<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1996
REGISTRATION NO. 333-04388
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 8
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ADVANCED RADIO TELECOM CORP.
(Currently Advanced Radio Technologies Corporation)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4812 52-1348016
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
VERNON L. FOTHERINGHAM
CHIEF EXECUTIVE OFFICER
ADVANCED RADIO TELECOM CORP. ADVANCED RADIO TELECOM CORP.
500 108TH AVENUE, N.E., SUITE 2600 500 108TH AVENUE, N.E., SUITE 2600
BELLEVUE, WASHINGTON 98004 BELLEVUE, WASHINGTON 98004
(206) 688-8700 (206) 688-8700
(Address, Including Zip Code, and Telephone (Name, Address, Including Zip Code, and
Number, Including Area Code, of Registrant's Telephone Number, Including Area Code, of
Principal Executive Offices) Agent for Service)
</TABLE>
<TABLE>
<S> <C> <C>
COPIES TO:
JAMES KARDON, ESQ. JOHN D. WATSON, JR., ESQ. W. THEODORE PIERSON, JR., ESQ.
HAHN & HESSEN LLP LATHAM & WATKINS PIERSON & BURNETT, LLP
350 FIFTH AVENUE 1001 PENNSYLVANIA AVE., N.W. 1667 K. STREET, N.W., SUITE 801
NEW YORK, NEW YORK 10118 WASHINGTON, D.C. 20004 WASHINGTON, D.C. 20006
(212) 736-1000 (202) 637-2200 (202) 466-3044
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ADVANCED RADIO TELECOM CORP.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION
IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-1
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page of Prospectus; Outside Back
Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors
4. Use of Proceeds...................................... Use of Proceeds
5. Determination of Offering Price...................... Outside Front Cover Page of Prospectus; Risk Factors;
Underwriting
6. Dilution............................................. Dilution; Shares Eligible for Future Sale
7. Selling Security Holders............................. Not Applicable
8. Plan of Distribution................................. Outside Front Cover Page of Prospectus; Underwriting
9. Description of Securities to be Registered........... Outside Front Cover Page of Prospectus; Prospectus
Summary; Description of Capital Stock; Shares
Eligible for Future Sale
10. Interests of Named Experts and Counsel............... Legal Matters; Experts
11. Information with Respect to the Registrant........... Prospectus Summary; Risk Factors; The Company;
Dividend Policy; Capitalization; Selected Historical
Combined and Pro Forma Financial Data; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business; Management;
Principal Stockholders; Certain Transactions;
Description of Capital Stock; Description of Certain
Indebtedness; Financial Statements.
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable.
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, not including the
Representative's non-accountable expense allowance. Except for the SEC
registration fee, the NASD filing fee and the Nasdaq listing fee, all of the
amounts in the table below are estimated.
<TABLE>
<CAPTION>
Securities and Exchange Commission registration fee................ $ 19,628
<S> <C> <C>
NASD filing fee.................................................... 5,718
Nasdaq listing fee................................................. 50,000
Accounting fees and expenses....................................... 568,600
Printing........................................................... 650,000
Blue Sky fees and expenses (including counsel fees)................ 20,000
Legal fees and expenses............................................ 620,000
Transfer Agent and Registrar fees and expenses..................... 2,500
Miscellaneous expenses............................................. 37,603
----------
TOTAL (estimated).................................................. $1,974,049
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</TABLE>
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<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party be reason of such position. If such person shall have acted in good
faith and in a manner he reasonable believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
Reference is made to Article Ninth of the Certificate of Incorporation of
the Registrant, Section 6.4 of the By-laws and each of the Indemnification
Agreements filed as Exhibits 10-5, 10-6, 10-7 and 10-8, respectively, to this
Registration Statement for information regarding indemnification of directors
and officers under certain circumstances.
The Registrant has agreed to indemnify the Underwriters and their
controlling persons, and the Underwriters have agreed to indemnify the
Registrant and its controlling persons, against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Act"). Reference
is made to the Underwriting Agreement filed as part of Exhibit 1-1 hereto.
For information regarding the Registrant's undertaking to submit to
adjudication the issue of indemnification for violation of the Act, see Item 17
hereof.
The Registrant's Certificate of Incorporation provides that every director,
officer or agent of the Company shall be entitled to be indemnified out of the
assets of the Company against all losses or liabilities which he or she may
sustain or incur in or about the execution of the duties of his or her office or
otherwise in relation thereto, including any liability incurred by him or her in
defending any proceedings, whether civil or criminal, in which judgment is given
in his or her favor or in which he or she is acquitted, and no director or other
officer shall be liable for any loss, damage or misfortune which may happen to
or be incurred by the Company in the execution of the duties of his or her
office or in relation thereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
TELECOM CLASS A AND B COMMON STOCK PRIVATE PLACEMENT
In April 1995, the Company and Landover Holdings Corporation ("LHC")
subscribed 340,000 shares of Telecom Class A common stock and 640,000 shares of
Telecom Class B common stock, respectively, for $0.001 per share, which, after
giving effect to anti-dilution adjustments and the February 1996 Reorganization,
currently are equivalent upon conversion prior to the Offering to 3,641,111
shares and 2,650,414 shares, respectively, of Common Stock. In addition,
Hedgerow Corporation of Maine ("Hedgerow") and Toro Financial Corp. ("Toro")
subscribed 15,000 shares and 5,000 shares, respectively, of Telecom Class A
common stock at the price of $0.001 per share, which, after giving effect to
anti-dilution adjustments and the February 1996 Reorganization currently are
equivalent upon conversion prior to the Offering to 160,637 shares and 53,546
shares of the Common Stock, respectively. The securities issued in the above
transactions were offered and sold in reliance upon the exemption from
registration under Section 4(2) of the Act. The recipients made certain
representations as to the nature of their investments and had adequacy of access
to information about the Registrant.
PREFERRED STOCK PRIVATE PLACEMENTS
Between May 8, 1995 and November 13, 1995, the LHC Stock was diluted by
purchases of series of Telecom preferred stock by E2-2, E2, E1 Holdings L.P.
("E1") and E2-3 Holdings, L.P. ("E2-3" and collectively with E1, E2 and E2-2,
the "Landover Partnerships"), each a limited partnership whose general partner
is controlled by LHC, in separate private placements. E2-2, which committed to
II-2
<PAGE>
purchase up to $3,500,000 of Telecom preferred stock matching other investors
under the LHC Purchase Agreement, purchased 405,880 shares of Telecom Series A
preferred stock (which converts into 1,918,705 shares of Common Stock upon
completion of this offering) for an aggregate of $946,600, and LHC purchased
35,873 shares of such Telecom Series A preferred stock from E2-2 for $1,050,000
pursuant to an option. E2 purchased an aggregate of 105,823 shares of Telecom
Series B preferred stock (which converts into 500,254 shares of Common Stock
upon completion of this offering) for an aggregate of $842,400. E1 purchased
13,797 shares of Telecom Series A preferred stock (which converts into 65,222
shares of Common Stock upon completion of this offering) for an aggregate of
$60,000 and 8,856 shares of Telecom Series B preferred stock (which converts
into 41,865 shares of Common Stock upon completion of this offering) for an
aggregate of $38,300. E2-3 purchased an aggregate of 7,363 shares of Telecom
Series C preferred stock (which converts into 34,807 shares of Common Stock upon
completion of this offering) for an aggregate of $112,700. All of the Landover
Partnerships will liquidate upon completion of this offering. The securities
issued in each of the foregoing transactions were offered and sold in reliance
on an exemption from registration under Regulation D promulgated under the Act.
On November 9, 1995, Telecom sold 61,640 shares of Telecom Series D
preferred stock (which convert into 291,390 shares of Common Stock upon
completion of this offering) for $2,000,000 in a private placement. Telecom
simultaneously redeemed 293,791 shares of Telecom common stock from LHC for
$2,000,000. In connection with the February 1996 Reorganization described below,
LHC granted to the holders of Telecom Series D preferred stock a contingent
option to purchase 145,685 shares of Telecom common stock at a nominal price
(the "Series D/LHC Option"), which option expires upon completion of this
offering.
On November 13, 1995, Global Private Equity II, L.P., Advent Partners
Limited Partnership and Advent International Investors II L.P. each a limited
partnership controlled by Advent International Corporation, (collectively,
"Advent") purchased for an aggregate of $5,000,000, (i) one share of ART's
Series A Redeemable Preferred Stock for a purchase price of $50,000 and (ii) the
Company's 10% Secured Convertible Demand Promissory Notes in the aggregate
principal amount of $4,950,000. In connection with the February 1996
Reorganization, Advent exchanged such Preferred Stock and Note for 232,826
shares of Telecom Series E preferred stock (which converts into 1,100,632 shares
of Common Stock upon completion of this Offering), $0.001 par value per share.
The securities issued in each of the foregoing transactions were offered and
sold in reliance on an exemption from registration under Regulation D
promulgated under the Act. Advent made certain representations as to the nature
of its investment and had adequate access to information about the Registrant.
On February 2, 1996, Ameritech Development Corp. ("Ameritech") purchased for
an aggregate of $2,500,000 48,893 shares of Telecom Series F preferred stock,
par value $0.001 per share, (the "Ameritech Financing") convertible into 231,131
shares of Common Stock upon completion of this offering. In addition, Telecom
entered into the Ameritech Strategic Distribution Agreement and in connection
therewith granted to Ameritech a ten-year warrant to purchase 318,959 shares of
Telecom common stock exercisable at a nominal price per share (the "Ameritech
Warrant"). The securities issued in each of the foregoing transactions were
offered and sold in reliance on an exemption from registration under Regulation
D promulgated under the Act. Ameritech made certain representations as to the
nature of its investment and had adequate access to information about the
Registrant.
MARCH BRIDGE NOTES
On March 8, 1996, Telecom issued in a private placement $5,000,000 principal
amount of two year, 10% unsecured notes (the "March Bridge Notes") and five-year
warrants to purchase up to an aggregate of 400,000 shares of Telecom common
stock at a price of $17.1875 per share (the "March Bridge Warrants") to
investors including: (i) affiliates of J.C. Demetree, Jr. and Mark Demetree,
directors of the Company; (ii) the Advent Partnerships; and (iii) Ameritech, who
invested $700,000, $725,000 and $750,000 in the March Bridge Notes and March
Bridge Warrants, respectively.
II-3
<PAGE>
EQUIPMENT FINANCING
On April 1, 1996, CRA, Inc. ("CRA") entered into a secured equipment
financing with Telecom (the "Equipment Financing") for the purchase from P-Com
of 38 GHz radio equipment. To evidence its obligations and the Equipment
Financing, Telecom issued in favor of CRA a $2,445,000 promissory note, payable
in 24 monthly installments of $92,694 with a final payment equal to $642,305 due
April 1, 1998. The securities issued in the foregoing transaction were offered
and sold in reliance on an exemption from registration under Regulation D
promulgated under the Act.
COMMCOCCC ACQUISITION
On July 3, 1996, the Company entered into the CommcoCCC Agreement to acquire
129 38 GHz wireless broadband authorizations from CommcoCCC, Inc. in exchange
for 6,000,000 shares of Common Stock. The stockholders of CommcoCCC
simultaneously loaned $3.0 million on a secured, subordinated basis bearing
interest at the prime rate and payable on September 30, 1996 and issued three-
year warrants to acquire 18,182 shares of Common Stock at $24.75 per share. In
connection with an October 1996 amendment to the CommcoCCC Agreement, the
Company modified the terms of such warrants, reduced the exercise price of such
warrants to $17.1875 per share and increased the number of shares issuable upon
exercise to 87,272 shares. The securities to be issued in the foregoing
transaction will be offered and sold in reliance on an exemption from
registration under Regulation D promulgated under the Act.
SEPTEMBER BRIDGE FINANCING
In August 1996, the Company received commitments for $3.0 million of 14.75%
unsecured notes due March 1998 (the "September Bridge Notes"). The September
Bridge Notes were funded from August 30, 1996 to October 1996. In October 1996,
the Company received an additional $1.0 millon of proceeds therefrom. The
Company also issued five-year warrants to purchase up to an aggregate of 116,364
shares of Common Stock at a price of $17.1875 per share (the "September Bridge
Warrants") to private investors including the Advent Partnerships, Ameritech,
LHC and affiliates of J.C. Demetree, Jr. and Mark C. Demetree. The securities
issued in the foregoing transaction were offered and sold in reliance on an
exemption from registration under Regulation D promulgated under the Act.
CIBC FINANCING
The Company has entered into commitment letters (subject to definitive
documentation) with certain investors (the "Noteholders") which provide for the
issuance of $50,000,000 of the Company's $12.5% Senior Secured Notes due 1998
(the "Senior Secured Notes") at any time, at the Company's option, during the
period commencing upon consummation of the Offering until 90 days thereafter
(the "CIBC Financing"). The interest rate on the Senior Secured Notes will
increase by 0.5% for each three-month period after the consummation of the
Offering until such time as the Senior Secured Notes have been repaid. The
Company will issue ten-year warrants at a nominal exercise price to the
Noteholders upon each of the following events: (i) the consummation of the
Offering, (ii) the issuance of the Senior Secured Notes and (iii) if the Senior
Secured Notes continue to be outstanding six months after the date of the
consummation of the Offering and, at various times thereafter. The Senior
Secured Notes must be repaid with the proceeds of any future debt and equity
financings. The securities issued in the foregoing transaction were offered and
sold in reliance on an exemption from registration under Regulation D
promulgated under the Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The following exhibits were delivered with this Registration Statement, or
will be delivered by amendment, for filing:
<TABLE>
<C> <S> <C>
1-1 Purchase Agreement.**
2-1 (a) Amended and Restated Certificate of Incorporation and Bylaws of
Registrant.**
(b) Amendment to Amended and Restated Certificate of Incorporation.**
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S> <C>
(c) Second Amended and Restated Certificate of Incorporation (to be effective
prior to the consummation of the Offering) and Restated and Amended Bylaws
(effective on the date of the Prospectus) of Registrant.*
4-1 Specimen of Common Stock Certificate.(3)
4-2 Omitted
4-3 Form of Lock-Up Agreement.**
4-4 Omitted
5-1 Opinion and Consent of Hahn & Hessen LLP, counsel for the Registrant, with
respect to the Registrant's Common Stock.**
9-1 (a) Voting Trust Agreement.**
(b) Form of Trustee Indemnification Agreement.**
(c) Voting Agreement.**
(d) Confidentiality Agreement.**
10-1 Employment and Consulting Agreements.
(a) Vernon L. Fotheringham, dated December 16, 1995.**
(b) Steven D. Comrie, dated February 2, 1996.**
(c) W. Theodore Pierson, Jr., dated May 8, 1995 and effective January 1, 1995.**
(d) I. Don Brown, dated February 16, 1996.**
(e) Charles Menatti, dated March 8, 1996.**
(f) James D. Miller, dated February 1, 1996.**
(g) Thomas A. Grina, dated April 26, 1996.(1)
10-2 (a) Second Amended and Restated Certificate of Incorporation and By-laws of
Telecom (filed as Exhibit 2-1 to the Registration Statement on Form S-1 of the
Company dated May 2, 1996).**
(b) Certificate of Incorporation of ART Merger Corporation (to become the
Certificate of Incorporation of Telecom upon the completion of the Merger).**
10-3 Form of Director Indemnification Agreement.**
10-4 (a) Registrant's Equity Incentive Plan, as amended.**
(b) Form of Stock Option Agreement.**
10-5 (a) Registrant's 1996 Non-Employee Directors Automatic Stock Option Plan.**
(b) Form of Non-Employee Directors Stock Option Agreement.**
10-6 Stock Option Agreements.
(a) Comrie Non-Qualified Stock Option Agreement.**
(b) Comrie Incentive Stock Option Agreement.**
10-7 Management Consulting Agreement with Landover Holdings Corporation, dated
November 13, 1995.**
10-8 (a) ART West Joint Venture Agreement dated April 4, 1995, with Extended
Communications, Inc.**
(b) Put/Call Agreement dated October 1, 1994, with Extended Communications,
Inc.**
(c) Services Agreement dated October 1, 1994, with Extended Communications,
Inc.**
(d) Amendment dated April 4, 1995 to the Put/Call Agreement dated October 1,
1994, with Extended Communications, Inc.**
(e) Asset Purchase Agreement dated June 24, 1996 with Extended Communications,
Inc.**
(f) Management Agreement dated June 1, 1996 with ART West Partnership.**
10-9 (a) Put/Call Agreement dated September 1, 1994 with DCT Communications, Inc.**
(b) Services Agreement dated September 1, 1994 with DCT Communications, Inc.**
(c) Term Sheet dated April 26, 1996 with DCT.**
(d) Purchase Agreement with DCT dated July 1, 1996.**
(e) Amendment to Services Agreement dated June 1996 with DCT.**
</TABLE>
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<TABLE>
<C> <S> <C>
10-10 (a) Asset Purchase Agreement dated April 4, 1995 with EMI Communications
Corporation.**
(b) $1,500,000 Nonnegotiable and Nontransferable Promissory Note.**
(c) Maintenance Agreement dated November 14, 1995 with EMI Communications
Corporation.**
(d) Agreement dated November 14, 1995 with EMI Communications Corporations.**
10-11 38 GHz Radio Links Purchase Agreement dated August 11, 1995 with P-Com, Inc.+**
10-12 (a) Agreement dated May 25, 1995 with Telecom One.++
(b) Services Agreement dated April 24, 1996 with Telecom One.**
(c) Asset Purchase Agreement and Management Agreement with Telecom One dated
June 27, 1996.**
10-13 Agreement dated April 25, 1996 with GTE.**
10-14 Software License Agreement dated March 29, 1996 with GTE.**
10-15 Agreement dated July 12, 1995 with Southeast Research Partners, Inc.**
10-16 Agreement dated March 1, 1995 with High Sky Limited Partnership, High Sky II
Limited Partnership, Vernon L. Fotheringham, W. Theodore Pierson, Jr., and F.
Thomas Tuttle.**
10-17 Stock Purchase Agreement dated May 8, 1995 with Vernon L. Fotheringham, W.
Theodore Pierson, Jr., High Sky Limited Partnership, High Sky II Limited
Partnership, and Extended Communications, Inc.**
10-18 (a) Purchase Agreement dated April 21, 1995 with Landover Holdings
Corporation.**
(b) Letter Agreement dated May 8, 1995 with the Demetrees, Telecom and Landover
Holdings Corporation.**
(c) Letter Agreement dated November 13, 1995 with Telecom, E2-2 Holdings, L.P.
and the Demetrees.**
10-19 Restated and Amended Stockholders' Agreement dated February 2, 1996 with Telecom
and the stockholders of each of Telecom and the Company.**
10-20 Second Restated and Amended Registration Rights Agreement dated July 3, 1996
with Telecom and the stockholders of each of Telecom and the Company.**
10-21 Services Agreement dated May 8, 1995 with Telecom.**
10-22 Option Agreement dated February 2, 1996 with Telecom.**
10-23 (a) Securities Purchase Agreement dated November 13, 1995 with Telecom, Vernon
Fotheringham, W. Theodore Pierson, Jr., the stockholders of Telecom named
therein and the Advent Partnerships.**
(b) Exchange Agreement dated February 2, 1996 with Telecom and the Advent
Partnerships.**
10-24 (a) Securities Purchase Agreement dated February 2, 1996 with Telecom and
Ameritech Development Corporation ("Ameritech"), including letter of
intent.**
(b) Warrant issued on February 2, 1996 to Ameritech.**
(c) Put/Call Agreement dated February 2, 1996 with Ameritech.**
10-25 Strategic Distribution Agreement dated April 29, 1996 with Ameritech.**
10-26 Second Restated and Amended Merger Agreement and Plan of Reorganization dated
October 11, 1996 between the Company, Merger Sub and Telecom.**
10-27 (a) $2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").**
(b) Security Agreement with CRA (including UCC-1 Financing Statement).**
(c) Indemnity Agreement.**
(d) Form of Indemnity Warrant.**
10-28 Omitted.
10-29 (a) Purchase Agreement dated April 26, 1996 with Harris Corporation Farinon
Division ("Harris").(1)+
(b) PCS Marketing Agreement dated April 26, 1996 with Harris.(1)+
</TABLE>
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<TABLE>
<C> <S> <C>
10-30 Form of Subscription Agreement dated March 8, 1996, including Forms of Bridge
Note and Bridge Warrant.**
10-31 (a) Asset Acquisition Agreement and Plan of Reorganization dated July 3, 1996
with CommcoCCC, Inc.**
(b) Form of Note issued to Commco, L.L.C.**
(c) Form of Note issued to Columbia Capital Corporation.**
(d) Form of Warrant issued to Commco, L.L.C.**
(e) Form of Warrant issued to Columbia Capital Corporation.**
(f) Option Agreement dated July 3, 1996 with Commco, L.L.C.**
(g) Security Agreement dated June 27, 1996 with Columbia Capital Corporation.**
(h) Form of Noncompetition Agreement with CommcoCCC.**
(i) CommcoCCC Management Agreement dated July 3, 1996.**
(j) Right of First Offer Agreement dated July 3, 1996.**
(k) Engagement Letter with Montgomery Securities dated May 23, 1996.**
(l) Agreement to Lease between COMMCO, L.L.C. and Advanced Radio Technologies
Corporation.**
(m) Extension Agreement.**
(n) Amendment No. 1 to Asset Acquisition Agreement and Plan of Reorganization.**
10-32 Letter of Intent dated April 29, 1996 with Helioss Communications Inc.**
10-33 Letter of Intent dated March 26, 1996 with Advantage Telecom, Inc.**
10-34 (a) Consulting Agreement dated March 1, 1996 with Trond Johannesen.**
(b) Shareholders Agreement.**
(c) License and Support Agreement, dated September 30, 1996 (United Kingdom).**
(d) License and Support Agreement, dated September 30, 1996 (Sweden).**
10-35 Form of Subscription Agreement dated September 1996, including Forms of
September Bridge Note and September Bridge Warrant.**
10-36 Memorandum of Terms with Advantage Telecom, Inc.**
10-37 Installation Services Agreement dated October 2, 1996 with Teleport
Communications Group, Inc.**
10-38 (a) Commitment Letter.**
(b) Form of Senior Secured Credit Agreement with CIBC.
(c) Form of Senior Secured Notes.
(d) Form of CIBC Warrants.
(e) Form of Security Agreement.
10-39 Master Service Agreements.
(a) Microwave Partners, d/b/a Astrolink Communications Inc., dated October 3,
1996.**
(b) American PCS, L.P., dated July 29, 1996.**
(c) Message Center Management, Inc., dated September 19, 1996.**
(d) NEXTLINK Communications, LLC, dated October 13, 1996.**
(e) GST Telecom, Inc., dated October 11, 1996.**
(f) CAIS, Inc., dated October 1996.**
(g) DIGEX, Incorporated, dated October 1996.**
(h) Brooks Fiber Properties, Inc. dated October 1996.**
10-40 MFS Communications Company, Inc. Agreements.**
10-41 Services Agreement dated as of October 29, 1996 with ICG Telecom Group, Inc. and
Pacific & Eastern Digital Transmission Services, Inc.**
</TABLE>
II-7
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<TABLE>
<C> <S> <C>
11 Computation of Pro Forma Net Loss Per Share of Common Stock.**
12 Computation of Ratio of Earnings to Fixed Charges.(1)
21 Subsidiaries of the Registrant.**
23(a) Consent of the Registrant's Independent Accountants.
