount of 13 1/4% Senior Discount Notes
due 2005 (the "Securities"). Capitalized terms not defined herein shall have the
respective meanings assigned to them in the Indenture.
RECITALS OF THE ISSUER
The Company has entered into a senior discounted secured debt and
equity financing arrangement. Such financing arrangement, as described in the
Consent Solicitation, dated July 20, 2001 (as amended through the date hereof)
(the "Consent Solicitation"), is defined herein as the "Cerberus Financing". As
part of the Cerberus Financing, the Issuer has completed a consent solicitation
(the "Consent Solicitation") with the holders of the Securities to amend certain
provisions of the Indenture (the "Amendments"), as described in the Consent
Solicitation.
In accordance with Section 9.02 of the Indenture the Holders of not
less than a majority in aggregate principal face amount of the Securities
Outstanding have consented to such Amendments.
The Board of Directors of the Issuer has duly authorized the execution
and delivery of this Supplemental Indenture. The Issuer has delivered to the
Trustee an Officers' Certificate pursuant to Section 9.03 of the Indenture and
an Opinion of Counsel pursuant to Section 9.03 of the Indenture.
WHEREFORE, each party agrees as follows for the benefit of the other
parties and for the equal or ratable benefit of the Holders of the Securities:
-1-
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01 Definitions.
-----------
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires, the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to the
Indenture and this Supplemental Indenture as a whole and not to any particular
Article, Section or subdivision. In addition, the words "this Indenture," as
used in the Indenture, shall refer to the Indenture as supplemented by this
Supplemental Indenture.
SECTION 1.02 Effect of Headings.
------------------
The Article and Section headings are for convenience only and shall
not affect the construction hereof. Except as expressly provided herein, all
references to Sections in the Indenture shall remain unchanged.
SECTION 1.03 Successors and Assigns.
----------------------
All covenants and agreements in this Supplemental Indenture by the
Issuer shall bind their successors and assigns, or any other obligor on the
Securities, whether expressed or not.
SECTION 1.04 Separability Clause.
-------------------
In case any provision in this Supplemental Indenture shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.05 Benefits of Supplemental Indenture.
----------------------------------
Nothing in this Supplemental Indenture, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, any
Paying Agent and the Holders, any benefit or any legal or equitable right,
remedy or claim under this Supplemental Indenture.
SECTION 1.06 Governing Law.
-------------
THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF).
-2-
SECTION 1.07 Effectiveness.
-------------
This Supplemental Indenture shall take effect on the date hereof;
provided, however, that the Amendments set forth in Article II hereof shall
become operative only upon and simultaneously with, and shall have no force and
effect prior to the date of delivery by the Issuer of an Officers' Certificate
to the effect that the Cerberus Financing has been consummated.
ARTICLE II
AMENDMENTS
Section 1.01. Definitions.
-----------
(a) The second sentence of the definition of "Asset Sale" is hereby
amended and restated in its entirety as follows:
For the purposes of this definition, the term "Asset Sale" shall not
include (i) any disposition of properties and assets of the Company that is
governed under Article Eight, (ii) sales of property or equipment that have
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of the Company or any Restricted Subsidiary, as the
case may be, (iii) any issuance of securities by an Unrestricted Subsidiary, and
(iv) for purposes of Section 10.15 hereof, sales, conveyances, transfers, leases
or other dispositions of property or assets, whether in one transaction or a
series of related transactions occurring within one year, either (x) involving
assets with a Fair Market Value not in excess of $1 million in any 12 month
period, or (y) which constitutes the incurrence of a Capitalized Lease
Obligation.
(b) The second sentence of the definition of "Indebtedness" is hereby
amended and restated in its entirety as follow:
In no event shall "Indebtedness" include (a) trade payables and
accrued liabilities that are current liabilities incurred in the ordinary course
of business, excluding the current maturity of any obligation which would
otherwise constitute Indebtedness or (b) any amount, liability or obligation due
to CCPRE-EGAN, LLC ("CCPRE") by the Company under the Net Lease between CCPRE
and the Company, dated as of September 30, 1999 (the "Net Lease").