23(b) Consent of the Registrant's Counsel (Included in Exhibit 5-1).**
25 Omitted
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested for the deleted portions of this document.
++ Withdrawn pursuant to Rule 477 of the Securities Act of 1933, as amended.
(1) Filed with the Registration Statement on Form S-1 of the Company dated May
15, 1996 (SEC Reg. No. 333-03735) ("Unit Registration Statement").
(2) Filed with Amendment No. 1 to Unit Registration Statement dated July 3,
1996.
(3) Filed with Amendment No. 2 to Unit Registration Statement.
(4) Filed with Amendment No. 4 to Unit Registration Statement.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities under the Act may be permitted to
directors, officers and controlling person of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to provide the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denomination and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
II-8
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on November 4, 1996.
Advanced Radio Technologies
Corporation
By: /s/ THOMAS GRINA
-----------------------------------
Thomas A. Grina
EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
<TABLE>
<C> <S> <C>
SIGNATURES TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
/s/ VERNON L. FOTHERINGHAM
------------------------------------------- Chairman, Chief Executive November 4, 1996
Vernon L. Fotheringham Officer and Director
*
------------------------------------------- President, Chief Operating November 4, 1996
Steven D. Comrie Officer and Director
/s/ THOMAS A. GRINA
------------------------------------------- Executive Vice President and November 4, 1996
Thomas A. Grina Chief Financial Officer
*
------------------------------------------- Director November 4, 1996
J.C. Demetree
*
------------------------------------------- Director November 4, 1996
Mark C. Demetree
*
------------------------------------------- Director November 4, 1996
Matthew C. Gove
*
------------------------------------------- Director November 4, 1996
Andrew I. Fillat
*
------------------------------------------- Director November 4, 1996
Laurence S. Zimmerman
</TABLE>
*By: /s/ THOMAS A. GRINA
------------------------------------------
Thomas A. Grina
ATTORNEY-IN-FACT
II-10
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby severally constitutes and appoints Vernon L. Fotheringham and
Thomas A. Grina, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and all
documents relating thereto, including one or more registration statements that
may be filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, and to file the same, with all exhibits hereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing necessary or advisable
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done in virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURES TITLE DATE
- ------------------------------------------------------ --------------------------------------- ----------------
/s/ VERNON L. FOTHERINGHAM
------------------------------------------- Chairman, Chief Executive Officer and July 26, 1996
Vernon L. Fotheringham Director
/s/ STEVEN D. COMRIE
------------------------------------------- President, Chief Operating Officer and July 26, 1996
Steven D. Comrie Director
/s/ LAURENCE S. ZIMMERMAN
------------------------------------------- Director July 26, 1996
Laurence S. Zimmerman
/s/ J. C. DEMETREE, JR.
------------------------------------------- Director July 26, 1996
J. C. Demetree, Jr.
/s/ MARK C. DEMETREE
------------------------------------------- Director July 26, 1996
Mark C. Demetree
/s/ MATTHEW C. GOVE
------------------------------------------- Director July 26, 1996
Matthew C. Gove
/s/ ANDREW I. FILLAT
------------------------------------------- Director July 26, 1996
Andrew I. Fillat
</TABLE>
II-11
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- ---------- ---------------------------------------------------------------------------------------- ---------
<C> <S> <C>
1-1 Purchase Agreement.**
2-1 (a) Amended and Restated Certificate of Incorporation and Bylaws of Registrant.**
(b) Amendment to Amended and Restated Certificate of Incorporation.**
(c) Second Amended and Restated Certificate of Incorporation (to be effective prior to
the consummation of the Offering) and Restated and Amended Bylaws (effective on the
date of the Prospectus) of Registrant.*
4-1 Specimen of Common Stock Certificate.(3)
4-2 Omitted
4-3 Form of Lock-Up Agreement.**
4-4 Omitted.
5-1 Opinion and Consent of Hahn & Hessen LLP, counsel for the Registrant, with respect to
the Registrant's Common Stock.**
9-1 (a) Voting Trust Agreement.**
(b) Form of Trustee Indemnification Agreement.**
(c) Voting Agreement.**
(d) Confidentiality Agreement.**
10-1 Employment and Consulting Agreements.
(a) Vernon L. Fotheringham, dated December 16, 1995.**
(b) Steven D. Comrie, dated February 2, 1996.**
(c) W. Theodore Pierson, Jr., dated May 8, 1995 and effective January 1, 1995.**
(d) I. Don Brown, dated February 16, 1996.**
(e) Charles Menatti, dated March 8, 1996.**
(f) James D. Miller, dated February 1, 1996.**
(g) Thomas A. Grina, dated April 26, 1996.(1)
10-2 (a) Second Amended and Restated Certificate of Incorporation and By-laws of Telecom
(filed as Exhibit 2-1 to the Registration Statement on Form S-1 of the Company dated
May 2, 1996).**
(b) Certificate of Incorporation of ART Merger Corporation (to become the Certificate of
Incorporation of Telecom upon the completion of the Merger).**
10-3 Form of Director Indemnification Agreement.**
10-4 (a) Registrant's Equity Incentive Plan, as amended.**
(b) Form of Stock Option Agreement.**
10-5 (a) Registrant's 1996 Non-Employee Directors Automatic Stock Option Plan.**
(b) Form of Non-Employee Directors Stock Option Agreement.**
10-6 Stock Option Agreements.
(a) Comrie Non-Qualified Stock Option Agreement.**
(b) Comrie Incentive Stock Option Agreement.**
10-7 Management Consulting Agreement with Landover Holdings Corporation, dated November 13,
1995.**
10-8 (a) ART West Joint Venture Agreement dated April 4, 1995, with Extended Communications,
Inc.**
(b) Put/Call Agreement dated October 1, 1994, with Extended Communications, Inc.**
(c) Services Agreement dated October 1, 1994, with Extended Communications, Inc.**
(d) Amendment dated April 4, 1995 to the Put/Call Agreement dated October 1, 1994, with
Extended Communications, Inc.**
(e) Asset Purchase Agreement dated June 24, 1996 with Extended Communications, Inc.**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- ---------- ---------------------------------------------------------------------------------------- ---------
(f) Management Agreement dated June 1, 1996 with ART West Partnership.**
<C> <S> <C>
10-9 (a) Put/Call Agreement dated September 1, 1994 with DCT Communications, Inc.**
(b) Services Agreement dated September 1, 1994 with DCT Communications, Inc.**
(c) Term Sheet dated April 26, 1996 with DCT.**
(d) Purchase Agreement with DCT dated July 1, 1996.**
(e) Amendment to Services Agreement dated June 1996 with DCT.**
10-10 (a) Asset Purchase Agreement dated April 4, 1995 with EMI Communications Corporation.**
(b) $1,500,000 Nonnegotiable and Nontransferable Promissory Note.**
(c) Maintenance Agreement dated November 14, 1995 with EMI Communications Corporation.**
(d) Agreement dated November 14, 1995 with EMI Communications Corporations.**
10-11 38 GHz Radio Links Purchase Agreement dated August 11, 1995 with P-Com, Inc.+
10-12 (a) Agreement dated May 25, 1995 with Telecom One.++
(b) Services Agreement dated April 24, 1996 with Telecom One.**
(c) Asset Purchase Agreement and Management Agreement with Telecom One dated June 27,
1996.**
10-13 Agreement dated April 25, 1996 with GTE.**
10-14 Software License Agreement dated March 29, 1996 with GTE.**
10-15 Agreement dated July 12, 1995 with Southeast Research Partners, Inc.**
10-16 Agreement dated March 1, 1995 with High Sky Limited Partnership, High Sky II Limited
Partnership, Vernon L. Fotheringham, W. Theodore Pierson, Jr., and F. Thomas Tuttle.**
10-17 Stock Purchase Agreement dated May 8, 1995 with Vernon L. Fotheringham, W. Theodore
Pierson, Jr., High Sky Limited Partnership, High Sky II Limited Partnership, and
Extended Communications, Inc.**
10-18 (a) Purchase Agreement dated April 21, 1995 with Landover Holdings Corporation.**
(b) Letter Agreement dated May 8, 1995 with the Demetrees, Telecom and Landover Holdings
Corporation.**
(c) Letter Agreement dated November 13, 1995 with Telecom, E2-2 Holdings, L.P. and the
Demetrees.**
10-19 Restated and Amended Stockholders' Agreement dated February 2, 1996 with Telecom and the
stockholders of each of Telecom and the Company.**
10-20 Second Restated and Amended Registration Rights Agreement dated July 3, 1996 with
Telecom and the stockholders of each of Telecom and the Company.**
10-21 Services Agreement dated May 8, 1995 with Telecom.**
10-22 Option Agreement dated February 2, 1996 with Telecom.**
10-23 (a) Securities Purchase Agreement dated November 13, 1995 with Telecom, Vernon
Fotheringham, W. Theodore Pierson, Jr., the stockholders of Telecom named therein
and the Advent Partnerships.**
(b) Exchange Agreement dated February 2, 1996 with Telecom and the Advent
Partnerships.**
10-24 (a) Securities Purchase Agreement dated February 2, 1996 with Telecom and Ameritech
Development Corporation ("Ameritech"), including letter of intent.**
(b) Warrant issued on February 2, 1996 to Ameritech.**
(c) Put/Call Agreement dated February 2, 1996 with Ameritech.**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- ---------- ---------------------------------------------------------------------------------------- ---------
10-25 Strategic Distribution Agreement dated April 29, 1996 with Ameritech.**
<C> <S> <C>
10-26 Second Restated and Amended Merger Agreement and Plan of Reorganization dated October
11, 1996 between the Company, Merger Sub and Telecom.**
10-27 (a) $2,445,000 Promissory Note in favor of CRA, Inc. ("CRA").**
(b) Security Agreement with CRA (including UCC-1 Financing Statement).**
(c) Indemnity Agreement.**
(d) Form of Indemnity Warrant.**
10-28 Memorandum of Terms of Development and Procurement Agreement with American Wireless with
Extension Agreement dated April 25, 1996.**
10-29 (a) Purchase Agreement dated April 26, 1996 with Harris Corporation Farinon Division
("Harris") (confidential treatment requested for certain terms).(1)
(b) PCS Marketing Agreement dated April 26, 1996 with Harris (confidential treatment
requested for certain terms).(1)
10-30 Form of Subscription Agreement dated March 8, 1996, including Forms of Bridge Note and
Bridge Warrant.**
10-31 (a) Asset Acquisition Agreement and Plan of Reorganization dated July 3, 1996 with
CommcoCCC, Inc.**
(b) Form of Note issued to Commco, L.L.C.**
(c) Form of Note issued to Columbia Capital Corporation.**
(d) Form of Warrant issued to Commco, L.L.C.**
(e) Form of Warrant issued to Columbia Capital Corporation.**
(f) Option Agreement dated July 3, 1996 with Commco, L.L.C.**
(g) Security Agreement dated June 27, 1996 with Columbia Capital Corporation.**
(h) Form of Noncompetition Agreement with CommcoCCC.**
(i) CommcoCCC Management Agreement dated July 3, 1996.**
(j) Right of First Offer Agreement dated July 3, 1996.**
(k) Engagement Letter with Montgomery Securities dated May 23, 1996.**
(l) Agreement to Lease Between COMMCO, L.L.C. and Advanced Radio Technologies
Corporation.**
(m) Extension Agreement.**
(n) Amendment No. 1 to Asset Acquisition Agreement and Plan of Reorganization.**
10-32 Letter of Intent dated April 29, 1996 with Helioss Communications Inc.**
10-33 Letter of Intent dated March 26, 1996 with Advantage Telecom, Inc.**
10-34 (a) Consulting Agreement dated March 1, 1996 with Trond Johannesen.**
(b) Shareholders Agreement.**
(c) License and Support Agreement, dated September 30, 1996 (United Kingdom).**
(d) License and Support Agreement, dated September 30, 1996 (Sweden).**
10-35 Form of Subscription Agreement dated September 1996, including Forms of Bridge Note and
Bridge Warrant.**
10-36 Memorandum of Terms with Advantage Telecom, Inc.**
10-37 Installation Services Agreement dated October 2, 1996 with Teleport Communications
Group, Inc.**
10-38 (a) Commitment Letter.**
(b) Senior Secured Credit Agreement with CIBC.
(c) Form of Senior Secured Notes.
(d) Form of CIBC Warrants.
(e) Security Agreement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- ---------- ---------------------------------------------------------------------------------------- ---------
10-39 Master Service Agreements
<C> <S> <C>
(a) Microwave Partners, d/b/a Astrolink Communications Inc., dated October 3, 1996.**
(b) American PCS, L.P., dated July 29, 1996.**
(c) Message Center Management, Inc., dated September 19, 1996.**
(d) NEXTLINK Communications, LLC, dated October 13, 1996.**
(e) GST Telecom, Inc., dated October 11, 1996.**
(f) CAIS, Inc., dated October 1996.**
(g) DIGEX, Incorporated, dated October 1996.**
(h) Brooks Fiber Properties, Inc. dated October 1996.**
10-40 MFS Communications Company, Inc. Agreements.**
10-41 Services Agreement dated as of October 29, 1996 with ICG Telecom Group, Inc. and Pacific
& Eastern Digital Transmission Services, Inc.**
11 Computation of Pro Forma Net Loss Per Share of Common Stock.**
12 Computation of Ratio of Earnings to Fixed Charges.(1)
21 Subsidiaries of the Registrant.**
23(a) Consent of the Registrant's Independent Accountants.
23(b) Consent of the Registrant's Counsel (Included in Exhibit 5-1).**
25 Omitted
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested for the deleted portions of this document.
++ Withdrawn pursuant Rule 477 of the Securities Act of 1933, as amended.
(1) Filed with the Registration Statement on Form S-1 of the Company dated May
15, 1996 (SEC Reg. No. 333-03735) ("Unit Registration Statement").
(2) Filed with Amendment No. 1 to Unit Registration Statement.
(3) Filed with Amendment No. 2 to Unit Registration Statement.
(4) Filed with Amendment No. 4 to Unit Registration Statement.
<PAGE>
- --------------------------------------------------------------------------------
SENIOR SECURED CREDIT AGREEMENT
dated as of
November [ ], 1996
among
ADVANCED RADIO TELECOM CORP.,
as Borrower,
THE GUARANTORS named herein
and
THE LENDERS named herein
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS(1)
Section Heading Page
- ------- ------- ----
RECITALS .......................................................... 1
SECTION 1 DEFINITIONS............................................... 1
1.1 Certain Defined Terms..................................... 1
1.2 Accounting Terms.......................................... 30
1.3 Other Definitional Provisions;
Anniversaries........................................... 30
1.4 Rules of Construction..................................... 30
SECTION 2 AMOUNT AND TERMS OF SENIOR LOAN
COMMITMENT AND SENIOR LOAN; NOTES....................... 31
2.1 Senior Loan and Notes .................................... 31
2.2 Interest on the Senior Loan............................... 34
2.3 Fees...................................................... 35
2.4 Prepayments and Payments; Change of
Control Offer........................................... 36
2.5 Use of Proceeds........................................... 41
SECTION 3 CONDITIONS................................................ 41
3.1 Conditions to Senior Loan................................. 41
SECTION 4 REPRESENTATIONS AND WARRANTIES............................ 49
4.1 Organization and Good Standing;
Capitalization......................................... 50
4.2 Authorization and Power................................... 51
4.3 No Conflicts or Consents.................................. 51
4.4 Enforceable Obligations................................... 52
4.5 Properties; Liens......................................... 53
4.6 Financial Condition....................................... 53
4.7 Full Disclosure........................................... 55
4.8 No Default................................................ 55
4.9 Compliance with Contracts; Etc............................ 55
4.10 No Litigation............................................. 56
4.11 Use of Proceeds; Margin Stock; Etc........................ 56
4.12 Taxes..................................................... 56
4.13 ERISA..................................................... 57
4.14 Compliance with Law....................................... 59
4.15 Government Regulation..................................... 59
4.16 Capital Structure and Subsidiaries........................ 59
4.17 Intellectual Property..................................... 59
4.18 Environmental Matters..................................... 60
4.19 Debt Agreements........................................... 63
4.20 Permits................................................... 63
- ------------------------
(1) This Table of Contents shall not be deemed part of this Senior Secured
Credit Agreement for any purpose and is inserted for convenience purposes
only.
-i-
<PAGE>
Section Heading Page
- ------- ------- ----
4.21 Insurance................................................. 64
4.22 Labor Matters............................................. 64
4.23 Guarantees................................................ 64
4.24 Broker's or Finder's Fees................................. 65
4.25 Security Interest......................................... 65
4.26 Merger; Pending Acquisitions.............................. 66
4.27 Representations and Warranties
in Documents............................................ 66
4.28 Pari Passu Loan Obligations............................... 67
4.29 Minimum IPO; Issuance of Common Stock
in Transactions......................................... 67
4.30 FCC Matters............................................... 67
4.31 Significant Customers and Suppliers....................... 69
4.32 Proprietary Information of Third Parties.................. 69
SECTION 5 AFFIRMATIVE COVENANTS..................................... 70
5.1 Financial Statements and Other Reports.................... 70
5.2 Corporate Existence; Etc.................................. 78
5.3 Payment of Taxes and Claims............................... 78
5.4 Maintenance of Properties; Insurance...................... 78
5.5 Inspection................................................ 79
5.6 Equal Security for Senior Loans and Notes................. 79
5.7 Compliance with Laws; Etc................................. 80
5.8 Maintenance of Accurate Records; Etc...................... 80
5.9 Compliance with Environmental Laws........................ 80
5.10 Payments in U.S. Dollars.................................. 81
5.11 Register.................................................. 82
5.12 Warrant Matters........................................... 82
5.13 Additional Pledge of Foreign Subsidiary
Capital Stock.......................................... 85
5.14 Performance and Enforcement Under Certain
Agreements ............................................ 86
SECTION 6 NEGATIVE COVENANTS........................................ 86
6.1 Indebtedness.............................................. 86
6.2 Liens..................................................... 87
6.3 Restricted Payments....................................... 91
6.4 Investments............................................... 91
6.5 Contingent Obligations.................................... 95
6.6 Restriction on Fundamental Changes,
Acquisitions and Dispositions.......................... 96
6.7 Limitation on Dividend and Other
Payment Restrictions Affecting
Subsidiaries........................................... 98
6.8 Transactions with Shareholders and
Affiliates............................................. 99
6.9 Subsidiary Stock.......................................... 100
6.10 Business Activities....................................... 100
6.11 Amendments to Charter Documents........................... 100
6.12 [Reserved]................................................ 101
6.13 Creation of Subsidiaries.................................. 101
-ii-
<PAGE>
Section Heading Page
- ------- ------- ----
6.14 Transfer of Assets to Subsidiaries........................ 101
6.15 Sale or Discount of Receivables........................... 101
6.16 Security Interests........................................ 101
6.17 Impairment of Security Interest........................... 102
6.18 Additional Guarantees .................................... 102
6.19 Restriction on Leases..................................... 103
6.20 Restriction on Tax Consolidation.......................... 103
6.21 Sale and Lease-Backs...................................... 103
6.22 Limitation on Other Restrictions on
Amendment of Senior Loan Documents..................... 103
6.23 Modifications of Certain Documents; Etc................... 104
6.24 Pledge of Additional Collateral........................... 104
6.25 Payments with Respect to Subordinated
Indebtedness........................................... 105
SECTION 7 EVENTS OF DEFAULT......................................... 105
7.1 Failure To Make Payments When Due......................... 105
7.2 Default in Other Agreements............................... 105
7.3 Breach of Certain Covenants............................... 106
7.4 Breach of Warranty........................................ 106
7.5 Other Defaults Under Senior Loan
Documents.............................................. 106
7.6 Involuntary Bankruptcy; Appointment
of Custodian; Etc...................................... 106
7.7 Voluntary Bankruptcy; Appointment of
Custodian; Etc......................................... 107
7.8 Judgments and Attachments................................. 107
7.9 Dissolution............................................... 107
7.10 Guarantee................................................. 108
7.11 Collateral Document Default............................... 108
7.12 ERISA Matters............................................. 108
7.13 Environmental Matters..................................... 109
7.14 Non-monetary Judgment..................................... 109
7.15 Injunction................................................ 109
7.16 Damage, Strike, Casualty.................................. 109
7.17 Licenses and Permits...................................... 110
7.18 Subordination Provisions.................................. 110
SECTION 8 THE COLLATERAL AGENT...................................... 110
8.1 Appointment............................................... 110
8.2 Delegation of Duties...................................... 111
8.3 Exculpatory Provisions.................................... 111
8.4 Reliance by Collateral Agent.............................. 112
8.5 Notice of Default......................................... 113
8.6 Non-Reliance on Collateral Agent and Other
Collateral Agents...................................... 113
8.7 Indemnification........................................... 114
8.8 Collateral Agent in Its Individual Capacity............... 115
8.9 Resignation of the Collateral Agent; Successor
Collateral Agent....................................... 115
-iii-
<PAGE>
Section Heading Page
- ------- ------- ----
SECTION 9 GUARANTEE................................................. 115
9.1 Unconditional Guarantee................................... 116
9.2 Ranking of Guarantee...................................... 117
9.3 Severability.............................................. 117
9.4 Limitation of Guarantor's Liability....................... 117
9.5 Contribution.............................................. 117
9.6 Waiver of Subrogation..................................... 118
9.7 Evidence of Guarantee..................................... 119
9.8 Waiver of Stay, Extension or Usury Laws................... 119
SECTION 10 MISCELLANEOUS............................................. 119
10.1 [Reserved]................................................ 119
10.2 Participations in and Assignments or
Syndication of the Senior Loan and
Note................................................... 119
10.3 Expenses.................................................. 121
10.4 Indemnity................................................. 122
10.5 Setoff.................................................... 123
10.6 Amendments and Waivers.................................... 124
10.7 Independence of Covenants................................. 125
10.8 Entirety.................................................. 125
10.9 Notices................................................... 125
10.10 Survival of Warranties and Certain
Agreements............................................. 126
10.11 Failure or Indulgence Not Waiver;
Remedies Cumulative.................................... 126
10.12 Severability.............................................. 126
10.13 Headings.................................................. 127
10.14 Applicable Law............................................ 127
10.15 Successors and Assigns; Subsequent
Holders of Notes....................................... 127
10.16 Counterparts; Effectiveness............................... 127
10.17 Consent to Jurisdiction; Venue; Waiver
of Jury Trial; Etc. ................................... 128
10.18 Sharing of Benefits....................................... 129
10.19 Net Payments.............................................. 129
10.20 Waiver of Stay, Extension or Usury Laws................... 132
10.21 Confidentiality........................................... 133
10.22 Requirements of Law....................................... 133
10.23 Acknowledgments........................................... 134
10.24 Role of Special Counsel................................... 134
10.25 Joint and Several Liability............................... 135
10.26 Collateral Agent Third Party Beneficiary.................. 135
SIGNATURE PAGES......................................................... S-1
-iv-
<PAGE>
SCHEDULES
Schedule 1.1(a) PENDING FCC LICENSE APPLICATIONS
Schedule 4.1 SUBSIDIARIES; EQUITY RIGHTS; INTERESTS IN OTHER
PERSONS
Schedule 4.10 LITIGATION
Schedule 4.16 EXISTING INVESTMENTS
Schedule 4.17 INTELLECTUAL PROPERTY
Schedule 4.18 ENVIRONMENTAL MATTERS
Schedule 4.19 DEBT AND LIENS TO REMAIN OUTSTANDING AFTER
CLOSING DATE; DEBT TO BE REPAID AT THE
CLOSING DATE
Schedule 4.20 PERMITS
Schedule 4.24 BROKERS' FEES
Schedule 4.30 FCC LICENSES
Schedule 4.32 KEY EMPLOYEES
Schedule 6.8 EXISTING AFFILIATE AGREEMENTS
EXHIBITS
I FORM OF SENIOR NOTE
II FORM OF COMPLIANCE CERTIFICATE
III FORM OF NOTICE OF BORROWING
IV FORM OF OPINION OF ROPES & GRAY AND HAHN & HESSEN
- COUNSEL FOR THE OBLIGORS
V FORM OF OPINION OF CAHILL GORDON & REINDEL
- SPECIAL COUNSEL FOR THE LENDERS
VI FORM OF NOTATION OF GUARANTEE
VII FORM OF SECURITY AGREEMENT
VIII FORM OF WARRANT AGREEMENT
IX FORM OF INTERCOMPANY NOTE
X FORM OF SUBORDINATION PROVISIONS
XI FORM OF SECTION 10.19 CERTIFICATE
XII FORM OF AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT
XIII FORM OF JOINDER AGREEMENT
-v-
<PAGE>
This Senior Secured Credit Agreement is dated as of November [ ],
1996, and entered into by and among ADVANCED RADIO TELECOM CORP., a Delaware
corporation (the "COMPANY" or the "BORROWER," which term includes its
successors), the Guarantors named on the signature pages hereto and the Lenders
named on the signature pages hereto (the "LENDERS").
RECITALS
WHEREAS, the Borrower desires that the Lenders extend a senior
secured term loan facility to the Borrower on the terms herein provided;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
1 DEFINITIONS
1.1 CERTAIN DEFINED TERMS
The following terms used in this Agreement shall have the following
meanings:
"ACQUISITION" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of the
Capital Stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person.
"ADDITIONAL COLLATERAL" shall have the meaning ascribed to such
term in Section 6.24.
"ADDITIONAL WARRANTS shall have the meaning ascribed to such term
in Section 5.12.
"ADJUSTED NET ASSETS" shall have the meaning ascribed to such term
in Section 9.5.
"AFFILIATE" shall mean any Person which directly or indirectly
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse and children) of such individual and any trust whose principal
<PAGE>
-2-
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED
by" and "UNDER COMMON CONTROL WITH") shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise); PROVIDED, HOWEVER, that, in any event,
any Person which owns directly or indirectly 10% or more of the securities
having ordinary voting power for the election of directors or other governing
body of a corporation or 10% or more of the partnership or other ownership
interests of any other Person (other than as a limited partner or non-managing
member of such other Person) will be deemed to control such corporation or other
Person. Notwithstanding the foregoing, (i) no individual shall be deemed to be
an Affiliate solely by reason of his or her being a director, officer or
employee of the Borrower or any Subsidiary, (ii) for purposes of Section 6.8
only, the Company shall not be deemed an Affiliate of any Subsidiary and no
Wholly Owned Subsidiary which is an Obligor shall be deemed an Affiliate of any
Subsidiary or the Company and (iii) neither CIBC Wood Gundy Securities Corp. nor
any of its Affiliates shall be deemed an Affiliate of the Company or any
Subsidiary.
"AFFILIATE TRANSACTION" shall have the meaning ascribed to such
term in Section 6.8.
"AGREEMENT" shall mean this Senior Secured Credit Agreement, as it
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"ART WEST ACQUISITION" shall mean the acquisition of the assets
identified therein, including certain 38 GHz radio authorizations pursuant to
the ART West Acquisition Documents.
"ART WEST ACQUISITION AGREEMENT" shall mean the Asset Purchase
Agreement dated as of June 24, 1996 among the Company, Extended Communications,
Inc., a Washington corporation, and the selling stockholders named therein, as
amended and in effect from time to time in accordance with its terms and this
Agreement.
"ART WEST ACQUISITION DOCUMENTS" shall mean the ART West
Acquisition Agreement and each of the Related Documents with respect thereto, in
each case including all exhibits, appendices, annexes and attachments thereto,
and "ART WEST ACQUISITION DOCUMENT" means any of them, in each case as amended
and in
<PAGE>
-3-
effect from time to time in accordance with its terms and this Agreement.
"BANKRUPTCY LAW" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute
or any other United States Federal, state or local Law or the Law of any other
jurisdiction relating to bankruptcy, insolvency, winding-up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"BANKRUPTCY ORDER" shall mean any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation,
winding-up, dissolution or reorganization, or appointing a custodian of a debtor
or of all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"BOARD OF DIRECTORS" shall mean, with respect to any Person, the
Board of Directors of such Person or any duly authorized committee of that
Board.
"BORROWER" shall have the meaning ascribed to such term in the
introduction to this Agreement.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and
any day that is a legal holiday under the Laws of New York, New York or is a day
on which banking institutions therein located are authorized or required by Law
or other governmental action to close.
"CAPITAL LEASE," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"CAPITALIZED LEASE OBLIGATION" shall mean obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness represented by such
obligations shall be the capitalized amount of such obligations determined in
accordance with GAAP.
"CAPITAL STOCK" shall mean (i) with respect to any Person that is
a corporation, any and all shares, interests,
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-4-
participations or other equivalents (however designated and whether or not
voting) of corporate stock, including, without limitation, each class of Common
Stock and Preferred Stock of such Person and (ii) with respect to any Person
that is not a corporation, any and all partnership or other equity interests of
such Person.
"CASH EQUIVALENTS" shall mean (i) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's, a division of McGraw-Hill ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having the highest rating obtainable from either S&P's or Moody's; and (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the Laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least "adequately capitalized" (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1 capital
(as defined in such regulations) of not less than $100 million; (v) shares of
any money market mutual fund that (a) has its assets invested continuously in
the types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500 million, and (c) has the highest rating obtainable
from either S&P's or Moody's; and (vi) repurchase agreements with respect to,
and which are fully secured by a perfected security interest in, obligations of
a type described in clause (i) or clause (ii) above and are with any commercial
bank described in clause (iv) above.
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds or proceeds of a condemnation award. Casualty Event shall not include
any Taking or Destruction or loss of title to Real Property.
<PAGE>
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"CERCLA" shall have the meaning ascribed to such term in Section
4.18.
"CHANGE OF CONTROL" shall mean any transaction or event
(including, without limitation, an issuance, sale or exchange of Capital Stock,
a merger or consolidation, or a dissolution or liquidation) as a direct or
indirect result of which (a) if such transaction or event occurs prior to the
completion of an Initial Public Offering, the Permitted Holders fail to own
shares of Capital Stock of the Borrower representing at least a majority (on a
fully diluted basis) of the aggregate voting power of all shares of Capital
Stock of the Borrower at the time outstanding; or (b) if such transaction or
event is an Initial Public Offering or occurs after the completion of an Initial
Public Offering, (i) any Person or any group shall (directly or indirectly)
beneficially own in the aggregate shares of Capital Stock of the Borrower having
40% or more of the aggregate voting power of all shares of Capital Stock of the
Borrower at the time outstanding, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Borrower (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Borrower was approved by a vote of at least a majority of the directors of
the Borrower then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Borrower then in office. For purposes of this definition, the
terms "BENEFICIALLY OWN" and "GROUP" shall have the respective meanings
ascribed to them pursuant to Section 13(d) of the Exchange Act.
"CHANGE OF CONTROL DATE" shall have the meaning ascribed to such
term in Section 2.4A(iv).
"CHANGE OF CONTROL OFFER" shall have the meaning ascribed to such
term in Section 2.4A(iv).
"CLOSING DATE" shall mean the first date on which the conditions
set forth in Section 3.1 are satisfied (or waived by the Lenders).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall mean all of the Pledged Collateral and
Mortgaged Real Property.
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-6-
"COLLATERAL AGENT" shall mean each collateral agent appointed
under the Security Agreement with the consent of the Borrower and the Required
Lenders.
"COLLATERAL AGENT'S FEE LETTER" shall mean the letter agreement
between the Collateral Agent and the Borrower with respect to the services to be
provided by the Collateral Agent under the Senior Loan Documents.
"COMMCOCCC" shall mean CommcoCCC, Inc., a Delaware corporation.
"COMMCOCCC ACQUISITION" shall mean the acquisition of 129 38GHz
wireless broadband authorizations from CommcoCCC pursuant to the CommcoCCC
Acquisition Documents for 6,000,000 shares of Common Stock of the Borrower.
"COMMCOCCC ACQUISITION AGREEMENT" shall mean the Asset Acquisition
Agreement and Plan of Reorganization dated as of July 3, 1996 among CommcoCCC,
the Borrower and certain other parties, as amended and in effect from time to
time in accordance with its terms and this Agreement.
"COMMCOCCC ACQUISITION DOCUMENTS" shall mean the CommcoCCC
Acquisition Agreement and each of the Related Documents with respect thereto, in
each case including all exhibits, appendices, annexes and attachments thereto,
and "COMMCOCCC ACQUISITION DOCUMENT" means any of them, in each case as
amended and in effect from time to time in accordance with its terms and this
Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMITMENT LETTER" shall mean the letter agreement dated October
15, 1996, between the Company and CIBC WG Argosy Merchant Fund 2, L.L.C.
"COMMON STOCK" of any Person shall mean any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of, such Person's Common Stock, whether
outstanding on the Closing Date or issued after the Closing Date, and includes,
without limitation, all series and classes of such Common Stock.
"COMMUNICATIONS ACT" shall mean the Communications Act of 1934, as
amended, and all rules and regulations of the FCC, in each case as from time to
time in effect.
<PAGE>
-7-
"COMPANY" shall have the meaning ascribed to such term in the
introduction to this Agreement.
"COMPLIANCE CERTIFICATE" shall mean a certificate substantially in
the form of EXHIBIT II delivered to the Lenders by the Borrower pursuant to
Section 5.1(iv)(b).
"CONSOLIDATED RENTAL PAYMENTS" shall mean, for any period, the
aggregate amount of all rents paid or to be incurred under all operating leases
for real property of the Company and the Subsidiaries as lessees (net of
sublease income).
"CONTESTED CLAIM" shall mean any Tax, Indebtedness or other claim
or liability (i) the validity or amount of which is being diligently contested
in good faith, (ii) for which adequate reserve, or other appropriate provision,
if any, as required in conformity with GAAP shall have been made and (iii) with
respect to which any right to execute upon or sell any assets of the Borrower or
of any Subsidiary has not matured or has been and continues to be effectively
enjoined, superseded or stayed.
"CONTINGENT OBLIGATION", as applied to any Person, shall mean any
direct or indirect liability, contingent or otherwise, of that Person (i) with
respect to any Indebtedness, lease, dividend or other obligation of another if
the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (x) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(y) to maintain the solvency or any balance sheet
<PAGE>
-8-
item, level of income or financial condition of another if, in the case of any
agreement described under subclause (x) or (y) of this sentence, the primary
purpose or intent thereof is as described in the preceding sentence. The amount
of any Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, shall mean any
provision of any Security issued by that Person or of any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject, including, with respect to the
Obligors, the Documents and the Senior Loan Documents.
"CONTROLLED GROUP" shall mean (i) a controlled group of
corporations as defined in Section 1563(a) of the Code or (ii) a group of trades
or businesses under common control, as defined in Section 414(c) of the Code, of
which the Company is a part or becomes a part.
"COVERED TAXES" shall mean any and all Taxes, other than Taxes
imposed on or measured by net income or net profits (including any franchise
taxes imposed thereon) by any jurisdiction in which the Lenders or any
Collateral Agent is subject to Taxes.
"CREDITOR" shall mean the Collateral Agent or any Lender; and
"CREDITORS" shall mean all of them.
"CUSTODIAN" shall mean any receiver, interim receiver, receiver
and manager, trustee, assignee, liquidator, sequestrator or similar official
charged with maintaining possession or control over property for one or more
creditors, whether under any Bankruptcy Law or otherwise.
"DCT ACQUISITION" shall mean the acquisition of 16 38 GHz radio
authorizations set forth on a schedule thereto pursuant to the DCT Acquisition
Documents.
"DCT ACQUISITION AGREEMENT" shall mean the Asset Purchase
Agreement dated as of June 28, 1996 among the Company, DCT Communications, Inc.,
a California corporation, and certain individuals named therein, as amended and
in effect from time to time in accordance with its terms and this Agreement.
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-9-
"DCT ACQUISITION DOCUMENTS" shall mean the DCT Acquisition
Agreement and each of the Related Documents with respect thereto, in each case
including all exhibits, appendices, annexes and attachments thereto, and "DCT
ACQUISITION DOCUMENT" means any of them, in each case as amended and in effect
from time to time in accordance with its terms and this Agreement.
"DEBT ISSUANCE" shall mean the incurrence by any Obligor of any
Indebtedness after the Closing Date (other than as permitted by Section 6.1).
"DESTRUCTION" shall have the meaning ascribed to such term in the
Mortgages. Destruction shall not include any Casualty Event.
"DISPOSITION" shall mean any conveyance, sale, lease assignment,
transfer or other disposition (including any sale-leaseback transaction) of any
Property (including shares of Capital Stock of any Subsidiary of any Person)
(whether now owned or hereafter acquired) by the Borrower or any Subsidiary to
any Person, other than an Excluded Disposition.
"DISPOSITION EVENT" shall mean the receipt by the Borrower or any
Subsidiary of cash proceeds or cash distributions of any kind from Property
received in consideration for a Disposition.
"DISQUALIFIED CAPITAL STOCK" shall mean any Capital Stock that, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control), (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except upon the occurrence of a Change
of Control), in whole or in part, on or prior to the final maturity date of the
Notes, or (ii) is convertible into or exchangeable for (whether at the option of
the issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) above, in each case at any time prior to the final maturity
of the Notes.
"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower or any Subsidiary, or of any rights, warrants or
options to acquire the same (or to make payments to any Person, such as
<PAGE>
-10-
"phantom stock", where the amount thereof is calculated with reference to the
fair market or equity value of the Borrower or any Subsidiary), but excluding
(i) in the case of the Borrower, dividends payable in respect of shares of the
Common Stock of the Borrower through the issuance of additional shares of Common
Stock of the Borrower and any redemption or exchange of any Capital Stock of the
Borrower for Common Stock of the Borrower and (ii) in the case of any Subsidiary
of the Borrower, dividends payable in respect of shares of the Common Stock of
such Subsidiary through the issuance of additional shares of Common Stock of
such Subsidiary.
"DOCUMENT" shall mean the Merger Agreement, each CommcoCCC
Acquisition Document, each ART West Acquisition Document, each DCT Acquisition
Document, each Telecom Acquisition Document, the Minimum IPO Underwriting
Agreement, the Warrant Agreement, the Registration Rights Agreement, each
Related Document, the Existing Affiliate Agreements and the Voting Trust
Agreement and "DOCUMENTS" shall mean all of them collectively.
"DOLLARS" or the sign "$" shall mean the lawful money of the
United States of America.
"ELIGIBLE ASSIGNEE" shall mean (a) (i) a commercial bank organized
under the Laws of the United States of America or any state thereof; (ii) a
savings and loan association or savings bank organized under the Laws of the
United States or any state thereof; (iii) a commercial bank organized under the
Laws of any other country or a political subdivision thereof; PROVIDED,
HOWEVER, that (x) such bank is acting through a branch or agency located in
the United States or (y) such bank is organized under the Laws of a country that
is a member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other entity that is an
institutional "accredited investor" or a "qualified institutional buyer" (in
each case as defined in the Securities Act) that extends credit or buys loans or
debt securities as one of its businesses including, but not limited to,
insurance companies, mutual funds and lease financing companies; and (b) any
Lender and any Affiliate of any Lender.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written notice, claim, demand or other communication (collectively, a "CLAIM")
by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the
<PAGE>
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presence, or Release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (ii) any violation, or alleged
violation, of any Environmental Law. The term "ENVIRONMENTAL CLAIM" shall
include any claim by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
applicable Federal, state, local and foreign Laws, rules or regulations, any
orders, decrees, judgments or injunctions and the common Law in each case as now
or hereafter in effect, relating to pollution or protection of human health,
safety or the environment, including without limitation, ambient air indoor air,
soil, surface water, ground water, wetlands, land or subsurface strata,
including, without limitation, those relating to Releases or threatened Releases
of Hazardous Materials into the environment, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"EQUITY ISSUANCE" shall mean any of (a) any issuance or sale by
any Obligor after the Closing Date of (x) any Capital Stock (including any
Capital Stock issued upon exercise of any Equity Right) or any warrants or
options to purchase Capital Stock or (y) any other security or instrument
representing an equity interest (or the right to obtain any equity interest) in
the issuing or selling Person or (b) the receipt by the Borrower or any
Subsidiary after the Closing Date of any capital contribution (whether or not
evidenced by any equity security issued by the recipient of such contribution);
PROVIDED, HOWEVER, that Equity Issuance shall not include (i) any capital
contribution or sale of equity interest to any Subsidiary from the Borrower or
any Subsidiary or any such issuance or sale (including as a result of capital
contributions) by any Subsidiary to the Borrower or any Subsidiary; (ii) any
such sale or issuance by the Borrower of its Capital Stock (including Capital
Stock issued upon exercise of any warrant or option) or warrants or options to
purchase its Capital Stock, in each case, to directors, officers, consultants or
employees of the Borrower or any Subsidiary; (iii) any conversion or exchange of
any Indebtedness of the Borrower outstanding as of the Closing Date into or for
equity securities of the Borrower; (iv) any issuance by the Borrower of its
Capital Stock to effect an Investment
<PAGE>
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permitted by Section 6.4(r); (v) the creation by the Borrower or any Subsidiary
of any Subsidiary as permitted by this Agreement; (vi) the Minimum IPO; and
(vii) the issuance of Common Stock of the Borrower to effect the CommcoCCC
Acquisition.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
outstanding subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including any stockholders' or voting trust agreements)
for the issuance, sale or voting of, or outstanding securities convertible into,
any additional shares of Capital Stock of any class, or partnership or other
ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any corporation or trade or business
that is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which the Company is a member and (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) of the Code of which the Company
is a member.
"EVENT OF DEFAULT" shall mean each of the events set forth in
Section 7.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute and the rules and
regulations of the Commission promulgated thereunder.
"EXCLUDED DISPOSITIONS" shall mean (i) Dispositions resulting in
no more than $100,000 in proceeds in any fiscal year; (ii) an exchange of
equipment or inventory for like equipment or inventory, provided that the Person
effecting such exchange receives substantially equivalent value in such exchange
for the Property disposed of; (iii) any transaction permitted by Section 6.6
(other than clause (k) thereof), any Lien permitted by Section 6.2, any
Investment permitted by Section 6.4 and any Restricted Payment permitted by
Section 6.3; (iv) any issuance of Capital Stock by any Subsidiary to directors
to qualify directors if required by applicable Law if resulting in DE MINIMIS
proceeds; (v) any Equity Issuance or event or occurrence which is excluded from
the definition of Equity Issuance; (vi) the sale of inventory in the ordinary
course of business and sale of equipment if sold in contemplation of future
concessions or
<PAGE>
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business from the purchaser; and (vii) the sale or return of inventory or other
tangible assets which the Borrower or any Subsidiary customarily replaces
periodically with substitute assets (including, without limitation, vehicles) in
the ordinary course of business.
"EXISTING AFFILIATE AGREEMENTS" shall have the meaning ascribed to
such term in Section 6.8.
"EXTENSION NOTICE" shall have the meaning ascribed to such term in
Section 2.1A.
"FCC" shall mean the Federal Communications Commission.
"FCC LICENSES" shall mean all licenses, permits or authorizations
required at any time under the Communications Act to operate the Company's and
the Subsidiaries' businesses.
"FCC RULES" shall have the meaning ascribed to such term in
Section 4.30.
"FIRREA" shall mean the Financial Institutions Reform Recovery and
Enforcement Act of 1989, as amended from time to time.
"FOREIGN PENSION PLAN" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Borrower
or any Subsidiary primarily for the benefit of employees of the Borrower or such
Subsidiary residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA, or any such plan as to which
the Borrower or any Subsidiary may have any liability.
"FOREIGN SUBSIDIARY" shall mean any direct or indirect Subsidiary
organized and operating outside of the United States as defined in Section
7701(a)(9) of the Code (or any successor provision).
"FORM 1001" shall have the meaning ascribed to such term in
Section 10.19F.
"FORM 4224" shall have the meaning ascribed to such term in
Section 10.19F.
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"FORM W-8" shall have the meaning ascribed to such term in Section
10.19F.
"FORM W-9" shall have the meaning ascribed to such term in Section
10.19F.
"FUNDING GUARANTOR" shall have the meaning ascribed to such term
in Section 9.5.
"GAAP" shall mean those generally accepted accounting principles
and practices that are recognized as such by the Financial Accounting Standards
Board and that are consistently applied for all periods after the date hereof so
as to properly reflect the financial conditions, and the results of operations
and changes in financial position, of the Company and the Subsidiaries, except
that any accounting principle or practice required to be changed in order to
continue as a generally accepted accounting principle or practice may be so
changed.
"GOVERNMENTAL AUTHORITY" shall mean any government or political
subdivision or any agency, authority, board, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GOVERNMENTAL CONSENT" shall mean any material approval,
determination, order, consent, authorization, certificate, license, permit,
franchise, concession or validation of, or exemption or other action by, or
filing, recording or registration with, or notice to, any Governmental
Authority.
"GOVERNMENTAL REQUIREMENTS" shall mean all legal requirements in
effect from time to time, including the common law and all Federal, state, local
and foreign laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, Governmental Consents, demand letters,
directions and requirements of all Governmental Authorities, officials and
officers, and all instruments of record, foreseen or unforeseen, ordinary or
extraordinary, including any change in any law or regulation or the
interpretation thereof by any Governmental Authority (whether or not having the
force of law), relating now or at any time heretofore or hereafter to the
business or operations of any Obligor or to any of the property owned, leased or
used by any Obligor, including the development, design, construction,
acquisition, start-up, ownership and operation and maintenance of property.