(c) Section 1.01 is hereby amended by adding the following definition
of "Cerberus" immediately following the definition of "Cedel":
"Cerberus" means Cerberus Capital Management, L.P., and its
designees and affiliates.
(d) The definition of "Permitted Credit Facility" is hereby amended
and restated in its entirety as follows:
-3-
"Permitted Credit Facility" means any senior secured or
unsecured term loan and/or revolving credit facility (including any
letter of credit subfacility) entered into principally with commercial
banks, financial institutions and/or any other person.
(e) The definition of "Permitted Holders" is hereby amended and
restated in its entirety as follows:
"Permitted Holders" means (i) WorldCom and each of its
Affiliates, (ii) Cerberus and each of its Affiliates and (iii) Edward
J. Driscoll III (the Chairman of the Board and Chief Executive Officer
of the Company as of the date of this Indenture) and his family
members, any trust for the benefit of any of the foregoing persons and
their respective estates and heirs. As used herein, "family member"
means the spouse, siblings and lineal descendants of Mr. Driscoll.
(f) Clause (h) of the definition of "Permitted Indebtedness" is hereby
amended and restated in its entirety as follows:
(h) Indebtedness of the Company and/or any of its
Subsidiaries incurred under one or more Permitted Credit Facilities
and/or Indebtedness of the Company and/or any of its Subsidiaries
represented by Debt Securities, and any refinancings of the foregoing
otherwise incurred in compliance with this Indenture, in an aggregate
principal amount not to exceed $250 million at any time outstanding
(without regard to interest whether accrued, capitalized, accreted or
otherwise) and any Guarantees thereof;
(g) The definition of "Permitted Investments" is hereby amended
by adding the following Clause (h) immediately following Clause (g):
(h) any Investment by the Company or any Restricted
Subsidiary in WGSI in an amount not to exceed $75 million in the
aggregate at any one time.
(h) Clause (h) of the definition of "Permitted Liens" is hereby
amended and restated in its entirety to read as follows:
(h) Liens securing Indebtedness incurred under a Permitted
Credit Facility, provided that (I) such Indebtedness is Permitted
Indebtedness and (II) such Liens attach within 180 days of the date on
which such Permitted Credit Facility is established,
(i) The definition of "Permitted Liens" is hereby amended by
adding the following Clause (m) immediately following Clause (l):
;and (m) Liens securing any Indebtedness incurred pursuant
to the Winstar Settlement, as such term is defined in the Solicitation
of Consents, dated July 20, 2001, shall be deemed Permitted Liens.
-4-
(j) Section 1.01 is hereby amended by adding the following
definition of "WGSI" immediately following the definition of "Warrant Change of
Control":
"WGSI" means Wam!Net Government Services, Inc., a Minnesota
corporation, its successors, assigns (including by operation of law),
entities succeeding to all of its assets and liabilities, and its
subsidiaries.
Section 10.13. Limitation on Restricted Payments.
---------------------------------
Clause (vi) of the third paragraph of Section 10.13 is hereby amended
and restated in its entirety as follows:
(vi) so long as no Default shall have occurred and be
continuing, Investments in (x) joint ventures formed to engage in the
Digital Network Business and (y) other persons principally engaged in
the Digital Network Business; provided that no more than $25.0 million
of Investments made pursuant to this clause (vi) shall be outstanding
at any time; and
Section 10.14. Limitation on Transaction with Affiliates.