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"GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including causing a bank or other financial institution to issue a letter of
credit or other similar instrument for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have
a correlative meaning.
"GUARANTEES" shall mean, collectively, the guarantees delivered to
the Lenders by the Guarantors pursuant to Section 9 which are evidenced by
notations of guarantee substantially in the form of EXHIBIT VI.
"GUARANTORS" shall mean, collectively, each of the Subsidiaries
(other than Foreign Subsidiaries) existing on the Closing Date and each
additional Subsidiary (other than Foreign Subsidiaries) created or acquired
after the Closing Date.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, toxic,
hazardous or extremely hazardous substance, constituent or waste, or any other
constituent, waste, material, compound or substance including, without
limitation, petroleum including crude oil or any fraction thereof, or any
petroleum product, subject to regulation under any Environmental Law.
"INCREASE DATE" shall have the meaning ascribed to such term in
Section 2.2.
"INDEBTEDNESS" shall mean, with respect to any Person, (i) all
indebtedness, obligations and liabilities of such Person for borrowed money,
(ii) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet of such Person in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit,
whether or not representing obligations for borrowed money, of such Person, (iv)
any indebtedness, obligation or liability of such Person owed for all or any
part of the deferred purchase price of property or services (excluding any such
obligations
<PAGE>
-16-
incurred under ERISA), which purchase price is (a) due more than six months (or
a longer period of up to one year, if such terms are available from suppliers in
the ordinary course of business) from the date of incurrence of the obligation
in respect thereof or (b) evidenced by a note or similar written instrument, (v)
all indebtedness, obligations and liabilities secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person, except that "Indebtedness" shall not
include trade payables and accrued liabilities incurred in the ordinary course
of business for the purchase of goods or services that are not secured by a Lien
and obligations under Interest Rate Agreements (which constitute Contingent
Obligations, not Indebtedness), (vi) guarantees of such Person in respect of
Indebtedness of other Persons and (vii) all Disqualified Capital Stock issued by
such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price. For purposes
hereof, the "MAXIMUM FIXED REPURCHASE PRICE" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value to be determined reasonably and in good faith by the Board of
Directors of the issuer of such Disqualified Capital Stock.
"INDEMNIFIED LIABILITIES" shall have the meaning ascribed to such
term in Section 10.4.
"INDEMNITEES" shall have the meaning ascribed to such term in
Section 10.4.
"INDEPENDENT FINANCIAL ADVISOR" shall mean a firm (i) that does
not, and whose directors, officers and employees or Affiliates do not, have a
direct or indirect financial interest in any Obligor and (ii) that is otherwise
independent and qualified to perform the task for which it is to be engaged.
"INITIAL PUBLIC OFFERING" shall mean a primary underwritten public
offering of the Common Stock of the Borrower, other than any public offering or
sale pursuant to a registration statement on Form S-8 or a comparable form.
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"INITIAL SENIOR LOAN" shall have the meaning ascribed to such term
in Section 2.1A.
"INITIAL WARRANTS" shall have the meaning ascribed to such term in
Section 5.12A.
"INTELLECTUAL PROPERTY" shall mean all patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or necessary for
the conduct of the business of an Obligor as currently conducted or as proposed
to be conducted that are material to the condition (financial or otherwise),
business, operations or prospects of the Obligors, taken as a whole.
"INTERCOMPANY NOTE" shall mean a promissory note substantially in
the form of EXHIBIT IX.
"INTEREST RATE AGREEMENT" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect an Obligor against
fluctuations in interest rates.
"INVESTMENT" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of Capital
Stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person; (b) the making of any deposit with, or
advance, loan or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an agreement, contingent or
otherwise, to resell such Property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days arising
in connection with the sale of inventory or supplies by such Person in the
ordinary course of business; (c) the entering into of any guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person; (d) the entering into of any Interest Rate Agreement; (e) any
direct or indirect acquisition for cash of any 38 GHz licenses (or the economic
benefit of any such license) or right to use any such license or Capital Stock
of any Person holding any such license or the right to use any such license (or
the economic benefit of any such license); or (f) any direct or indirect
agreement to make any Investment (including any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such sale).
"JOINT VENTURE" shall mean a joint venture, partnership or other
similar arrangement, whether in corporate, partnership
<PAGE>
-18-
or other legal form; PROVIDED, HOWEVER, that, as to any such arrangement in
corporate form, such corporation shall not, as to any Person of which such
corporation is a Subsidiary, be considered to be a Joint Venture to which such
Person is a party.
"KEY EMPLOYEES" shall have the meaning ascribed to such term in
Section 4.32.
"LAWS" shall mean all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees of any
state, commonwealth, nation, territory, possession, province, county, parish,
town, township, village, municipality or Governmental Authority, and "LAW"
means each of the foregoing.
"LENDERS" shall have the meaning ascribed to that term in the
introduction to this Agreement and shall include any assignee of the Senior
Loan, any Note or the Senior Loan Commitment to the extent of such assignment.
"LIEN" shall mean any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof) and any
option, trust or other preferential arrangement having the practical effect of
any of the foregoing.
"LITIGATION" shall mean any action, suit, proceeding, claim,
lawsuit, arbitration and/or investigation conducted or threatened by or before
any Governmental Authority.
"MARGIN STOCK" shall have the meaning assigned to that term in
Regulation U and Regulation G of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in
the business, assets or financial condition of the Borrower and the
Subsidiaries, taken as a whole, except as expressly disclosed in the Prospectus
relating to historical events that have occurred or that the Company believes
are likely to occur.
"MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse effect
upon the business, assets or financial condition of the Borrower and the
Subsidiaries, taken as a whole, or (ii) the material impairment of the ability
of any Obligor to perform, or the material impairment of the ability of the
Collateral Agent or any Lender to enforce, the Obligations.
<PAGE>
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"MATURITY DATE" shall have the meaning ascribed to such term in
Section 2.1E.
"MERGER" shall mean the merger of Merger Sub with and into
Advanced Radio Telecom Corp., a Delaware corporation, pursuant to the Merger
Agreement.
"MERGER AGREEMENT" shall mean the Second Restated and Amended
Agreement and Plan of Reorganization dated October 11, 1996 among the Borrower,
Merger Sub and Advanced Radio Telecom Corp.
"MERGER SUB" shall mean ART Merger Corporation, a Delaware
corporation and a Wholly Owned Subsidiary.
"MINIMUM IPO" shall mean an Initial Public Offering which results
in gross proceeds to the Company of at least $30 million and a per share price
of at least $8.25.
"MINIMUM IPO CONSUMMATION DATE" means the date of the initial
consummation of the Minimum IPO (regardless of the date of consummation of any
underwriters' over-allotment option).
"MINIMUM IPO UNDERWRITING AGREEMENT" shall mean the Purchase
Agreement dated as of October 31, 1996, by and among the Borrower and Merrill
Lynch & Co. and Deutsche Morgan Grenfell as lead underwriters and the other
underwriters named therein.
"MORTGAGE" shall mean a term loan mortgage, assignment of leases,
security agreement and fixture filing, or a term loan deed of trust, assignment
of leases, security agreement and fixture filing, creating and evidencing a Lien
on a Mortgaged Real Property, which shall be in form and substance reasonably
satisfactory to the Lenders and the Borrower and which shall be dated the date
of delivery thereof and made by the owner of the Mortgaged Real Property
described therein for the benefit of the Collateral Agent, as mortgagee (grantee
or beneficiary), assignee and secured party, as the same may at any time be
amended, modified or supplemented in accordance with the terms thereof and
hereof.
"MORTGAGED REAL PROPERTY" shall mean each Real Property which
shall be subject to a Mortgage delivered pursuant to Section 6.24.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as
such in Section 3(37) of ERISA (i) to which contributions are or have been made
by the Company or any ERISA
<PAGE>
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Affiliate or (ii) as to which the Company or any ERISA Affiliate may have
liability under Title IV of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
(i) in the case of any Disposition Event, the amount of Net Cash
Payments received by the Borrower or any Subsidiary in connection with
such Disposition Event;
(ii) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance and condemnation awards received by the Borrower or
any Subsidiary in respect of such Casualty Event net of (a) reasonable
expenses incurred by the Borrower and its Subsidiaries in connection
therewith, (b) repayments of Indebtedness (other than Indebtedness
hereunder) to the extent secured by a Lien on such Property and (c) any
income and transfer taxes payable by the Borrower or any Subsidiary in
respect of such Casualty Event;
(iii) in the case of any Equity Issuance or any Debt Issuance, the
aggregate amount of all cash received by the Borrower or any Subsidiary in
respect thereof net of all reasonable investment banking fees, legal fees,
consulting fees, accountants' fees, underwriting discounts and commissions
and other customary fees and expenses, actually incurred and
satisfactorily documented in connection therewith;
(iv) in the case of any Taking or Destruction, the Net Award or Net
Proceeds, as applicable, resulting therefrom, to be applied as Net
Available Proceeds under this Agreement pursuant to the provisions of the
Mortgages; PROVIDED, HOWEVER, that such amounts have not been applied
to restore or rebuild the Mortgaged Real Property so Taken or Destroyed as
permitted or required by the applicable Mortgage and this Agreement; and
(v) with respect to any loss of title to all or any portion of any
Mortgaged Real Property, any title insurance proceeds resulting therefrom,
to be applied as Net Available Proceeds under this Agreement pursuant to
the provisions of the Mortgages.
"NET AWARD" shall have the meaning ascribed to such term in each
Mortgage.
<PAGE>
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"NET CASH PAYMENTS" shall mean, with respect to any Disposition
Event, the aggregate amount of all cash payments (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) received by the Borrower or any Subsidiary directly
or indirectly in connection with such Disposition Event; PROVIDED, HOWEVER,
that Net Cash Payments shall be net (without duplication) of (i) the amount of
all reasonable attorneys' fees, consulting fees, accountants' fees, investment
banking fees, survey costs, title and recording tax expenses, commissions,
underwriting discount, brokerage or selling commissions and other fees and
expenses paid by the Borrower or any Subsidiary in connection with the
Disposition (the "RELEVANT DISPOSITION") constituting (or relating to) such
Disposition Event, (ii) any Federal, state and local income or other taxes paid
or estimated to be payable by the Borrower and its Subsidiaries as a result of
the Relevant Disposition (but only to the extent that such estimated taxes are
in fact paid to the relevant Federal, state or local Governmental Authority by
the due date (including extensions) of the applicable Tax Return in respect of
the Relevant Disposition) and net purchase price adjustment reasonably expected
to be payable in connection therewith (but upon the resolution of the criteria
for payment, if not paid, then to such extent such amount shall be Net Cash
Payments), (iii) any repayments by the Borrower or any Subsidiary of
Indebtedness to the extent that (a) such Indebtedness is secured by a Lien on
the Property that is the subject of the Relevant Disposition and (b) the
transferee of (or holder of a Lien on) such Property requires that such
Indebtedness be repaid as a condition to the purchase of such Property, (iv)
amounts required to be paid to any Person (other than the Borrower or any
Subsidiary) owning a beneficial interest in the assets subject to such Relevant
Disposition, (v) reasonable amounts to be provided by the Borrower or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Relevant Disposition and retained by the
Borrower or such Subsidiary, as the case may be (PROVIDED that, if any amount
of such reserve shall be released or reversed, the amount of such release or
reversal shall be Net Cash Payments) and (vi) any other customary fees and
expenses actually incurred and satisfactorily documented in connection
therewith.
"NOTES" shall mean the Original Notes and the PIK Notes.
"NOTICE OF BORROWING" shall mean a notice substantially in the
form of EXHIBIT III with respect to a proposed borrowing.
<PAGE>
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"OBLIGATIONS" shall mean all obligations of every nature of each
Obligor from time to time owed to the Lenders under the Senior Loan Documents,
whether for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance).
"OBLIGORS" shall mean the Borrower and the Guarantors and
"OBLIGOR" means any of them.
"OFFER PAYMENT DATE" shall have the meaning ascribed to such term
in Section 2.4A(iv).
"OFFICER" shall mean the Chairman of the Board, the President, any
Vice President, the Chief Financial Officer, the Controller, the Treasurer or
the Secretary of an Obligor.
"OFFICERS' CERTIFICATE" shall mean, as applied to any corporation,
a certificate executed on behalf of such corporation by one or two Officers;
PROVIDED, HOWEVER, that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of the Senior Loan hereunder
shall include (i) a statement that the Officer or Officers making or giving such
Officers' Certificate have read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a statement that,
in the opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"ORIGINAL NOTES" shall have the meaning ascribed to such term in
Section 2.1D.
"OTHER TAXES" shall have the meaning ascribed to such term in
Section 10.19A.
"PARI PASSU INDEBTEDNESS" shall mean, with respect to the
Borrower, Indebtedness that ranks PARI PASSU in right of payment to the
Senior Loan.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
<PAGE>
-23-
"PENDING ACQUISITIONS" shall mean, collectively, the ART West
Acquisition, the CommcoCCC Acquisition, the Telecom Acquisition and the DCT
Acquisition, and "PENDING ACQUISITION" means each of them.
"PENDING APPLICATIONS" shall mean those applications, including
amendments, filed by the Company for those licenses from the FCC for microwave
facilities in the 38 GHz band listed on SCHEDULE 1.1(a).
"PERMITS" shall have the meaning ascribed to such term in Section
4.20.
"PERMITTED AFFILIATE TRANSACTIONS" shall have the meaning ascribed
to such term in Section 6.8.
"PERMITTED HOLDERS" shall mean each of the shareholders of the
Company as of the date hereof (as reflected in the stock register of the
Company) and prior to the Minimum IPO Consummation Date and their respective
Permitted Transferees.
"PERMITTED LIENS" shall have the meaning ascribed to such term in
Section 6.2.
"PERMITTED SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness
(i) of which the maturity of any principal amounts due thereunder shall be no
earlier than one year after the final maturity date of the Senior Loans, (ii)
which is subordinated to the Obligations hereunder on substantially the terms
set forth in EXHIBIT X, and (iii) the terms and provisions of which are
acceptable to the Required Lenders.
"PERMITTED TRANSFEREE" shall mean with respect to any Person: (i)
in the case of any Person who is a natural person, such individual's spouse or
children (natural or adopted), any trust for such individual's benefit or the
benefit of such individual's spouse or children (natural or adopted), or any
corporation or partnership in which the direct and beneficial owner of all of
the equity interest is such Person or such individual's spouse or children
(natural or adopted) or any trust for the benefit of such persons; (ii) in the
case of any Person who is a natural person, the heirs, executors, administrators
or personal representatives upon the death of such Person or upon the
incompetency or disability of such Person for purposes of the protection and
management of such individual's assets; and (iii) in the case of any Person who
is not a natural person, any Affiliate of such Person.
<PAGE>
-24-
"PERSON" shall mean and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships, joint
stock companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PIK INTEREST AMOUNT" shall have the meaning ascribed to such term
in Section 2.2B.
"PIK NOTES" shall have the meaning ascribed to such term in
Section 2.1D.
"PLAN" shall mean an employee benefit or other plan which is
established or maintained by or to which contributions are made by the Company
or any ERISA Affiliate or as to which the Company or any ERISA Affiliate may
have liability and that is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"PLEDGED COLLATERAL" shall mean all the Pledged Collateral as
defined in the Security Agreement.
"POTENTIAL EVENT OF DEFAULT" shall mean a condition or event that,
after notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable grace or
cure period.
"PREFERRED STOCK" of any Person shall mean any Capital Stock of
such Person that has preferential rights (as compared to any other Capital Stock
of such Person) with respect to dividends or redemptions or upon liquidation.
"PRIOR LIENS" shall mean Liens which, pursuant to the provisions
of the Security Agreement, are or may be superior to the Lien of the Security
Agreement.
"PROCEEDING" shall have the meaning ascribed to such term in
Section 5.1(ix).
"PRO FORMA" shall mean, with respect to any calculation made or
required to be made pursuant to the terms of this Agreement, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act.
"PROPERTY" shall mean any right or interest in or to property or
asset of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
<PAGE>
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"PROSPECTUS" means the final prospectus relating to the Minimum
IPO in the form first filed with the Commission and delivered to the Lenders
pursuant to the terms hereof.
"QUALIFIED CAPITAL STOCK" shall mean any Capital Stock that is not
Disqualified Capital Stock.
"QUARTERLY PERIOD" shall mean the period commencing on the first
calendar day of each three-month period, if such day is a Business Day, or the
first Business Day succeeding the first calendar day of each three-month period
and ending on the day next preceding the first Business Day of the following
Quarterly Period.
"REAL PROPERTY" shall mean all right, title and interest of the
Borrower or any Subsidiary (including, without limitation, any leasehold estate)
in and to a parcel of real property owned or operated by the Borrower or any
Subsidiary together with, in each case, all improvements and appurtenant
fixtures, equipment, personal property, easements and other property and rights
incidental to the ownership, lease or operation thereof.
"REGISTER" shall have the meaning ascribed to such term in Section
5.11.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Second Restated and
Amended Registration Rights Agreement dated July 3, 1996 among the Company, its
stockholders and certain other parties, as amended and in effect from time to
time in accordance with its terms and this Agreement.
"REGISTRATION RIGHTS AGREEMENT AMENDMENT" shall mean an amendment
to the Registration Rights Agreement substantially in the form of EXHIBIT XII,
as amended and in effect from time to time in accordance with its terms and this
Agreement.
"RELATED DOCUMENTS" shall mean any agreement, document or
instrument entered into by any Obligor in connection with the Merger Agreement,
the CommcoCCC Acquisition Agreement, the ART West Acquisition Agreement, the
Telecom Acquisition Agreement or the DCT Acquisition Agreement as any such
agreement, document or instrument is amended and in effect from time to time in
accordance with their respective terms and this Agreement.
"RELEASE" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment.
<PAGE>
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"RELEVANT PARTY" and "RELEVANT PARTIES" each shall have the
meaning ascribed to such terms in Section 7.2.
"REQUIRED LENDERS" shall mean, at any time, Lenders holding in the
aggregate at least a majority of the then outstanding (i) prior to the Closing
Date, the Senior Loan Commitments and (ii) after the making of the Initial
Senior Loan, principal amount of the Notes.
"RESTRICTED PAYMENT" shall have the meaning ascribed to such term
in Section 6.3.
"SECTION 10.19 CERTIFICATE" shall have the meaning ascribed to
such term in Section 10.19F.
"SECURITIES" shall mean any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options, warrants,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time, and any successor statute and the rules and regulations of
the Commission promulgated thereunder.
"SECURITY AGREEMENT" shall mean a Security Agreement substantially
in the form of EXHIBIT VII among the Company, the Guarantors and the
Collateral Agent, as the same may be amended, modified or supplemented in
accordance with the terms thereof and hereof.
"SECURITY DOCUMENTS" shall mean the Mortgages and the Security
Agreement.
"SENIOR LOAN" shall have the meaning ascribed to such term in
Section 2.1A.
"SENIOR LOAN COMMITMENT" and "SENIOR LOAN COMMITMENTS" each
shall have the meaning ascribed to such term in Section 2.1A.
"SENIOR LOAN DOCUMENTS" shall mean this Agreement, the Notes, the
Security Agreement, the Mortgages, the Warrant
<PAGE>
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Agreement, the Registration Rights Agreement and the Registration Rights
Agreement Amendment.
"STATE AND LOCAL REAL PROPERTY DISCLOSURE REQUIREMENTS" shall mean
any state or local Laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control of an
establishment, of the actual or threatened presence or release into the
environment, or the use, disposal, or handling of Hazardous Materials on, at,
under, or near the real property to be sold or the establishment for which
control is to be transferred.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of the
Borrower that is expressly subordinated in right of payment to the Notes.
"SUBORDINATION PROVISIONS" shall have the meaning ascribed to such
term in Section 7.18.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereto is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof. The term "SUBSIDIARY" includes,
immediately prior to the consummation of the Merger, any entity to become a
Subsidiary of the Borrower upon consummation of the Merger and, immediately
prior to the consummation of any Pending Acquisition, any entity to become a
Subsidiary of the Borrower upon consummation of such Pending Acquisition.
Unless stated otherwise or the context otherwise clearly requires,
"SUBSIDIARY" means a Subsidiary of the Borrower.
"SURETY INSTRUMENTS" shall mean all letters of credit (including
standby and commercial), bankers' acceptances, bank guarantees, surety bonds and
similar instruments.
"TAXES" shall mean any present or future tax, levy, stamp, impost,
duty, deduction, assessment or other charge or withholding (including any
intangible, documentary or excise tax), and all liabilities with respect thereto
(including penalties, interest and expenses) imposed, levied, collected,
withheld or assessed by or on behalf of any Governmental Authority.
<PAGE>
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"TAX RETURNS" shall have the meaning ascribed to such term in
Section 4.12.
"TELECOM ACQUISITION" shall mean the acquisition of certain 38 GHz
radio authorizations pursuant to the Telecom Acquisition Documents.
"TELECOM ACQUISITION AGREEMENT" shall mean the Telecom Asset
Purchase Agreement dated as of June 1996 among the Company, Telecom One, a
Delaware corporation, and the selling stockholders named therein, as amended and
in effect from time to time in accordance with its terms and this Agreement.
"TELECOM ACQUISITION DOCUMENTS" shall mean the Telecom Acquisition
Agreement and each of the Related Document with respect thereto in each case
including all exhibits, appendices, annexes and attachments thereto, and
"TELECOM ACQUISITION DOCUMENT" means any of the, in each case as amended and
in effect from time to time in accordance with its terms and this Agreement.
"TRANSACTIONS" means (i) the Minimum IPO, (ii) the Merger, (iii)
the use of the proceeds of the Minimum IPO as set forth in the Prospectus to
repay all outstanding Indebtedness other than the Indebtedness to remain
outstanding as reflected in the Prospectus under the caption "Capitalization" in
the column titled "Pro Forma As Adjusted" and (iv) the making of the Initial
Senior Loan.
"TRANSFEREE" shall have the meaning ascribed to such term in
Section 10.19.
"U.S. LEGAL TENDER" shall mean such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"U.S. PERSON" shall mean a person described in Section 7701(a)(30)
of the Code (or any successor provision).
"VOTING STOCK" shall mean, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the board of directors or other governing body of such Person.
"VOTING TRUST AGREEMENT" shall mean, collectively, the Voting
Trust Agreement and Irrevocable Proxy dated on or about
<PAGE>
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the Minimum IPO Consummation Date among the Zimmerman Group, the Company, Vernon
L. Fotheringham, Andrew I. Fellat and Mark C. Demetree, the Voting Agreement
dated on or about such date between Landover Holdings Corp. and the Company and
the Confidentiality Agreement dated on or about such date between Laurence S.
Zimmerman, a natural Person resident in New York, New York on the date hereof,
and the Company, each as amended and in effect from time to time in accordance
with its terms and this Agreement.
"WARRANT AGREEMENT" shall mean the Warrant Agreement dated as of
the Minimum IPO Closing Date between the Borrower and the Warrant Agent named
therein, as amended and in effect from time to time in accordance with its terms
and this Agreement.
"WARRANTS" means the Warrants issued under the Warrant Agreement.
"WARRANT SHARES" shall mean the shares of Common Stock of the
Company issuable or issued upon exercise of the Warrants.
"WEIGHTED AVERAGE LIFE TO MATURITY" shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding aggregate principal amount of such Indebtedness into (b) the
total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person,
any corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Wholly Owned
Subsidiaries of that Person or a combination thereof. Unless stated otherwise
or the context otherwise clearly requires, "WHOLLY OWNED SUBSIDIARY" means a
Wholly Owned Subsidiary of the Borrower.
"ZIMMERMAN GROUP" shall mean Laurence S. Zimmerman, a natural
Person resident in New York, New York as of the date hereof, his wife as of the
date hereof, the Zachary Tyler
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Zimmerman trust and Landover Holdings Corp., a Delaware corporation.
1.2 ACCOUNTING TERMS
For the purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS; ANNIVERSARIES
Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
1.4 RULES OF CONSTRUCTION
A. In this Agreement and each other Senior Loan Document, unless
the context clearly requires otherwise (or such other Senior Loan Document
clearly provides otherwise), references to (i) the plural include the singular,
the singular the plural and the part the whole; (ii) Persons include their
respective permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; (iii)
agreements (including this Agreement), promissory notes and other contractual
instruments include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments or other
modifications thereto are not prohibited by their terms or the terms of any
Senior Loan Document; (iv) statutes and related regulations include any
amendments of same and any successor statutes and regulations; and (v) time
shall be a reference to New York City time. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
B. In this Agreement and each other Senior Loan Document, unless
the context clearly requires otherwise (or such other Senior Loan Document
clearly provides otherwise), (i) "AMEND" shall mean "amend, amend and restate,
supplement or modify"; and "AMENDED" and "AMENDMENT" shall have meanings
correlative to the foregoing; (ii) in the computation of periods of time from a
specified date to a later specified date, "FROM" shall mean "from and
including"; "TO" and "UNTIL" shall mean "to but excluding"; and "THROUGH"
shall mean "to and including"; (iii) "HEREOF," "HEREIN" and "HEREUNDER"
(and similar terms) in
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this Agreement or any other Senior Loan Document refer to this Agreement or such
other Senior Loan Document, as the case may be, as a whole and not to any
particular provision of this Agreement or such other Senior Loan Document; (iv)
"INCLUDING" (and similar terms) shall mean "including without limitation" (and
similarly for similar terms); (v) with respect to the Obligors "KNOWLEDGE" or
"AWARE" shall mean and include the actual knowledge or awareness of the chief
executive officer or chief financial officer of any of the Obligors; (vi) "OR"
has the inclusive meaning represented by the phrase "and/or"; (vii) "PROPERTY"
and "ASSETS" each shall include all properties and assets of any kind or
nature, tangible or intangible, real, personal or mixed, now existing or
hereafter acquired; (viii) "SATISFACTORY TO" any of the Collateral Agent or
Lenders shall mean in form, scope and substance and on terms and conditions
satisfactory to such Person in its reasonable judgment; and (ix) references to
"THE DATE HEREOF" shall mean the date first set forth above.
C. In this Agreement unless the context clearly requires
otherwise, any reference to (i) an Annex, Exhibit or Schedule is to an Annex,
Exhibit or Schedule, as the case may be, attached to this Agreement and
constituting a part hereof, and (ii) a Section or other subdivision is to a
Section or such other subdivision of this Agreement.
D. No doctrine of construction of ambiguities in agreements or
instruments against the interests of the party controlling the drafting thereof
shall apply to any Senior Loan Document.
SECTION 2 AMOUNT AND TERMS OF SENIOR LOAN COMMITMENT
AND SENIOR LOAN; NOTES
2.1 SENIOR LOAN AND NOTES
A. SENIOR LOAN COMMITMENT. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of the
Obligors herein set forth, the Lenders severally and not jointly hereby agree to
lend to the Borrower on the Closing Date loans (the "INITIAL SENIOR LOAN")
in an aggregate amount requested by the Borrower not to exceed $50.0 million.
No Senior Loan shall be made after the Minimum IPO Consummation Date unless (i)
no Default or Event of Default shall have occurred and be continuing and (ii)
the Borrower has given written notice (the "EXTENSION NOTICE") to the Lenders
prior to the Closing Date that it desires that the Lenders make Senior Loans
after the Minimum IPO Consummation Date. The Senior Loan
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shall be at least $10.0 million and integral multiples of $500,000. Upon the
issuance of any PIK Notes, each Lender shall be deemed to have made a loan (the
"PIK LOAN", and together with the Initial Senior Loan, the "SENIOR LOAN") in
the amount of the face amount of such PIK Note on the date of the date of such
PIK Note. PIK Loans may only be made on an interest payment date and only in
respect of interest not paid in cash on such date in accordance herewith. Each
Lender's commitment to make the Senior Loan (other than any PIK Loan) to the
Borrower pursuant to this Section 2.1A is herein called the "SENIOR LOAN
COMMITMENT" and the Senior Loan Commitment of all the Lenders is herein called
the "SENIOR LOAN COMMITMENTS". The amount of each Lender's Senior Loan
Commitment is set forth opposite its name on the signature pages hereto and the
aggregate amount of the Senior Loan Commitments is initially $50.0 million.
B. NOTICE OF BORROWING. When the Borrower desires to borrow
under this Section 2.1, it shall deliver to the Lenders a Notice of Borrowing no
later than 11:00 A.M. (New York time), at least (x) with respect to the Initial
Senior Loan, ten full Business Days in advance of the Closing Date, or such
later date as shall be agreed to by the Lenders and (y) in the case of a PIK
Loan, one full Business Day in advance of the applicable interest payment date.
The Notice of Borrowing shall specify the applicable date of borrowing (which
shall be a Business Day) and the amount to be borrowed.
C. DISBURSEMENT OF FUNDS. (a) Upon satisfaction or waiver of
the conditions set forth in Section 3.1, no later than 12:00 Noon (New York
time) on the Closing Date, each Lender will make available its PRO RATA
share (based on each Lender's Senior Loan Commitment then in effect) of the
Senior Loan (not to exceed $50.0 million in the aggregate for all Lenders) in
the manner provided below. All amounts shall be made available in U.S. Legal
Tender and immediately available funds to the Borrower by depositing to its
account at the place in the United States notified by the Borrower to the
Lenders in writing at least two Business Days in advance of the Senior Loan to
be made by each such Lender. Each Lender shall make the proceeds of the PIK
Loan to be borrowed by the Company available to the Company on an interest
payment date on which a PIK Interest Amount is payable by causing the proceeds
of such PIK Loan to be applied in satisfaction of an amount of interest on the
Senior Loan due on such date which is equal to such PIK Interest Amount. Such
Loan shall be deemed to be a simultaneous borrowing of such PIK Loan and payment
of such interest.
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(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Senior Loan Commitment hereunder or to prejudice any
rights that the Borrower may have against any Lender as a result of any default
by such Lender hereunder.
D. NOTES. The Borrower shall execute and deliver to each
Lender on the Closing Date one or more notes dated the Closing Date
substantially in the form of EXHIBIT I to evidence such Lender's Senior Loan
Commitment and with appropriate insertions (the "ORIGINAL NOTES"). On each
interest payment date on which the Borrower elects to pay a PIK Interest Amount
pursuant to Section 2.2B, the Borrower shall execute and deliver to each Lender
on such interest payment date a note dated such interest payment date
substantially in the form of EXHIBIT I in a principal amount equal to such
Lender's PRO RATA portion of such PIK Interest Amount and with other
appropriate insertions (each a "PIK NOTE" and, together with the Original
Notes, the "NOTES"). A PIK Note shall bear interest from the date of its
issuance at the same rate borne by all Notes.
E. MATURITY OF SENIOR LOAN. The Senior Loan shall mature and
the Borrower shall pay to each Lender in full the outstanding principal amount
thereof and accrued interest thereon on the second anniversary of the Closing
Date (the "MATURITY DATE").
F. TERMINATION OF SENIOR LOAN COMMITMENTS. The Senior Loan
Commitments shall automatically and permanently terminate on the earlier of (x)
11:00 A.M. (New York time) on March 31, 1997 or (y) 11:00 A.M. (New York time)
on the Minimum IPO Consummation Date; PROVIDED, HOWEVER, that if the Company
shall have given the Extension Notice in accordance with Section 2.1A, the
Senior Loan Commitments shall not so terminate but instead shall automatically
and permanently terminate on the earlier of (x) 11:00 A.M. (New York time) on
the 90th day after the Minimum IPO Consummation Date (or the immediately
preceding Business Day if such day is not a Business Day) and (y) 11:00 A.M.
(New York time) on March 31, 1997. Notwithstanding anything herein to the
contrary, the Senior Loan Commitment shall automatically and permanently
terminate immediately after the making of any Senior Loan in an amount equal to
the amount of such Senior Loan (it being understood that if the Extension Notice
is not given in accordance with the provisions of Section 2.1A, the Senior Loan
Commitments shall automatically and permanently terminate in full on the Closing
Date immediately after the making of the Senior Loan on such date). The
Borrower shall have the right, without premium or penalty, to reduce or
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terminate the Senior Loan Commitments of the Lenders at any time. Any reduction
or termination of the Senior Loan Commitments shall apply to the Senior Loan
Commitment of each of the Lenders PRO RATA in accordance with the amount of
each Lender's then outstanding Senior Loan Commitment.
G. PRO RATA BORROWINGS. The Senior Loan made under this
Agreement shall be made by the Lenders PRO RATA on the basis of their
respective Senior Loan Commitments. No Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Senior
Loan hereunder and that each Lender shall be obligated, subject to the terms and
conditions hereof, to make its portion of the Senior Loan hereunder, regardless
of the failure of any other Lender to fulfill its commitments hereunder.
2.2 INTEREST ON THE SENIOR LOAN
A. RATE OF INTEREST. The Senior Loan shall bear interest on
the unpaid principal amount thereof from the date made through maturity (whether
by prepayment, acceleration or otherwise) at the rate of 12.50% PER ANNUM,
which rate shall increase by 0.50% PER ANNUM on (x) the date which is the
corresponding date in the month which is the third calendar month after the
calendar month in which the Minimum IPO Consummation Date occurs (the "INCREASE
DATE"), and (y) (without duplication) on each date which is the corresponding
day in each month which is at an additional three calendar month interval after
the calendar month in which the Increase Date occurs.
B. INTEREST PAYMENTS. Interest shall be payable with respect
to the Senior Loan in arrears on the last Business Day of each March, June,
September and December, commencing in March, 1997, and upon any prepayment or
repayment (including by acceleration or otherwise) of the Senior Loan (to the
extent accrued on the amount being prepaid) and at maturity of the Senior Loan.
The Company may, other than upon any prepayment, repayment, purchase
pursuant to Section 2.4A(iv) or maturity of the Senior Loan, pay all or a
portion of the interest payable on any interest payment date by issuance of PIK
Notes (valued at 100% of the face amount thereof) in an aggregate principal
amount equal to the amount of such interest then owing (the "PIK INTEREST
AMOUNT"). Accrued interest payable on prepayment, repayment, purchase pursuant
to Section 2.4A(iv) or maturity of the Senior Loan shall be paid solely in cash.
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C. POST-MATURITY INTEREST. Any principal payments on the
Senior Loan not paid when due and, to the extent permitted by applicable Law,
any interest payment on the Senior Loan not paid when due, in each case whether
at stated maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate that is 2.00% PER
ANNUM in excess of the rate of interest otherwise payable under this Agreement
for the Senior Loan.
D. COMPUTATION OF INTEREST. Interest on the Senior Loan shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
In computing interest on the Senior Loan, the date of the making of the
applicable Senior Loan shall be included (which, for purposes of any PIK Loan,
shall be deemed to be the date of the PIK Note representing such PIK Loan) and
the date of payment shall be excluded; PROVIDED, HOWEVER, that if a Senior
Loan is repaid on the same day on which it is made, one day's interest shall be
paid on that Senior Loan.
2.3 FEES
The Company agrees to pay to each Lender for the account of each
Lender a commitment fee in an amount equal to 2.0% of the full amount of the
Senior Loan Commitments as of the date hereof in accordance with the terms of
the Commitment Letter. One half of such commitment fee shall be earned on the
date of execution of this Agreement and shall be payable on the earlier to occur
of (x) the Minimum IPO Consummation Date and (y) March 31, 1997 (and shall be
payable whether or not any Senior Loans are made), with the balance earned and
payable upon the first date any Senior Loan is made hereunder (regardless of the
amount of the Senior Loan made).
The Company agrees to pay to CIBC Wood Gundy Securities Corp. on or
before the Minimum IPO Consummation Date and the date of the making of the
Initial Senior Loan all fees and expenses to be paid as required by the letter
agreement dated October 16, 1996 between the Company and CIBC Wood Gundy
Securities Corp.
The Company agrees to pay the Collateral Agent all fees required by
the Collateral Agent's Fee Letter.
Once paid, such commitment fee shall not be refundable under any
circumstances.
All fees paid under this Section 2.3 shall be paid solely in cash.
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2.4 PREPAYMENTS AND PAYMENTS; CHANGE OF CONTROL OFFER
A. PREPAYMENTS; CHANGE OF CONTROL OFFER
(i) VOLUNTARY PREPAYMENTS. The Borrower may, upon not less than
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) to the Lenders at any time and from time to time, prepay
the Senior Loan in cash in whole or in part at 100% of the principal amount
thereon plus accrued interest (which interest is payable solely in cash);
PROVIDED, HOWEVER, that unless the Senior Loan is to be prepaid in full,
such voluntary prepayments shall not result in the aggregate amount of the
Senior Loan outstanding being less than $10.0 million.
Notice of prepayment having been given as aforesaid, the principal
amount of the Senior Loan to be prepaid shall become due and payable on the
prepayment date. Amounts of the Senior Loan so prepaid may not be reborrowed.
(ii) MANDATORY PREPAYMENTS. The Borrower shall prepay the Senior
Loans and the Senior Loan Commitments shall be automatically reduced as follows
(each such prepayment and reduction to be effected in each case in the manner,
order and to the extent specified in subsection (iii) below of this Section
2.4A):
(I) CASUALTY EVENTS. On the date (or next Business Day if such
date is not a Business Day) on which the Borrower or any Subsidiary
receives any Net Available Proceeds from any Casualty Event with respect
to Property pledged pursuant to the Security Agreement, in an aggregate
principal amount equal to 100% of such Net Available Proceeds; PROVIDED,
HOWEVER, that so long as no Event of Default or Potential Event of
Default then exists and such Net Available Proceeds do not exceed $1.0
million, such Net Available Proceeds shall not be required to be so
applied on such date to the extent that the Borrower has delivered an
Officers' Certificate to the Lenders on or prior to such date stating that
such proceeds shall be used to (1) repair, replace or restore any Property
in respect of which such Net Available Proceeds were paid or (2) fund the
expansion or substitution of other Property used or usable in the business
of the Borrower and the Subsidiaries, in each case within 180 days
following the date of the receipt of such Net Available Proceeds;
PROVIDED, FURTHER, HOWEVER, that (i) if the amount of such Net
Available Proceeds exceeds $1.0 million, then the entire amount and not
just the portion in
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excess of $1.0 million shall be applied and (ii) if all or any portion of
such Net Available Proceeds not required to be applied to the prepayment
of the Senior Loans pursuant to the preceding proviso is not so used
within 180 days after the date of the receipt of such Net Available
Proceeds, such remaining portion shall be applied on the last Business Day
of such period as specified in subsection (iii) of this Section 2.4A.
(II) EQUITY ISSUANCE; DEBT ISSUANCE. Within two Business Days
after any Equity Issuance or any Debt Issuance after the Closing Date, in
an aggregate principal amount equal to 100% of the Net Available Proceeds
of such Equity Issuance or such Debt Issuance, as the case may be.
(III) SALE OF ASSETS. Within two Business Days after the date of
receipt of any Net Available Proceeds from any Disposition Event, in an
aggregate principal amount equal to 100% of the Net Available Proceeds
from such Disposition Event; PROVIDED, HOWEVER, that the Net Available
Proceeds from any Disposition permitted by Section 6.6(k) (other than any
Disposition of or involving any FCC Licenses (including by way of sale of
Capital Stock or a license or similar agreement to use any FCC Licenses or
have the right to the economic benefit thereof)) shall in each case not be
required to be applied as provided herein on such date if and to the
extent that (i) no Event of Default or Potential Event of Default then
exists and (ii) the Borrower delivers an Officers' Certificate to the
Lenders on or prior to such date stating that such Net Available Proceeds
shall be reinvested in capital assets of the Borrower or any Subsidiary in
each case within 180 days following the date of such Disposition (which
certificate shall set forth the estimates of the proceeds to be so
expended); PROVIDED, FURTHER, HOWEVER, that if all or any portion of
such Net Available Proceeds not so applied as provided herein is not so
used within such 180 day period, such remaining portion shall be applied
on the last day of such period (or the next preceding Business Day if such
last day is not a Business Day) as specified in subsection (iii) of this
Section 2.4A (it being understood that the foregoing shall in no way
affect the obligation of the Company to obtain the consent of the Required
Lenders if required pursuant to this Agreement).
(IV) RECOVERY EVENTS. On the date (or next Business Day if
such date is not a Business Day) on which the Borrower or any Subsidiary
receives any Net Available
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Proceeds from any Taking or Destruction or loss of title to any Mortgaged
Real Property, in an aggregate principal amount equal to 100% of such Net
Available Proceeds; PROVIDED, HOWEVER, that so long as no Event of
Default or Potential Event of Default then exists and such Net Available
Proceeds do not exceed $1.0 million, such Net Available Proceeds shall not
be required to be so applied on such date to the extent that the Borrower
has delivered an Officers' Certificate to the Lenders on or prior to such
date stating that such proceeds shall be used to (1) repair, replace or
restore any Mortgaged Real Property in respect of which such Net Available
Proceeds were paid or (2) fund the purchase of substitute or additional
Mortgaged Real Property, in each case within 180 days following the date
of the receipt of such Net Available Proceeds; PROVIDED, FURTHER,
HOWEVER, that (i) if the amount of such Net Available Proceeds exceeds
$1.0 million, then the entire amount and not just the portion in excess of
$1.0 million shall be applied and (ii) if all or any portion of such Net
Available Proceeds not required to be applied to the prepayment of Term
Loans pursuant to the preceding proviso is not so used within 180 days
after the date of the receipt of such Net Available Proceeds, such
remaining portion shall be applied on the last Business Day of such period
as specified in subsection (iii) of this Section 2.4A.
(iii) APPLICATION OF PREPAYMENTS. All prepayments required by
Section 2.4A(ii)(i)-(iv) shall include payment of accrued interest on the
principal amount so prepaid and shall be applied to payment of interest before
application to principal. To the extent that the amount to be applied exceeds
the aggregate amount of the Senior Loan then outstanding, the Senior Loan
Commitments shall be reduced by such amount, all such reductions to be applied
PRO RATA among the Lenders.
(iv) MANDATORY OFFER TO PURCHASE THE NOTES.
(I) Upon the occurrence of a Change of Control (the date of such
occurrence, the "CHANGE OF CONTROL DATE"), each Lender shall have the
right to require the repurchase of its Notes pursuant to an offer to
purchase (the "CHANGE OF CONTROL OFFER") at a purchase price in cash
equal to 101% of the aggregate principal amount thereof, PLUS accrued
and unpaid interest to the date of repurchase (which interest shall be
payable solely in cash).
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(II) The notice to the Lenders required by subclause (III) below
shall contain all instructions and materials necessary to enable the
Lenders to tender the Notes.
(III) Within 30 days following any Change of Control the Borrower
shall mail a notice to the Lenders stating:
(1) that the Change of Control Offer is being made pursuant
to this Section 2.4(a)(iv) and that all Notes validly tendered
will be accepted for payment;
(2) the purchase price and the purchase date, which shall be
no earlier than 30 days nor later than 40 days from the date
such notice is mailed (the "OFFER PAYMENT DATE");
(3) that any Note not tendered will continue to accrue
interest;
(4) that any Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the
Offer Payment Date unless the Company shall default in the
payment of the repurchase price of the Notes;
(5) that if the Lender elects to have the Note purchased
pursuant to the Change of Control Offer it will be required to
surrender the Note, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Note completed, to the
Borrower prior to 5:00 p.m. (New York time) on the Offer Payment
Date;
(6) that the Lender will be entitled to withdraw its
election if the Borrower receives, not later than 5:00 p.m. (New
York time) on the second Business Day preceding the Offer
Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the principal amount of Notes the Lender
delivered for purchase, and a statement that the Lender is
withdrawing its election to have the Note purchased; and
(7) that if the Note is purchased only in part a new Note of
the same type will be issued in principal amount equal to the
unpurchased portion of the Note surrendered.
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(IV) On or before the Offer Payment Date, the Borrower shall (i)
accept for payment the Notes or portions thereof that are to be purchased
in accordance with the above, and (ii) deposit, with a paying agent
retained by the Company in connection with the Change of Control Offer (at
the sole expense of the Company) and reasonably acceptable to the Required
Lenders, U.S. Legal Tender sufficient to pay the purchase price of Notes
to be purchased plus all accrued and unpaid interest on the Notes
purchased. Such paying agent shall promptly mail to the Lender whose
Notes are so accepted payment in an amount equal to the purchase price.
(V) The Borrower shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities Laws and regulations
thereunder to the extent such Laws and regulations are applicable in
connection with the purchase of the Notes pursuant to an offer hereunder.
To the extent the provisions of any securities Laws or regulations
conflict with the provisions under this Section, the Borrower shall comply
with the applicable securities Laws and regulations and shall not be
deemed to have breached their obligations under this Section by virtue
thereof.
B. MANNER AND TIME OF PAYMENT. All payments of principal and
interest hereunder and under any Note by the Borrower shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Lenders, unless otherwise specified, not later than 12:00 Noon (New York time)
on the date due at the account specified to the Borrower by each Lender at least
one Business Day prior thereto for the account of such Lender; funds received by
a Lender after that time shall be deemed to have been paid by the Borrower on
the next succeeding Business Day.
C. PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day that is not
a Business Day, the payment shall be made on the next succeeding Business Day
and such extension of time shall be included in the computation of the payment
of interest hereunder or under the Notes or of the commitment and other fees
hereunder, as the case may be.
D. NOTATION OF PAYMENT. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by granting
participations therein), such Lender will make a notation thereon of all
principal payments previously made thereon and of the date to which interest
thereon has been paid and will notify the Borrower of the name and address of
the
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transferee of such Note; PROVIDED, HOWEVER, that the failure to make (or any
error in the making of) such a notation or to notify the Borrower of the name
and address of such transferee shall not limit or otherwise affect the
obligation of the Borrower under any Senior Loan Document with respect to the
Senior Loan and payments of principal or interest on such Note.