-----------------------------------------
The first paragraph of Section 10.14 is hereby amended and restated in
its entirety as follows:
The Company shall not, and shall not permit, cause or suffer
any Restricted Subsidiary to, directly or indirectly, conduct any
business, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or
enter into any contract, agreement, loan, advance or Guarantee or
engage in any other transaction (or series of related transactions
which are similar or part of a common plan) with or for the benefit of
any of, their respective Affiliates or any beneficial owner of 10% or
more of the Common Stock of the Company or any officer or director of
the Company or any Subsidiary (each, an "Affiliate Transaction"),
unless the terms of the Affiliate Transaction are set forth in writing
and are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than would be available in a
comparable transaction with an unaffiliated third party. Each
Affiliate Transaction (or series of related Affiliate Transactions)
involving aggregate payments and/or other consideration having Fair
Market Value (i) in excess of $1 million shall be approved by a
majority of the Board, such approval to be evidenced by a Board
Resolution stating that the Board has determined that such transaction
or transactions comply with the foregoing provisions, (ii) in excess
of $5 million shall further require the approval of a majority of the
Disinterested Directors and (iii) in excess of $10 million shall
require that the Company obtain a written opinion from an Independent
Financial Advisor stating that the terms of such Affiliate Transaction
(or series of related Affiliate Transactions) to the Company or the
Restricted Subsidiary, as the case may be, are fair from a financial
point of view; provided, however, that the dollar thresholds set forth
in clauses (i), (ii) and (iii) above shall be increased to $2.5
million, $10 million and
-5-
$25 million, respectively, in the case of any Affiliate Transaction
with WorldCom, Cerberus or any of their respective Affiliates further,
provided, however, that for the purposes of this Section 10.14,
Cerberus and its Affiliates shall be exempt from the requirement to
obtain the written opinion of an Independent Financial Advisor with
respect to the fairness of an Affiliate Transaction. For purposes of
this Section 10.14, any Affiliate Transaction approved by a majority
of the Disinterested Directors or as to which a written opinion has
been obtained from an Independent Financial Advisor, on the basis set
forth in the preceding sentence, shall be deemed to be on terms that
are no less favorable to the Company or such Restricted Subsidiary, as
the case may be, than would be available in a comparable transaction
with an unaffiliated third party and, therefore, shall be permitted
under this Section 10.14.
Section 10.15. Disposition of Proceeds of Asset Sales.
--------------------------------------
The first sentence of Section 10.15 is hereby amended and restated in
its entirety to read as follows:
The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Sale unless (a) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of
the shares or assets sold or otherwise disposed of and (b) at least
80% of such consideration consists of Cash or Cash Equivalents;
provided that the following shall be treated as Cash or Cash
Equivalents for the purposes of this Section 10.15: (x) the amount of
Indebtedness (other than Subordinated Indebtedness and Deeply
Subordinated Indebtedness) of the Company or any Restricted Subsidiary
that is assumed by the transferee of assets disposed of in such Asset
Sale pursuant to an agreement that fully and unconditionally releases
the Company or such Restricted Subsidiary from further liability
("Assumed Indebtedness"), (y) the amount of any notes or other
obligations that within 30 days of receipt are converted into cash (to
the extent of the cash (after payment of any costs of disposition) so
received), and (z) the exercise of any warrant or option issued by the
Company or any Subsidiary where the exercise price is paid (i) by
cancellation of all or any part of the unpaid principal amount of any
then-outstanding Indebtedness owed to such warrant or option holder by
the Company or its Subsidiary in an amount equal to the exercise
price, (ii) by cancellation of such number of the shares of common
stock of the Company or its Subsidiary otherwise issuable to the
warrant or option holder upon such exercise as shall be specified for
cancellation by the warrant or option holder, such that the excess of
the aggregate current market price of such specified number of shares
on the date of exercise over the portion of the exercise price
attributable to such shares shall equal the exercise price
attributable to the shares of common stock to be issued upon such
exercise, or (iii) by surrender to the Company or its Subsidiary for
cancellation certificates representing shares of common stock of the
Company or its Subsidiary owned by the warrant or option holder
(properly endorsed for transfer in blank) having a current market
price on the date of exercise equal to the exercise price thereunder.
-6-
Section 10.20. Limitation on Designations of Unrestricted Subsidiaries.
-------------------------------------------------------
The first and second paragraphs of Section 10.22 are hereby amended
and restated in their entirety as follows:
Other than in the case of a Permitted Designation (as defined below)
the Company will not designate any Subsidiary of the Company (other than a newly
created Subsidiary in which the Company has made an Investment of $1,000 or
less) as an "Unrestricted Subsidiary" under this Indenture (a "Designation")
unless:
(a) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(b) except in the case of Permitted Investments and
Investments made pursuant to clause (v) of the third paragraph of
Section 10.13 hereof, at the time of and after giving effect to such
Designation, the Company would be able to incur $1.00 of Indebtedness
(other than Permitted Indebtedness) under Section 10.11 hereof; and
(c) the Company would be permitted under this
Indenture to make an Investment at the time of such Designation
(assuming the effectiveness of such Designation) in an amount (the
"Designation Amount") equal to the Fair Market Value of the interest
of the Company and its Restricted Subsidiaries in such Subsidiary on
such date.