2.5 USE OF PROCEEDS
A. SENIOR LOAN. The proceeds of the Senior Loan shall be used
by the Borrower for general corporate purposes, subject to the covenants herein
and to finance the PIK Loans.
B. MARGIN REGULATIONS. No portion of the proceeds of the
borrowing under this Agreement shall be used by the Borrower in any manner that
might cause the borrowing or the application of such proceeds to violate the
applicable requirements of Regulation G, Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of the Board of Governors or to violate the Exchange Act, in
each case as in effect on the Closing Date and the date of such use of proceeds.
SECTION 3 CONDITIONS
3.1 CONDITIONS TO SENIOR LOAN
The obligation of the Lenders to make the Senior Loan is subject to,
at the Closing Date, the prior or concurrent satisfaction of each of the
following conditions:
A. CHARTER, BYLAWS, RESOLUTIONS, PROCEEDINGS, DOCUMENTS,
OPINIONS; ETC. On or before the Closing Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
satisfactory by the Lenders shall be reasonably satisfactory in form and
substance to the Required Lenders, and the Lenders shall have received the
following items, each of which shall be in form and substance satisfactory to
the Required Lenders and, unless otherwise noted, dated the Closing Date:
1. a certified copy of each Obligor's charter, together with a
certificate of status, compliance, good standing or like certificate with
respect to each Obligor issued by the appropriate government officials of
the jurisdiction of its incorporation and of each jurisdiction
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in which it owns so as to require foreign qualification, any material
assets or carries on any material business, each to be dated a recent date
prior to the Closing Date;
2. a copy of each Obligor's bylaws, certified as of the Closing
Date by one of its Officers;
3. resolutions of each Obligor's Board of Directors approving and
authorizing the execution, delivery and performance of each Senior Loan
Document and any other documents, instruments and certificates required to
be executed by such Obligor in connection herewith and therewith and
approving and authorizing the execution, delivery and payment of the
Notes, and the issuance and delivery of the Warrants each certified as of
the Closing Date by one of its Officers as being in full force and effect
without modification or amendment;
4. signature and incumbency certificates of each Obligor's
Officers executing any Senior Loan Document;
5. executed copies of this Agreement and the Notes executed in
accordance with Section 2.1D drawn to the order of each Lender and with
appropriate insertions;
6. an originally executed Notice of Borrowing substantially in
the form of EXHIBIT III, signed by the President or a Vice President of
the Borrower on behalf of the Borrower in writing delivered to the
Lenders;
7. originally executed copies of one or more favorable written
opinions dated the Closing Date of (i) Ropes & Gray and Hahn & Hessen LLP,
each counsel for the Obligors, which between them shall cover the matters
set forth in EXHIBIT IV and addressed to the Lenders (ii) Cahill Gordon
& Reindel, special counsel for the Lenders, substantially in the form of
EXHIBIT V and addressed to the Lenders;
8. a certificate, delivered by the Borrower and signed by the
Chief Financial or Accounting Officer of the Borrower and addressed to the
Lenders in form and substance reasonably satisfactory to the Lenders, with
appropriate attachments dated the Closing Date stating that, after giving
effect to the making of the Senior Loans and the other transactions to
occur on the Closing Date, the fair saleable value of the Property of each
Obligor will not be less than the probable liability on its debts as they
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mature, that each Obligor will be able to pay its debts as they mature and
that each will not have unreasonably small capital to conduct its
business, all in form and substance reasonably satisfactory to the
Lenders;
9. a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of issuance of each Note, substantially in the
form of EXHIBIT VI, as applicable;
10. an Officers' Certificate on the Minimum IPO Consummation Date
and the date of the making of the Initial Senior Loan certifying as to the
number of shares of Common Stock of the Borrower outstanding on a fully
diluted basis as of such date after giving effect to (w) the Minimum IPO
(assuming a minimum of 2,750,000 shares of Common Stock of the Borrower
issued thereunder (or such larger number as may be actually issued)), (x)
the CommcoCCC Acquisition (assuming a minimum of 6,000,000 shares of
Common Stock of the Borrower issued in connection therewith (or such
larger number as may be actually issued)), (y) the Warrants to be issued
on such date and all Warrants then issued and outstanding and (z) all then
outstanding Equity Rights (other than the Warrants) exercisable as of such
date (calculated based on the treasury method);
11. an executed Warrant Agreement and duly executed certificates
for the Initial Warrants as of the earlier of (x) the earlier of the date
of the giving of the Extension Notice or the Minimum IPO Consummation Date
or (y) March 31, 1997;
12. on or prior to the second Business Day after the filing
thereof with the Commission, a copy of the Prospectus;
13. on or prior to the Closing Date a copy of all closing
documents relating to the other Transactions and all such counterpart
originals or certified copies of such documents, instruments, certificates
and opinions as the Required Lenders may reasonably request; and
14. on or prior to the Closing Date, a duly executed copy of the
Security Agreement and the Registration Rights Agreement Amendment.
B. APPROVALS. On or before the Closing Date, all material
authorizations, consents and approvals (including of any third party) necessary
in connection with the Transactions shall
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have been obtained and remain in full force and effect and evidence of the
receipt of such authorizations, consents and approvals satisfactory to the
Required Lenders shall have been delivered to the Lenders.
C. PAYMENT OF FEES. On the Minimum IPO Consummation Date, all
reasonable legal fees of Cahill Gordon & Reindel as special counsel to the
Lenders in connection with the negotiation, execution and delivery of the Senior
Loan Documents shall have been paid in full. On or before the Closing Date the
Borrower shall have paid to the Lenders, the Collateral Agent and CIBC Wood
Gundy Securities Corp. the fees payable on or before the Closing Date pursuant
to Section 2.3.
D. PERFORMANCE OF COVENANTS. On or before the Closing Date the
Company shall have performed in all material respects all agreements that this
Agreement provides shall be performed on or before the Closing Date, except as
otherwise disclosed to the Lenders and agreed to in writing by the Required
Lenders.
E. CONSUMMATION OF TRANSACTIONS; FINANCING DOCUMENTATION. On
or before the making of the Initial Senior Loan, the Transactions (other than
the making of the Senior Loan) shall have been consummated in accordance with
the material terms contemplated by the Documents related thereto as of the date
hereof. The Obligors shall have executed and delivered all other financing
documentation reasonably required by the Required Lenders relating to the Senior
Loan and the transactions contemplated thereby, on terms and in form and
substance reasonably satisfactory to the Required Lenders.
F. OFFICERS' CERTIFICATE. On the Closing Date, the Borrower
shall have delivered to the Lenders an Officers' Certificate from the Borrower
in form and substance satisfactory to the Required Lenders to the effect that
(x) on or prior to the Closing Date, (i) each Obligor has performed and complied
in all material respects with all covenants and conditions to be performed and
observed by such Obligor on or prior to the Closing Date as required herein,
(ii) each Obligor has performed or complied in all material respects with any
covenants and conditions to be performed or complied with by such Obligor on or
prior to the Closing Date and (iii) all conditions to the consummation of the
Transactions have been satisfied in all material respects and have not been
waived or amended without the Required Lenders' prior written consent and (y)
each of the representations and warranties herein are true and correct on and as
of such date as if made on and as of such date.
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G. FIRE, FLOOD; MATERIAL ADVERSE CHANGE; ETC. No Obligor or
any of its Subsidiaries shall have sustained any loss or interference with
respect to its businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any Litigation, which loss or interference, in the judgment of the Lenders,
has had or could reasonably be expected to have a Material Adverse Effect; since
December 31, 1995, there has been no Material Adverse Change, or any event,
change or circumstance which could reasonably be expected to cause or evidence,
either individually or together with any other events, changes or circumstances,
a Material Adverse Change.
H. NO ORDER. No order, judgment or decree of any Governmental
Authority of competent jurisdiction shall purport to enjoin or restrain any
Lender from making a Senior Loan.
I. NO LITIGATION; NO ADVERSE PROCEEDINGS. There shall not be
pending or, to the best knowledge of any Obligor, threatened any Litigation
against or affecting any Obligor or any of its Subsidiaries that has not been
disclosed by the Borrower in writing to the Lenders (and the Lenders shall have
received on the Closing Date an Officers' Certificate dated the Closing Date
attesting to the same), which, in each case, singly or in the aggregate, is
reasonably likely to have a Material Adverse Effect or a material adverse effect
on the Transactions or the making of any Senior Loan. No injunction or other
restraining order shall have been issued and no hearing to cause an injunction
or other restraining order to be issued shall be pending or noticed with respect
to any Litigation seeking to restrain, enjoin, delay, prohibit or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the Transactions. There shall not be threatened, instituted or
pending any Litigation (i) challenging the Transactions or seeking to restrain,
delay or prohibit the consummation thereof; or (ii) seeking to impose any
materially adverse conditions upon the Transactions.
J. REGULATIONS G, T, U AND X. The making of each Senior Loan
in the manner contemplated in this Agreement shall be in compliance with Section
2.5B.
K. PRO FORMA CAPITAL STRUCTURE. The PRO FORMA consolidated
capital structure of the Company and the Subsidiaries, after giving effect to
the Transactions, shall be consistent with the capital structure contemplated in
the Prospectus.
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L. NO ADVERSE MARKET CONDITIONS. There shall not have occurred
(i) any general suspension of trading in securities on the Toronto Stock
Exchange, the New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market in the United States or minimum or maximum prices
established on any such exchanges; (ii) a declaration of a banking moratorium or
any suspension of payments in respect of the banks in the United States, New
York or Canada; or (iii) either (a) a material outbreak or escalation of
hostilities between the United States or Canada and any foreign power, or (b) a
material outbreak or escalation of any other insurrection or armed conflict
involving the United States or Canada or any other national or international
calamity or emergency, or (c) any material adverse change in the financial
markets of the United States or Canada, or (d) any fire, flood, earthquake,
strike, civil disturbance or act of God, which, in each case, in the reasonable
judgment of the Lenders, would materially affect the ability to sell, assign or
syndicate any portion of any Senior Loan or the Senior Loan Commitments at its
face amount and on the terms hereof (it being recognized that at the Closing
Date the syndication of the Senior Loan Commitments may not be completed).
M. RETENTION OF COLLATERAL AGENT. The Company shall have
retained (at the sole expense of the Company) a Collateral Agent reasonably
satisfactory to the Required Lenders on terms reasonably satisfactory to the
Required Lenders, and such Collateral Agent shall become a party hereto pursuant
to documentation reasonably satisfactory to the Required Lenders.
N. SATISFACTORY FINANCIAL STATEMENTS. The Required Lenders
shall be satisfied that audited, unaudited and PRO FORMA financial
statements meeting the requirements of Regulation S-X under the Securities Act
of the Company, and each Guarantor (in a form no more detailed or comprehensive
than the financial statements in the form included in the final registration
statement declared effective under the Securities Act, with respect to the
Minimum IPO) are available as of the Closing Date or will be available no later
than a date which would permit the commencement of the marketing efforts of any
securities, the proceeds of which are to be used to repay the Senior Loans, no
later than thirty days following the Closing Date.
O. COMPLIANCE WITH LAW. The Required Lenders and their counsel
shall be reasonably satisfied that the consummation of the Transactions and the
related financing, including the funding of any Senior Loan, shall be in
compliance in all material respects with all applicable Laws. There shall not
have been any statute, rule, regulation, injunction or order
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applicable to the Transactions promulgated, enacted, entered or enforced by any
Governmental Authority involving a substantial likelihood of an order that would
prohibit, restrict or significantly delay the Transactions.
P. WIRE INSTRUCTIONS. The Lenders shall have received not less
than two Business Days prior to the Closing Date wire instructions prepared by
the Company as to all wire transfers or other payments to be effective on the
Closing Date in connection with the Transactions to be consummated on the
Closing Date pursuant to this Agreement or the other Documents, which wire
instructions shall identify the payor and payee of each such wire transfer or
payment, shall describe the manner of transfer or payment and shall otherwise be
satisfactory in form and substance to the Required Lenders.
Q. NO EVENT OF DEFAULT OR POTENTIAL EVENT OF DEFAULT; ACCURACY
OF REPRESENTATION AND WARRANTIES. Both immediately prior to the making of any
Senior Loan and also after giving PRO FORMA effect thereto and to the
intended use thereof:
(1) no Event of Default or Potential Event of Default shall have
occurred and be continuing; and
(2) the representations and warranties made by the Obligors in
Section 4, and by each Obligor in each of the other Senior Loan Documents
to which it is a party, shall be true, correct and complete on and as of
the date of the making of such Senior Loan or other extension of credit
with the same force and effect as if made on and as of such date (or, if
any such representation or warranty is expressly stated to have been made
as of a specific date, as of such specific date).
R. SECURITY INTEREST. The Lenders shall have a perfected first
priority (except with respect to Permitted Liens) security interest in the
Pledged Collateral.
S. LIEN SEARCHES; ETC. The Obligors shall have authorized,
executed and delivered each of the following:
(1) UCC Financing Statements (Form UCC-1) in appropriate form for
filing under the UCC and any other applicable Law, rule or regulation in
each jurisdiction as may be reasonably necessary or appropriate to perfect
the Liens created, or purported to be created, by the Security Agreement;
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(2) certified copies of Requests for Information (Form UCC-11), or
equivalent reports or lien search reports, each of a recent date listing
all effective financing statements or comparable documents that name any
Obligor as debtor and that are filed in those jurisdictions in which any
of the Pledged Collateral is located and the jurisdictions in which each
Obligor's principal place of business is located, none of which encumber
the Collateral covered or intended to be covered by the Security Agreement
other than those encumbrances which constitute Prior Liens and Permitted
Liens;
(3) to the extent a material portion of equipment or inventory is
maintained on a leased premise, (i) a copy of each lease or other
agreement relating to such possessory interest and (ii) agreements from
the respective landlords of such of the real property which is being
leased by the Borrower confirming that such landlords have subordinated
their landlord liens in such personal property to the security interests
held by the Collateral Agent pursuant to the Security Agreement and that
such landlords will provide the Collateral Agent with reasonable access to
such facilities to exercise the Collateral Agent's remedies pursuant to
such Security Agreement; and
(4) evidence of the completion of all recordings and filings of,
or with respect to, the Security Agreement and delivery of such other
documents as may be reasonably necessary to perfect the Liens created, or
purported to be created, by the Security Agreement.
T. OTHER MATTERS. (1) All other documentation, including any
tax sharing agreement, employment agreement or management compensation
arrangement entered into with any of the senior management of the Borrower or
other material financing arrangement of the Obligors shall be satisfactory in
form and substance to the Required Lenders.
(2) The Lenders shall have received such other legal opinions, corporate
documents and other instruments and/or certificates as the Required Lenders may
reasonably request.
U. VOTING TRUST. The Voting Trust Agreement shall have been
executed and delivered by the Company and the Zimmerman Group and the other
parties thereto.
V. OTHER LEGAL OPINIONS. At the Closing Date, the Lenders
shall have received the opinions, dated as of the
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respective date of the closing of the relevant transaction, and addressed to the
Lenders, of any counsel for any Obligor delivered to the underwriters in the
Minimum IPO in connection with the closing thereunder or in connection with the
consummation of the Merger, any Pending Acquisition, or otherwise, or letters,
dated as of the respective date of the closing of the relevant transaction, from
such counsel entitling the Lenders to rely on such opinions, in each case as the
Required Lenders may reasonably request.
W. CLOSING DATE. The Closing Date shall occur no later than
the earlier of (x) the Minimum IPO Consummation Date, unless the Extension
Notice shall have been given, in which event the 90th day thereafter or (y)
March 31, 1997.
The obligation of any Lender to make any extension of credit
hereunder is also subject to the payment by the Company of such reasonable fees
and expenses as the Company shall have agreed to pay or deliver to any Creditor
in connection herewith, including the reasonable fees and expenses of Cahill
Gordon & Reindel, special New York counsel to the Lenders in connection with the
negotiation, preparation, execution and delivery of the Senior Loan Documents
and the extensions of credit hereunder (to the extent that statements for such
fees and expenses have been delivered to the Company).
Each Notice of Borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in Section 3.1Q (both as of
the date of such notice or request and, unless the Company otherwise notifies
the Lenders prior to the date of such borrowing, as of the date of such
borrowing).
Each notice submitted by the Borrower hereunder for an extension of
credit hereunder shall constitute a representation and warranty by the Borrower,
as of the date of such notice and as of the relevant borrowing date, as
applicable, that the applicable conditions in Section 3.1 are satisfied.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Senior Loan, each Obligor, jointly and severally, represents and
warrants to each Creditor that, at the time of execution hereof and as of the
Closing Date and immediately before and immediately after consummation of the
Transactions, the following statements are true, correct and complete:
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4.1 ORGANIZATION AND GOOD STANDING; CAPITALIZATION
A. Each of the Borrower and each Subsidiary is a corporation duly
organized and existing and in good standing under the Laws of its jurisdiction
of incorporation. Each of the Borrower and each Subsidiary has the corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted and is duly qualified
as a foreign corporation and in good standing in all jurisdictions in which it
is doing business, except where failure to be so qualified or in good standing,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect.
B. All of the Subsidiaries as of the Closing Date are identified
in SCHEDULE 4.1. The Capital Stock of each of the Subsidiaries identified in
SCHEDULE 4.1 is duly authorized, validly issued, fully paid and nonassessable
and none of such Capital Stock constitutes Margin Stock.
C. As of the date hereof but giving effect to the Transactions
(excluding the over-allotment option granted in connection with the Minimum IPO,
as reflected in the Prospectus), there are issued and outstanding 13,690,546
shares of Common Stock of the Company. Such shares of Common Stock of the
Company have been duly and validly issued, fully paid and nonassessable. Except
as set forth on SCHEDULE 4.1, no stockholder of the Borrower has or will have
any preemptive rights to subscribe for any additional equity securities of the
Borrower. Except for the Warrants and except as set forth on SCHEDULE 4.1,
neither the Borrower nor any of its Subsidiaries has granted or issued, or has
agreed to grant or issue, any Equity Rights to any Person to acquire any shares
of, or other securities convertible into, the Company's or any of its
Subsidiaries' Capital Stock.
D. The Warrant Shares have been duly and validly reserved for
issuance upon the exercise of the Warrants and, when issued and delivered
against payment therefor as provided therein, will be duly authorized, validly
issued, fully paid and nonassessable and subject to no Liens in respect of the
issuance thereof. The issuance, sale and delivery of the Warrants and the
Warrant Shares is not, and will not be, subject to any preemptive right of
stockholders of the Borrower or any right of first refusal or other right in
favor of any Person.
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4.2 AUTHORIZATION AND POWER
Each Obligor has the corporate power and requisite authority, and,
to the extent a party thereto, has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its obligations
under the Senior Loan Documents and each other document and instrument to be
delivered in connection with the Transactions and the Pending Acquisition
executed or to be executed by it.
4.3 NO CONFLICTS OR CONSENTS
A. The execution and delivery of the Senior Loan Documents and
each other document to be executed and delivered in connection with the
Transactions and the Pending Acquisitions, the consummation of each of the
transactions herein or therein contemplated, the compliance with each of the
terms and provisions hereof or thereof, the issuance, delivery and performance
of each Note and the issuance and delivery of the Warrants and the Warrant
Shares do not and will not (i) violate any provision of any Law or any
Governmental Requirement applicable to the Borrower or any Subsidiary, the
certificate of incorporation or bylaws of any of them or any order, judgment or
decree of any Governmental Authority binding on any of them, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Borrower or any Subsidiary that
could, singly or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, (iii) result in or require the creation or imposition
of any Lien upon any of the Property of the Borrower or any Subsidiary or (iv)
require any approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of the Borrower or any Subsidiary, except for
such approvals or consents that will be obtained on or before the Closing Date
and disclosed in writing to the Lenders or such approvals or consents the
failure to obtain which could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
B. No consent, approval, authorization or order of any
Governmental Authority or other Person is required in connection with the
execution and delivery by the Borrower or any Subsidiary of the Senior Loan
Documents or any other document or instrument to be delivered in connection with
the Transactions or the Pending Acquisitons or the consummation of the
transactions contemplated hereby or thereby or the issuance and delivery of the
Warrants or the Warrant Shares, other than (i) any such consent, approval,
authorization or order that has been obtained
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and remains in full force and effect or that has been waived in writing by the
Lenders or the failure to obtain which would not, singly or in the aggregate,
have a Material Adverse Effect and (ii) with respect to the Registration Rights
Agreement and the Registration Rights Agreement Amendment, the registration of
the Warrant Shares covered thereby with the Commission or any filings pursuant
to state securities law. The issuance, sale and delivery of the Warrants and
the issuance of the Warrants Shares upon the proper exercise thereof will be in
compliance with the Securities Act and with all applicable state securities
laws, assuming that the Lenders are "qualified institutional buyers" or
"accredited investors" within the meaning of the Securities Act and are
acquiring the Warrants for their own account.
C. Neither the Company nor any Person authorized or employed by
the Company as agent, broker, dealer or otherwise has taken or will take any
other action (including, without limitation, any offer, issuance or sale of any
securities of the Company under circumstances which might require the
integration of any securities with the issuance of the Warrants under the
Securities Act), in any case so as to subject the offering, issuance or sale of
the Warrants or the Warrant Shares to the registration provisions of the
Securities Act.
4.4 ENFORCEABLE OBLIGATIONS
Each of the Senior Loan Documents and each other document or
instrument to be delivered in connection with the Transactions and the Pending
Applications has been duly authorized; each of the Senior Loan Documents and
each other document or instrument to be delivered in connection with the
Transactions and the Pending Applications to be executed and delivered on or
prior to the Closing Date has been duly executed and delivered by the Borrower
and the Subsidiaries (to the extent a party thereto); and each of the Senior
Loan Documents and each other document or instrument to be delivered in
connection with the Transactions and the Pending Applications to be executed and
delivered on or prior to the Closing Date is, and each of the Senior Loan
Documents or any other Document to be executed and delivered after the Closing
Date will be, upon such execution and delivery, the legal, valid and binding
obligations of the Borrower and the Subsidiaries (to the extent a party
thereto), enforceable in accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar Laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such
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enforceability is considered in a proceeding in equity or at Law).
4.5 PROPERTIES; LIENS
The Borrower and each Subsidiary has, and after consummation of the
Transactions will have, good, sufficient and legal title to all of its
respective Property, and all Property held under lease by it is, and immediately
after the consummation of the Transactions or any Pending Acquisition will be,
held under valid, subsisting and enforceable leases, and neither the Borrower
nor any Subsidiary is in default under any lease, except in each case for such
defects or defaults that, singly or in the aggregate, would not have a Material
Adverse Effect. Except as permitted by this Agreement, all such Property owned
or leased is so owned or leased free and clear of Liens.
4.6 FINANCIAL CONDITION
A. The audited consolidated balance sheets of the Company and the
Subsidiaries at December 31, 1995 and 1994 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows of the
Company and the Subsidiaries for the two-year period ended December 31, 1995 and
the period from August 23, 1993 (date of inception) to December 31, 1995,
certified by the independent certified public accountants of the Company, copies
of which have been delivered to the Lenders, were prepared in accordance with
GAAP, have been prepared from, and are consistent with, the books and records of
the Company and fairly present in all material respects the consolidated
financial position, as at the respective dates thereof, and the consolidated
results of operations, stockholders' equity (deficit) and cash flows of the
Company and the Subsidiaries for the periods then ended. Neither the Company
nor any of the Subsidiaries had at December 31, 1995 any material contingent
liabilities, liabilities for Taxes or long-term leases or unusual forward or
long-term commitments which are not reflected or reserved against in the
foregoing statements or in the notes thereto. No event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred since
December 31, 1995.
B. The unaudited consolidated balance sheet of the Company and
the Subsidiaries at June 31, 1995 and June 31, 1996, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows of the Company and its Subsidiaries for the period then ended, a copy of
which has been delivered to the Lenders, were prepared in accordance with
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GAAP consistently applied (except to the extent noted therein), have been
prepared from, and are consistent with, the books and records of the Company and
fairly present in all material respects the consolidated financial position of
the Company and the Subsidiaries as of such date and the consolidated results of
operations, stockholders' equity (deficit) and cash flows of the Company and the
Subsidiaries for the period covered thereby, in each case subject to normal
year-end audit adjustments (including footnotes), consistent with past
practices. Neither the Company nor any of the Subsidiaries had at June 30, 1996
any material contingent liabilities, liabilities for Taxes or long-term leases
or unusual forward or long-term commitments which are not reflected or reserved
against in the foregoing statements or in the notes thereto.
C. Since December 31, 1995, there has been no Material Adverse
Change, or any event, change or circumstance which could reasonably be expected
to cause or evidence, either individually or together with any other events,
changes or circumstances, a Material Adverse Change.
D. All PRO FORMA financial information provided by or on
behalf of the Company to the Creditors (prior to the Closing Date, after giving
effect to the Transactions) in the Prospectus or thereafter in any document,
statement or certificate is accurate and complete in all material respects as of
the date of such information and all PRO FORMA adjustments given effect
therein are based upon assumptions which the Company believes to be fair and
reasonable.
E. Upon giving effect to the making of the Initial Senior Loan:
(i) The fair saleable value of the Property of each Obligor,
on a stand-alone basis, exceeds the amount that will be required to
be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of such Person as they mature.
(ii) The Property of each Obligor, on a stand-alone basis,
does not constitute unreasonably small capital for any such Person
to carry out its business as now conducted and as proposed to be
conducted including the capital needs of any such Person, taking
into account the particular capital requirements of the business
conducted by such Person, and projected capital requirements and
capital availability thereof.
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(iii) Each Obligor does not intend to, and will not permit any
of its Subsidiaries to, incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of debt of each of such Person).
The cash flow of each Obligor, after taking into account all
anticipated uses of the cash of each such Person, will at all times
be sufficient to pay all amounts on or in respect of debt of each
such Person when such amounts are required to be paid.
4.7 FULL DISCLOSURE
The information (including the Prospectus), financial statements,
exhibits and schedules furnished in writing by or on behalf of any of the
Obligors to any Creditor in connection with the negotiation, preparation or
delivery of this Agreement and the other Senior Loan Documents or included
herein or therein or delivered pursuant hereto or thereto, whether prior to or
after the date of this Agreement, when taken as a whole, do not, as of the date
such information was furnished, contain (except as disclosed to the Creditors in
writing) any untrue statement of material fact or omit (except as disclosed to
the Creditors in writing) to state a material fact necessary in order to make
the statements herein or therein, in light of the circumstances under which they
were made, not materially misleading. The projections and PRO FORMA
financial information furnished at any time on or after the date hereof by any
Obligor to any Creditor pursuant to this Agreement (including in the Prospectus)
have been prepared in good faith based on assumptions believed by the Borrower
to be reasonable at the time made, it being recognized by the Creditors that
such financial information as it relates to future events is not to be viewed as
fact and that actual results during the period or periods covered by such
financial information may differ from the projected results set forth therein by
a material amount and no Obligor, however, makes any representation as to the
ability of the Borrower or any of the Subsidiaries to achieve the results set
forth in any such projections.
4.8 NO DEFAULT
No event has occurred and is continuing that constitutes a Potential
Event of Default or an Event of Default.
4.9 COMPLIANCE WITH CONTRACTS; ETC.
Neither the Borrower nor any Subsidiary is in violation of (a) its
certificate of incorporation, by-laws or other
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organizational documents or (b) any applicable Law or Governmental Requirement,
or (c) any order, decree or judgment of any Governmental Authority having
jurisdiction over any of them; no event of default or event that but for the
giving of notice or the lapse of time, or both, would constitute an event of
default on the part of the Borrower or any Subsidiary exists under any material
Contractual Obligation, except in each case for such violations that would not,
singly or in the aggregate, have a Material Adverse Effect.
4.10 NO LITIGATION
Except as set forth on SCHEDULE 4.10, there is no Litigation
pending or, to the best knowledge of the Obligors after due investigation,
threatened, by, against, or that relates to (a) any benefit plan or any
fiduciary or administrator thereof, (b) the Transactions or any Pending
Acquisition or (c) the Borrower or any Subsidiary that, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
There are no outstanding injunctions or restraining orders prohibiting
consummation of any of the Transactions or any other transaction contemplated by
the Senior Loan Documents. Neither the Borrower nor any Subsidiary is in
default with respect to any judgment, order, writ, injunction or decree of any
Governmental Authority, and there are no unsatisfied judgments against any such
Person or its business or activities.
4.11 USE OF PROCEEDS; MARGIN STOCK; ETC.
The proceeds of the Senior Loan will be used solely for the purposes
specified herein. None of such proceeds will be used for the purpose of
purchasing or carrying any Margin Stock within the meaning of the applicable
provisions of Regulation G, T, U or X, or for the purpose of reducing or
retiring any Indebtedness that was originally incurred to purchase or carry a
Margin Stock or for any other purpose that might constitute this transaction a
"purpose credit" within the meaning of the applicable provisions of Regulation
G, T, U or X. No Obligor has taken or will take any action that might cause any
of the Senior Loan Documents to violate the applicable provisions of Regulation
G, T, U or X, or any other regulation of the Board of Governors of the Federal
Reserve System.
4.12 TAXES
The Borrower and each of those Subsidiaries which are includible
corporations under Section 1504(b) of the Code and
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which satisfy the ownership requirements of Section 1504(a) of the Code are
members of an affiliated group of corporations filing consolidated returns for
Federal income tax purposes, of which the Borrower is the "common parent"
(within the meaning of Section 1504 of the Code) of such group. The Borrower
and each Subsidiary (i) has filed all Federal income tax returns and reports and
all other material Tax returns and reports, domestic and foreign (collectively,
"TAX RETURNS"), that are required to be filed by them, (ii) has paid all taxes
shown as due pursuant to such Tax Returns and (iii) has provided adequate
reserves (in accordance with GAAP) for the payment of all material Federal,
state, local and foreign Taxes applicable for all prior fiscal years and for the
current fiscal year to the date hereof, except for (a) in the case of (i), any
such Tax Returns the nonfiling of which would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (b) in the case of
(ii), any taxes the nonpayment of which would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect and (c) in the case of
(iii), any such reserves the nonprovision of which would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
Borrower and each Subsidiary has paid all Taxes shown as due pursuant to any
assessment received by the Borrower and any Subsidiary, except where the
Borrower has contested such Taxes in good faith pursuant to appropriate
proceedings or except where the nonpayment of such Taxes would not, singly or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The
Borrower knows of no proposed Tax assessment against it or any Subsidiary that
could, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect which is not being actively contested by such Person to the
extent affected thereby in good faith and by appropriate proceedings;
PROVIDED, HOWEVER, that such reserves or other appropriate provisions, if
any, as shall be required in conformity with GAAP shall have been made or
provided therefor. The charges, accruals and reserves on the books of the
Borrower and the Subsidiaries in respect of Taxes are, in the opinion of the
Obligors, adequate except where the lack of such charges, accruals and reserves
would not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither Borrower nor any Subsidiary has given or been requested
to give a waiver of the statute of limitations relating to the payment of any
Federal, state, local and foreign Taxes.
4.13 ERISA
A. The Company and each of its ERISA Affiliates are in compliance
in all material respects with all applicable
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provisions of ERISA, the Code and other applicable Laws and the regulations and
published interpretations thereunder with respect to all employee benefit plans,
Plans and Multiemployer Plans, and have performed all their material obligations
under each employee benefit plan, Plan, and Multiemployer Plan, except for
noncompliance which in either case, has not resulted in and would not reasonably
be expected to result in a liability to the Company or any of its ERISA
Affiliates that has had or would have a Material Adverse Effect.
B. No event or condition specified in Section 5.1(xv) has
occurred or is reasonably expected to occur with respect to any Plan or
Multiemployer Plan which has resulted in or would reasonably be expected to
result in a liability to the Company or any of its ERISA Affiliates that had or
would have a Material Adverse Effect.
C. No unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) exist with respect to any of the Plans in an amount that,
if any of such Plans were terminated, would have a Material Adverse Effect.
D. Neither the Company nor any of its ERISA Affiliates has any
obligation to contribute to or any liability or contingent liability (including
actual or contingent withdrawal liability) with respect to any Multiemployer
Plan or any employee benefit plan of the type described in Sections 4063 and
4064 of ERISA or in Section 413(c) of the Code which failure to satisfy such
obligation or which liability or contingent liability has had or would
reasonably be expected to have a Material Adverse Effect. The withdrawal
liability which would result from a complete withdrawal from such plans would
not have a Material Adverse Effect.
E. Neither the Company nor any of its ERISA Affiliates has
incurred any accumulated funding deficiency (whether or not waived) with respect
to any Plan or sought a waiver of the minimum funding standard under Section 412
of the Code in respect of any Plan.
F. Neither the Company nor any of its ERISA Affiliates has or
reasonably expects to become subject to a Lien in favor of, or requirement to
provide security to, any Plan under Section 302(f) or 307 of ERISA or Section
401(a)(29) or 412(n) of the Code.
G. Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements
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of any and all applicable Laws and has been maintained, where required, in good
standing with applicable regulatory authorities. Neither the Borrower nor any
Subsidiary has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Pension Plan.
As used in this Section 4.13, the term "ACCUMULATED FUNDING
DEFICIENCY" has the meaning specified in Section 302 of ERISA and Section 412
of the Code, and the term "employee benefit plan" has the meaning specified in
Section 3(3) of ERISA.
4.14 COMPLIANCE WITH LAW
The Borrower and each Subsidiary is in compliance with all Laws,
except where the failure to comply, singly or in the aggregate, would not have a
Material Adverse Effect.
4.15 GOVERNMENT REGULATION
Neither the Borrower nor any Subsidiary is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 (as any of the preceding acts have been amended)
or other Law that regulates the incurrence by the Borrower or any Subsidiary of
Indebtedness, including, but not limited to, Laws relating to common contract
carriers or the sale of electricity, gas, steam, water or other public utility
services.
4.16 CAPITAL STRUCTURE AND SUBSIDIARIES
After giving effect to the Transactions, (i) the Borrower will have
no interest in any Person other than the Subsidiaries set forth on SCHEDULE 4.1
and other Investments of the Borrower as set forth on SCHEDULE 4.16 and the
Borrower will own, free and clear of all Liens, claims or restrictions on voting
or transfer (other than as permitted by this Agreement), 100% of all classes of
outstanding Capital Stock of each of the entities set forth on such SCHEDULE
4.1, except as specified on SCHEDULE 4.1 and (ii) no Obligor will have any
interest in any other Person. All of the issued and outstanding shares of
Capital Stock of the Borrower and each Subsidiary is, and at and as of the date
of consummation of the Transactions will be, duly authorized, validly issued,
fully paid and nonassessable.
4.17 INTELLECTUAL PROPERTY
A. SCHEDULE 4.17 sets forth a complete and correct list, as of
the Closing Date, of: (i) all patented or registered
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Intellectual Property and pending patent applications or applications for
registration of Intellectual Property owned or filed by or on behalf of the
Borrower and the Subsidiaries; (ii) all trade names and registered trademarks or
service marks owned by or used by the Borrower and the Subsidiaries; and (iii)
all material licenses of Intellectual Property to which the Borrower and the
Subsidiaries or any of them is a party, either as licensee or licensor. Except
as set forth on SCHEDULE 4.17, the Borrower and the Subsidiaries or any of
them own or are licensed to use all Intellectual Property necessary to permit
the operation of their businesses as currently conducted.
B. Except as disclosed on SCHEDULE 4.17, no material claim has
been asserted by any Person against the Borrower or any Subsidiary with respect
to the use of any such Intellectual Property, or challenging or questioning the
validity or effectiveness or use of any such Intellectual Property. Except as
disclosed on SCHEDULE 4.17, the use of such Intellectual Property by a
Borrower and each Subsidiary does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the aggregate, give rise
to any liabilities on the part of the Borrower or any Subsidiary that would,
singly or in the aggregate, result in a Material Adverse Effect. The
consummation of the Transactions or any Pending Acquisition will not in any
material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by the
Company or any Subsidiary.
4.18 ENVIRONMENTAL MATTERS
A. Except as disclosed in SCHEDULE 4.18 and except as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect:
(i) Each of the Borrower and each Subsidiary has obtained all
permits, licenses and other authorizations which are required under any
Environmental Law with respect to the operation of the businesses and
facilities and properties owned, leased, operated or used by any of them.
(ii) Each of the Borrower and each Subsidiary is in compliance with
all terms and conditions of the permits, licenses and authorizations
specified in subsection (i) above, and is also in compliance with and in
the last five years has been in compliance with, and is not subject to
liability under, any Environmental Laws applicable to it and
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its business and operations and facilities and properties owned, leased,
operated or used by any of them.
(iii) Neither the Borrower nor any Subsidiary has received notice
that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), or any comparable foreign or state Law, nor
has the Borrower or any Subsidiary received any written notification that
any Hazardous Materials that it or any of their respective predecessors in
interest has used, generated, stored, treated, handled, transported or
disposed of, or arranged for disposal or treatment of, or arranged with a
transporter for transport for disposal or treatment of, have been found at
any site at which any Governmental Authority or private party is
conducting or plans to conduct a remedial investigation or other action
pursuant to any Environmental Law.
(iv) There have been and are currently no Releases of Hazardous
Materials by the Borrower or any Subsidiary or, to the knowledge of the
Borrower and each Subsidiary, after due inquiry, their respective
predecessors in interest on, at, upon, into or from any facilities or
properties now or hereafter owned, leased, or operated by any of them. To
the knowledge of the Borrower and each Subsidiary, there have been no such
releases on, at, upon, under, from or into any property in the vicinity of
any of the properties owned, leased or operated by any of them that,
through soil, air, surface water or groundwater migration or
contamination, could reasonably be expected to have migrated to or under
the Borrower's or any Subsidiary's properties.
(v) No friable asbestos is present in, on, or at any property,
facility or equipment of the Borrower or any Subsidiary.
(vi) No properties now or formerly owned, leased or operated by the
Borrower or any Subsidiary or, to the knowledge of the Borrower or any of
its Subsidiaries, any of their respective predecessors in interest are (x)
listed or proposed for listing on the National Priorities List under
CERCLA or (y) listed on the Comprehensive Environmental Response,
Compensation, Liability Information System List Promulgated pursuant to
CERCLA or (z) included on any comparable lists maintained by any
Governmental Authority.
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(vii) There are no past or present events, conditions, activities,
practices, or actions which would reasonably be expected to prevent the
Borrower or any Subsidiary's compliance with any Environmental Law, or
which would reasonably be expected to give rise to any liability of the
Borrower or any Subsidiary under any Environmental Law, including, without
limitation, liability under CERCLA or similar state or foreign Laws.
(viii) No Lien has been asserted or recorded, or to the knowledge of
the Borrower and each Subsidiary threatened, under any Environmental Law
with respect to any assets, facility, inventory or property currently
owned, leased or operated by the Borrower or any Subsidiary.
(ix) Neither the Borrower nor any Subsidiary has expressly assumed
by contract any known liabilities or obligations arising under any
Environmental Law in connection with formerly owned, leased, operated or
used properties or facilities or in connection with any formerly owned
divisions, subsidiaries, companies or other entities.
(x) Neither the Borrower nor any Subsidiary has disposed of or
arranged for disposal or treatment of any Hazardous Materials at any site
owned or operated by a third party in violation of Environmental Laws or
in a manner which created a condition which requires investigation,
remediation or response action under Environmental Laws.
(xi) Neither the Borrower nor any Subsidiary has entered into or
agreed to any judgment, decree or order by any judicial or administrative
tribunal and neither the Borrower nor any Subsidiary is subject to any
judgment, decree or order, in each case relating to compliance with any
Environmental Law or requiring the Borrower or any Subsidiary to conduct
an investigation, response or corrective action with respect to any
Hazardous Material under any Environmental Law.
(xii) Neither the Borrower nor any Subsidiary has received any
written notice of an Environmental Claim with regard to any properties,
facilities or business owned or operated or formerly owned or operated by
the Borrower or any Subsidiary or any of their respective predecessors in
interest.
(xiii) There are no underground storage tanks or related piping at
any property owned, operated or leased by the
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Borrower or any Subsidiary, and any former underground tanks or related
piping on any such property which have been removed or closed, have been
removed or closed in accordance with any applicable Environmental Law.
B. ENVIRONMENTAL INVESTIGATIONS. All final and material
environmental investigations, studies, audits or assessments conducted which are
in the possession, custody or control of the Borrower or any Subsidiary relating
to the current or prior business, facilities or properties of the Borrower or
any Subsidiary (or their respective predecessors in interest) or any property,
asset or facility now or previously owned, operated, leased or used by the
Borrower or any Subsidiary (or their respective predecessors in interest) have
been made available to the Lenders.
4.19 DEBT AGREEMENTS
SCHEDULE 4.19 is a complete and correct list, as of the date
hereof after giving effect to the Transactions, of each credit agreement, loan
agreement, indenture, guarantee or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Borrower or any Subsidiary the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $100,000 and the aggregate principal or face amount outstanding or which
may become outstanding under each such arrangement is correctly described in
SCHEDULE 4.19. The aggregate principal or face amount of Indebtedness of the
Borrower and the Subsidiaries under any agreement or other arrangement not set
forth on SCHEDULE 4.19 does not exceed $100,000. SCHEDULE 4.19 also sets
forth all Indebtedness to be repaid at the Closing Date and such Indebtedness is
so identified.
4.20 PERMITS
Except as disclosed on SCHEDULE 4.20, the Borrower and each
Subsidiary has such certificates, permits, licenses, franchises, consents,
approvals, authorizations and clearances that are material to their financial
condition, business or operations, taken as a whole ("PERMITS"), and are in
compliance in all material respects with all applicable Laws of all Governmental
Authorities as are necessary to own, lease or operate their respective
properties and to conduct their businesses in the manner as presently conducted
and all such Permits are valid and in full force and effect. The Borrower and
each Subsidiary is in compliance in all material respects with
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its respective obligations under such Permits and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or termination
of such Permits, except for any such revocation or termination as would not,
singly or in the aggregate, have a Material Adverse Effect.
4.21 INSURANCE
The Borrower and each Subsidiary carries or is entitled to the
benefits of insurance (including self-insurance) in such amounts and covering
such risks as is generally maintained by companies of established repute engaged
in the same or similar businesses, and all such insurance is in full force and
effect.
4.22 LABOR MATTERS
Except as disclosed on SCHEDULE 4.22, there is (i) no unfair labor
practice complaint pending against the Borrower or any Subsidiary or, to the
knowledge of the Obligors, threatened against any of them, before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against the Borrower
or any Subsidiary or, to the knowledge of the Obligors, threatened against any
of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the
Borrower or any Subsidiary or, to the knowledge of the Obligors, threatened
against the Borrower or any Subsidiary and (iii) to the knowledge of the
Obligors, no union representation question existing with respect to the
employees of the Borrower or any Subsidiary and, to the knowledge of the
Obligors, no union organizing activities are taking place, except (with respect
to any matter specified in clause (i), (ii) or (iii) above, either individually
or in the aggregate) such as would not reasonably be expected to have a Material
Adverse Effect.
4.23 GUARANTEES
Each Guarantor shall, on the date it executes and delivers a
Guarantee hereunder, have the full corporate power, authority and capacity to
execute and deliver such Guarantee and to perform all of its obligations to be
performed thereunder; all corporate and other acts, conditions and things
required to be done and performed or to have occurred prior to such execution
and delivery to constitute such Guarantee as a valid and legally binding
obligation of such Guarantor enforceable in accordance with its terms shall have
been done and performed and shall have occurred in due compliance with all
applicable Laws; on the date of such execution and delivery, the execution,
delivery and
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performance of such Guarantee by such Guarantor will not (i) violate any
provision of Law or any provision of the charter or bylaws of such Guarantor, or
(ii) result in a breach of, a default under (including, without limitation, any
event which with notice or lapse of time, or both, would constitute a breach of
or a default under), or the creation of, any Lien on the properties or assets of
such Guarantor, the Borrower or any Subsidiary under any Contractual Obligation
to which such Guarantor or the Borrower or any Subsidiary is a party or by which
the properties or assets of such Guarantor, the Borrower or any Subsidiary may
be bound or affected, except where such event could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect; on the date
of such execution and delivery, each Guarantee executed and delivered by a
Guarantor shall constitute legal, valid, binding and unconditional obligations
of the Guarantor executing and delivering it to the Lenders hereunder,
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or similar Laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at Law); and the
foregoing representations and warranties of the Obligors shall be deemed for all
purposes to have been made on each date when a Guarantee is delivered hereunder
with respect solely to that Guarantee and the Guarantor so issuing such
Guarantee.
4.24 BROKER'S OR FINDER'S FEES
Except as set forth in SCHEDULE 4.24, no broker's or finder's fees
or commissions will be payable by any Obligor with respect to the Transactions,
any Pending Acquisition or any other transaction contemplated hereby and no
similar fees or commissions will be payable by any Obligor for any other
services rendered to any Obligor in connection with the Transactions, any
Pending Acquisition or any other transactions contemplated hereby and thereby.
Each Obligor represents, warrants, covenants and agrees that it will, jointly
and severally, indemnify the Creditors against, and hold each of them completely
harmless from and against, any and all claims, demands or liabilities for
broker's or finder's fees or similar fees or commissions asserted to have been
incurred in connection with any of the transactions contemplated hereby.
4.25 SECURITY INTEREST
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There has been created in favor of the Collateral Agent for the
benefit of the Lenders a valid, enforceable and duly perfected first priority
(except for Permitted Liens) security interest in the Pledged Collateral that
secures the full amount of the Senior Loan to be made and all other amounts
outstanding under this Agreement and the other Senior Loan Documents and such
other amounts as are provided in the Security Agreement. The pledgor has good
and legal title to all Collateral covered by the Security Agreement free and
clear of all Liens, except as may be expressly permitted under Section 6.2. No
filings or recordings are required to perfect the security interests created
under the Security Agreement, except for such filings or recordings required in
connection with the Security Agreement as to which each Obligor shall cooperate
in all respects so that the filing thereof may be made on or before the Closing
Date.