In the event of any such Designation, other than in the case of a
Permitted Designation, the Company shall be deemed to have made an Investment
constituting a Restricted Payment pursuant to Section 10.13 hereof for all
purposes of this Indenture in an amount equal to the Designation Amount. Neither
the Company nor any Restricted Subsidiary shall at any time (x) provide a
Guarantee of, or similar credit support for, or subject any of its properties or
assets (other than the Capital Stock of any Unrestricted Subsidiary) to the
satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (y) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any other Indebtedness
which provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon (or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity) upon the occurrence of a default
with respect to any other Indebtedness that is Indebtedness of an Unrestricted
Subsidiary (including any corresponding right to take enforcement action against
such Unrestricted Subsidiary), except under a Permitted Credit Facility or to
the extent otherwise permitted under this Indenture, including without
limitation under Section 10.13 hereof. The designation of WGSI as an
Unrestricted Subsidiary (the "Permitted Designation") shall not be affected by
the conversion of WGSI into a limited liability company or the merger of or
other reorganization of WGSI that results in WGSI being a limited liability
company.
-7-
Section 10.22. Issuance of Guarantees by Material Restricted Subsidiaries;
Limitations on Guarantees by Other Restricted Subsidiaries.
-----------------------------------------------------------
The second paragraph of Section 10.22 is hereby amended and restated
in its entirety to read as follows:
The Company will not permit any Restricted Subsidiary that
is not a Subsidiary Guarantor, directly or indirectly, to Guarantee
any Indebtedness of any person (other than Indebtedness of the Company
or any Subsidiary incurred under a Permitted Credit Facility) unless,
in each case, such Restricted Subsidiary simultaneously executes and
delivers to the Trustee a supplemental indenture, in the form of
Exhibit F hereto, pursuant to which such Restricted Subsidiary shall
guarantee the full and punctual payment of all Indenture Obligations
of the Company on the same terms and conditions as the Subsidiary
Guarantees by the Subsidiary Guarantors.
This Supplemental Indenture is executed by the Issuer and the Trustee
pursuant to the provisions of Article IX of the Indenture, and the terms and
conditions hereof shall be, and shall from and after the date hereof be deemed
to be, part of the terms and conditions of the Indenture for any and all
purposes, subject to Section 1.7 hereof. The Indenture as amended by this
Supplemental Indenture is in all respects confirmed and preserved.
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one in the same instrument.
-8-
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first written above.
WAM!NET INC.
By:
-------------------------------
Name:
Title:
Attest:
-------------------------------
FIRST TRUST NATIONAL ASSOCIATION,
Trustee
By:
-------------------------------
Name:
Title: Trust Officer
Attest:
-------------------------------
CONSENT FORM
WAM!NET INC.
The undersigned holder of record on July 16, 2001 of 13 1/4% Senior
Discount Notes due 2005 (the "Notes") of WAM!NET INC. (collectively, the
"Issuer"), hereby
Consents [ ] Does Not Consent [ ]
to the Indenture Amendments (as defined in the Solicitation of Consents dated
July 20, 2001 of the Issuer). The undersigned acknowledges receipt for the
Solicitation of Consents (including the supplemental material thereto) and to
the Waiver described in the Solicitation of Consents.
Unless otherwise specified by the undersigned, this form relates to
the total principal face amount of Notes held by the undersigned on the date
hereof as indicated below.
Principal Face Amount Held:
------------------------
Principal Face Amount Consenting:
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If forms of Consent are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or other persons acting
in a fiduciary or representative capacity, such persons should so indicate when
signing.
Name of Signer (Please Print)
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Telephone No. of Signer: (___)
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Date:
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Signature