4.26 MERGER; PENDING ACQUISITIONS
At the time of consummation thereof, each of the Merger and each
Pending Acquisition shall have been consummated substantially in accordance with
the terms of the Documents applicable thereto and all applicable material
requirements of Law. At the time of consummation thereof, all Governmental
Consents, and all other actions in respect of, all Governmental Authorities
required to make or consummate the Merger Acquisition have been obtained, given,
filed or taken or waived and are or will be in full force and effect (or
effective judicial relief with respect thereto has been obtained), except where
the failure to obtain, give, file, or take would not, individually or in the
aggregate, have a Material Adverse Effect. All applicable waiting periods with
respect thereto have or, prior to the time when required, will have expired
without, in all such cases, any action being taken by any Governmental Authority
which restrains, prevents, or imposes material adverse conditions upon the
Merger or any Pending Acquisition. Additionally, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Merger or any Pending Acquisition or the performance by the
Obligors of their obligations under the Documents applicable thereto, and all
applicable requirements of Law.
4.27 REPRESENTATIONS AND WARRANTIES IN DOCUMENTS
All representations and warranties of the Borrower and its
Subsidiaries as of the Closing Date set forth in the Documents were true and
correct in all material respects as of the time such representations and
warranties were made and shall be true and correct in all material respects as
of the Closing
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Date as if such representations and warranties were made on and as of such date,
unless stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date. All representations and warranties set forth
in the Documents by any Person other than the Borrower and the Subsidiaries as
of the Closing Date were, to the knowledge of the Borrower and the Subsidiaries
as of the Closing Date, true and correct in all material respects as of the time
such representations and warranties were made and shall be true and correct in
all material respects as of the Closing Date as if such representations and
warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date.
4.28 PARI PASSU LOAN OBLIGATIONS
The Obligations of each Obligor under this Agreement and each other
Senior Loan Document to which it is a party rank at least PARI PASSU in
right of payment with all of such Obligor's other unsubordinated Indebtedness,
other than any such Indebtedness which is preferred by mandatory provisions of
Law.
4.29 MINIMUM IPO; ISSUANCE OF COMMON STOCK IN TRANSACTIONS
The Prospectus, as of its date, did not contain an untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statement therein not misleading in light of the
circumstances under which they were made. The offering, issuance and sale of
the Common Stock of the Company pursuant to the Minimum IPO, the Merger and the
CommcoCCC Acquisition has been and will be made in compliance with the
Securities Act.
4.30 FCC MATTERS
A. A list of the FCC Licenses of the Company is attached as
SCHEDULE 4.30. The statements made to the FCC in the applications for the FCC
licenses were true and correct at the time made and at the time the FCC issued
the FCC Licenses. The FCC Licenses were duly issued by the FCC, are in full
force and effect, and contain all the conditions placed upon the entire
authorization for each market, except as are found in the rules and regulations
of the FCC ("FCC RULES"). The FCC Licenses permit the Company or ART to
operate within the service area and on the channels specified. The Company has
good and marketable
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title to the FCC Licenses (subject to FCC Rules on transfers of ownership) free
and clear of any mortgage, pledge, lien, security interest, conditional sale
agreement, settlement agreements, whether oral or written, claim, encumbrance,
or charge of any kind. The Company have fully complied with the terms of all
FCC Licenses, representations made to the FCC and the FCC Rules, except where
the failure to so comply could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There are no pending petitions for
reconsideration of the grants of the FCC Licenses and the grants of the FCC
Licenses have become final orders, no longer subject to reconsideration by the
FCC on its own motion or to judicial review. The Company has not been notified
of any unresolved protest to the grants of the FCC Licenses or objections by the
FCC and, except for FCC rulemaking proceedings, has no reason to believe that
the grants of the FCC Licenses will be rescinded or in any way modified. The
FCC Rules currently provide that the Company will have exclusive use of the
frequencies authorized throughout the designated rectangular geographic area and
that the Company will not require prior FCC approval before activating
communications paths and new transmitters within the designated area. To the
Company's best knowledge, there are no pending written petitions to amend the
FCC Rules in this regard and, except for FCC rulemaking proceedings, the Company
has no reason to believe that any such amendments will be proposed. Except as
set forth on SCHEDULE 4.30 and except as could not singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Company has timely
made all filings, reports, paid any fees, and otherwise met all FCC applicable
requirements concerning the FCC Licenses. The Company has not taken any action
or failed to take any action, and there are no formal or other proceeding
pending against the Company with respect to, any of the FCC Licenses that could
lead to the revocation, cancellation, forfeiture or failure to renew any FCC
License. There are no outstanding notices of apparent liability against the
Company. Except as set forth on SCHEDULE 4.30, the Company does not know of
any facts relating to the Company that could cause the FCC to deny its approval
of any of the applications or revoke or restrict any of the FCC Licenses or deny
its approval of or place restrictions on the Company's application to effect any
Pending Acquisition, and should any such facts come to the attention of the
Company or its officers or directors, the Company will promptly notify the
Lenders and take all reasonable measures to remove any such impediments to
consent. Except as set forth on SCHEDULE 4.30 and except as would not, singly
or in the aggregate, have a Material Adverse Effect, the Company is fully
qualified to be an FCC licensee and does not violate FCC requirements pertaining
to its Licenses and
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Pending Applications, including rules restricting alien ownership of FCC
Licenses.
B. To the knowledge of the Obligors, except as disclosed on
SCHEDULE 4.30, there are no applications, complaints or proceedings pending or
threatened (i) before the FCC relating to the business conducted by the
Obligors, (ii) before any Governmental Authority relating to the business
conducted by the Obligors involving charges of illegal discrimination under any
Federal or state employment Laws, or (iii) before any Governmental Authority
relating to the business conducted by the Obligors involving zoning issues under
any Governmental Requirement, except for, in each such case, any such event that
could not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
4.31 SIGNIFICANT CUSTOMERS AND SUPPLIERS
No customer or supplier which was significant to the Company during
the period covered by the financial statements delivered hereunder in connection
with the making of the Senior Loan or which has been significant to the Company
thereafter, has terminated, materially reduced or threatened to terminate or
materially reduce its purchases from or provision of products or services to the
Company.
4.32 PROPRIETARY INFORMATION OF THIRD PARTIES
To the best of the Company's knowledge, no third party has claimed
or has reason to claim that any key employees, officers or key consultants of
the Company listed on SCHEDULE 4.32 (collectively, "KEY EMPLOYEES") has (a)
violated or may be violating any of the terms or conditions of his employment,
non-competition or non-disclosure agreement with such third party, (b) disclosed
or may be disclosing or utilized or may be utilizing any trade secret or
proprietary information or documentation of such third party or (c) interfered
or may be interfering in the employment relationship between such third party
and any of its present or former employees. No third party has requested
information from the Company which suggests that such a claim might be
contemplated. To the best of the Company's knowledge, no Key Employee has
employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employee, and to the best of the
Company's knowledge, no Key Employee has violated any confidential relationship
which such Person may have had with any third party, in connection with the
development, manufacture or sale of any product or proposed product or the
development or sale of any service or proposed
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service of the Company, and the Company has no reason to believe there will be
any such employment or violation. To the best of the Company's knowledge, none
of the execution or delivery of or performance under this Agreement or the
Documents, or the carrying on of the business of the Company by any officer,
director or Key Employee of the Company, or the conduct or proposed conduct of
the business of the Company, will conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under any contract,
covenant or instrument under which any such Person is obligated.
SECTION 5 AFFIRMATIVE COVENANTS
Each Obligor covenants and agrees that from the date hereof and
until the Senior Loan and the Notes and all other monetary Obligations due under
this Agreement have been paid in full they shall perform all covenants in this
Section 5 (except that none of the following covenants shall apply to the
activities of any Foreign Subsidiary).
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS
The Borrower will maintain, and will cause each Subsidiary to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Borrower will deliver to each Creditor:
(i) as soon as available and in any event within 30 days after the
end of each month (other than a month concluding a calendar quarter)
ending after the date hereof, a confidential financial summary report
describing the operations of the Company and the Subsidiaries in the form
prepared (or if not so prepared, which is customarily prepared) for
presentation to senior management or the Board of Directors for such
monthly period and for the period from the beginning of the then current
fiscal year to the end of such monthly period;
(ii) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, (1)
the consolidated balance sheet of the Company and the Subsidiaries as at
the end of such fiscal quarter, (2) the related consolidated and
consolidating statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from
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the beginning of the then current fiscal year to the end of such fiscal
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous fiscal year and the
corresponding figures from the consolidated plan and financial forecast
for the current fiscal year delivered pursuant to Section 5.1(x), all in
reasonable detail and certified by the chief financial officer of the
Company that they fairly present in all material respects the financial
condition of each the Company and the Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal
year-end adjustments, (3) a narrative report describing the operations of
the Company and the Subsidiaries in the form prepared for presentation to
senior management or the Board of Directors for such quarterly period and
for the period for on the beginning of the then current fiscal year to the
end of such quarterly period, and (4) so long as the Company does not file
quarterly reports on Form 10-Q with the Commission, a narrative report
describing the operations of the Company and the Subsidiaries (in the form
of management's discussion and analysis of such operations which would
comply with the disclosure requirements of the Exchange Act with respect
to management's discussion and analysis set forth in quarterly reports on
Form 10-Q) prepared for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter;
(iii) as soon as available and in any event within 90 days after the
end of each fiscal year, (1) the consolidated balance sheets of the
Company and the Subsidiaries as at the end of such fiscal year, (2) the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year
and the corresponding figures from the consolidated plan and financial
forecast for the current fiscal year delivered pursuant to Section 5.1(x)
for the fiscal year covered by such financial statements, all in
reasonable detail and certified by the chief financial officer of the
Company that they fairly present in all material respects the financial
condition of the Company and the Subsidiaries as at the dates and the
results of their operations and their cash flows for the periods
indicated, (3) a narrative report describing the operations of the Company
and the
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Subsidiaries in the form prepared for presentation to senior management or
the Board of Directors for such fiscal year, (4) so long as the Company
does not file annual reports on Form 10-K with the Commission, a narrative
report describing the operations of the Company and the Subsidiaries (in
the form of management's discussion and analysis of such operations which
would comply with the disclosure requirements of the Exchange Act with
respect to management's discussion and analysis set forth in annual
reports on Form 10-K) prepared for such fiscal year, and (5) in the case
of such consolidated financial statements, a report thereon of independent
certified public accountants of recognized national standing, which report
shall be unqualified as to scope of audit and shall state that such
consolidated financial statements fairly present in all material respects
the consolidated financial position of the Company and the Subsidiaries as
at the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) together with each delivery of financial statements pursuant
to Sections 5.1(ii) and (iii) above, (a) an Officers' Certificate of the
Company stating that the signers have reviewed the terms of this Agreement
and the Notes and have made, or caused to be made under their supervision,
a review in reasonable detail of the transactions and condition of the
Company and Subsidiaries during the accounting period covered by such
financial statements and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signers do
not have knowledge of the existence as at the date of the Officers'
Certificate, of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof
and what action the Company has taken, is taking and proposes to take with
respect thereto; and (b) a Compliance Certificate demonstrating in
reasonable detail compliance (as determined in accordance with GAAP)
during and at the end of such accounting periods with the restrictions
contained in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.8 and 6.14;
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(v) [Reserved];
(vi) promptly upon receipt thereof (unless restricted by applicable
professional standards), copies of all management letters in final form
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company and the Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(vii) promptly upon the sending or filing thereof, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Borrower to its securityholders or by any
Subsidiary to its securityholders other than the Borrower or another
Subsidiary, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if
any, filed by the Borrower or any Subsidiary with any securities exchange
or with the Commission (other than reports of a routine or ministerial
nature which are not material) and (c) all press releases and other
statements made available generally by the Borrower or any Subsidiary to
the public concerning material developments in the business of the
Borrower or any Subsidiary;
(viii) promptly upon any executive officer of the Borrower obtaining
knowledge (a) of any condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming aware that any Creditor
has given any notice or taken any other action with respect to a claimed
Event of Default or Potential Event of Default under this Agreement, (b)
that any Person has given any notice to the Borrower or any Subsidiary or
taken any other action with respect to a claimed default or event or
condition that might result in an Event of Default referred to in Section
7.2, (c) of any condition or event that would be required to be disclosed
in a current report filed with the Commission on Form 8-K whether or not
the Borrower is required to file such reports under the Exchange Act, or
(d) of the occurrence of any event or change that has caused or evidences,
either in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action taken by
such holder or Person and the nature of such claimed
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default, Event of Default, Potential Event of Default, event or condition,
and what action the Borrower has taken, is taking and proposes to take
with respect thereto;
(ix) promptly upon any executive officer of the Borrower obtaining
knowledge of (a) the institution of, or non-frivolous threat of, any
Litigation (whether administrative, judicial or otherwise), against or
affecting the Borrower or any Subsidiary or any property of the Borrower
or any Subsidiary (collectively, "PROCEEDINGS") not previously disclosed
in writing by the Borrower to the Lenders or (b) any material development
in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the
Transactions;
written notice thereof together with such other information as may be
reasonably available to the Borrower or any Subsidiary to enable the
Lenders and their counsel to evaluate such matters;
(x) as soon as practicable but in any event no later than 40 days
following the first day of each fiscal year a forecast for each of the
next succeeding four fiscal quarters of the consolidated balance sheet and
the consolidated statements of income, cash flow and cash position of the
Company and the Subsidiaries, together with an outline of the major
assumptions upon which the forecast is based. Together with each delivery
of financial statements pursuant to Sections 5.1(ii) and (iii) above, the
Company shall deliver a comparison of the current year to date financial
results against the budget required to be submitted pursuant to this
Section;
(xi) not later than the last day of each fiscal year of the
Company, a report in form and substance satisfactory to the Lenders
outlining all material insurance coverage maintained as of the date of
such report by the Borrower and its Subsidiaries and all material
insurance coverage planned to be maintained by such Persons in the
subsequent fiscal year;
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(xii) as soon as possible, and in any event within ten days after
the Borrower or any Subsidiary knows or has reason to believe that any of
the following events or conditions has occurred or exists which could
reasonably be expected to have (individually or in the aggregate) a
Material Adverse Effect, a statement signed by a senior financial officer
of the Borrower setting forth details respecting such event or condition
and the action, if any, that the Borrower proposes to take with respect
thereto (and a copy of any notice or other notification or information
given to or by the Borrower with respect to such event or condition): any
notice, notification, demand, request for information, citation, summons
or order has been issued, any complaint has been filed, any penalty has
been assessed or any investigation or review is pending or threatened by
any governmental or other entity with respect to any alleged failure by
the Borrower or any Subsidiary to have any permit, license or
authorization required in connection with the conduct of the business of
the Borrower or any Subsidiary or with respect to any generation,
treatment, storage, recycling, transportation, discharge or disposal, or
any Release, of any Hazardous Materials generated by the Borrower or any
Subsidiary;
(xiii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of the
Borrower or any Subsidiary;
(xiv) promptly upon any Person becoming a Subsidiary of the
Borrower, a written notice setting forth with respect to such Person (a)
the date on which such Person became a Subsidiary of such Borrower and (b)
all of the data required to be set forth in SCHEDULE 4.1 with respect to
all Subsidiaries;
(xv) upon the request of any Creditor, any Schedule B (Actuarial
Information) to the annual report (Form 5500 series) filed by the Company
or any ERISA Affiliate with the Internal Revenue Service with respect to
any Plan; and as soon as possible, and in any event within 20 days after
the Borrower or any Subsidiary knows or has reason to believe that any of
the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a senior
financial officer of the Company setting forth details respecting such
event or condition and the action, if any, that the Company or any ERISA
Affiliate proposes to take with respect thereto (and a copy of any report
or notice required to be filed with or
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given to PBGC by the Company or any ERISA Affiliate with respect to such
event or condition):
(1) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation (including any proposed
regulations on which the reporting person may rely in making reports
to the PBGC) waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such event
(PROVIDED, HOWEVER, that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA,
including the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be treated as a reportable event for purposes of this
Section 5.1(xv) regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(2) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by the Company
or any ERISA Affiliate to terminate any Plan;
(3) an event or condition which might reasonably be expected
to constitute grounds for the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by
the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(4) the complete or partial withdrawal from a Multiemployer
Plan by the Company or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or
the receipt by the Company or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
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(5) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days;
(6) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Company or an ERISA Affiliate fails to timely
provide security to such Plan in accordance with the provisions of
said Sections;
(7) the imposition of liability to the PBGC or any other
party under Section 4062, 4063, 4064 or 4069 in excess of $100,000
upon the Company or any ERISA Affiliate with respect to any Plan;
and
(8) the occurrence of any transaction in connection with
which the Company would be subject to either a tax imposed by
Section 4975 of the Code or the corresponding civil penalty assessed
pursuant to Section 502(i) of ERISA, in either case in excess of
$100,000 in connection with any Plan or any trust created
thereunder;
(xvi) with reasonable promptness, such other information and data
with respect to the Borrower or any Subsidiary or any of their respective
property, business or assets as from time to time may be reasonably
requested by the Lenders; and
(xvii) promptly upon their becoming available (a) a copy of all
ownership reports filed with the FCC with respect to any Obligor, (b) a
copy of any order or notice of the FCC or any other Governmental Authority
or a court of competent jurisdiction which relates to any FCC License or
any application therefor or which refuses (or threatens to refuse) renewal
or extension of, or revokes, cancels, suspends or terminates (or threatens
to revoke, cancel, suspend or terminate), the authority of any Obligor to
operate its business as contemplated to be conducted and with respect to
any such refusal, revocation, cancellation, suspension or termination,
written notice specifying the reasons for such revocation, cancellation,
termination or denial, the anticipated effect thereof, and the actions, if
any, being taken by the Obligors to remedy the same, (c) a copy of any
material competing application filed with respect to any FCC License or
any application therefor of
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any Obligor, (d) a copy of any material citation, notice of violation or
order to show cause from the FCC directed to any Obligor or any complaint
directed to any Obligor to which the FCC has requested an answer, (e)
notice of any other action taken or threatened to be taken by any
Governmental Authority (including the FCC) which could reasonably be
expected to have a Material Adverse Effect, and (f) a copy of all material
information required to be filed by any Obligor in respect of the business
conducted by the Borrower with the FCC or any similar Governmental
Authority.
5.2 CORPORATE EXISTENCE; ETC.
Each Obligor will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises to its business and
those of each of its Subsidiaries, except as permitted by Section 6.6 or where
the failure to so preserve or keep will not, singly or in the aggregate, have a
Material Adverse Effect.
5.3 PAYMENT OF TAXES AND CLAIMS
Each Obligor will, and will cause each of its Subsidiaries to, pay
all material Taxes, assessments and other governmental charges imposed upon it
or any of its material Property or in respect of any of its franchises,
business, income or property before any material penalty accrues thereon, and
all claims (including, without limitation, claims for labor, services, materials
and supplies) for sums that have become due and payable and that have or may
become a Lien upon any of its Property prior to the time when any material
penalty or fine shall be incurred with respect thereto; PROVIDED, HOWEVER,
that no such charge or claim need be paid if the validity or amount of such
charge or claim is being diligently contested in good faith and if such reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor.
5.4 MAINTENANCE OF PROPERTIES; INSURANCE
Each Obligor will maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
Property used or useful in the business of such Obligor and its Subsidiaries and
from time to time promptly will make or cause to be made all necessary repairs,
renewals and replacements thereof; PROVIDED, HOWEVER, that nothing in this
Section 5.4 shall prevent any Obligor or any of its Subsidiaries
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from discontinuing the use, operation or maintenance of any such Property, or
disposing of any of them, if such action is in the ordinary course of business
or, in the reasonable good faith judgment of such Obligor, necessary or
desirable in the conduct of its business or otherwise permitted by this
Agreement. Each Obligor will maintain or cause to be maintained, with
financially sound and reputable insurers or with self insurance programs, in
each case to the extent consistent with prudent business practices and customary
in its industry, insurance with respect to its Property and business and the
Property and businesses of its Subsidiaries against loss or damage of the kinds
and in the amounts customarily carried or maintained under similar circumstances
by corporations of established reputation engaged in similar businesses and
owning similar Property in the same general respective areas in which such
Obligor and its Subsidiaries operate.
5.5 INSPECTION
Each Obligor shall permit any authorized representatives designated
by the Lenders to visit and inspect any of the properties of such Obligor or its
Subsidiaries, including, without limitation, its and their financial and
accounting records, and to receive copies and extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of such Obligor or
any of its Subsidiaries may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested.
5.6 EQUAL SECURITY FOR SENIOR LOANS AND NOTES
If any Obligor shall create, assume or suffer to exist any Lien upon
any of their respective Property, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of Section 6.2, such Obligor shall, at
the request of the Required Lenders make or cause to be made effective provision
whereby the Obligations will be secured by such Lien equally and ratably with
any and all other Indebtedness thereby secured as long as any such Indebtedness
shall be secured; PROVIDED, HOWEVER, that this covenant shall not be
construed as or deemed to be a consent by the Lenders to any violation of the
provisions of Section 6.2; PROVIDED, FURTHER, HOWEVER, that no Obligor
shall under any circumstances be required to make or cause to be made effective
provision whereby the Obligations will be secured, directly or indirectly, by
Margin Stock.
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5.7 COMPLIANCE WITH LAWS; ETC.
Each Obligor shall, and shall cause each of its Subsidiaries to,
comply with the requirements of all applicable Laws of any Governmental
Authority, to the extent noncompliance, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.8 MAINTENANCE OF ACCURATE RECORDS; ETC.
Each Obligor shall keep, and will cause each of its Subsidiaries to
keep, true books and records and accounts in which full and correct entries will
be made of all its respective business transactions, and will reflect, and cause
each of its Subsidiaries to reflect, in its respective financial statements
adequate accruals and appropriations to reserves all in accordance with GAAP and
consistent with prior business practices.
5.9 COMPLIANCE WITH ENVIRONMENTAL LAWS
A. The Obligors will pay, and will cause each of their respective
Subsidiaries to pay, all costs and expenses incurred by it in keeping in
compliance with all Environmental Laws, and will keep or cause to be kept all
Real Property free and clear of any Liens imposed pursuant to such Environmental
Laws.
B. No Obligor will, nor will any of them permit any of their
respective Subsidiaries to, generate, use, treat, store, release or dispose of,
or permit the generation, use, treatment, storage, release or disposal of,
Hazardous Materials at, under, on or from any Real Property or transport or
permit the transportation of Hazardous Materials to or from any Real Property,
unless the failure to comply with the requirements specified in clause (a) or
(b) above, either individually or in the aggregate, would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
C. In the event of the presence of any Hazardous Material at, on,
under or upon any Real Property which would reasonably be expected to result in
liability under or a violation of any Environmental Law, in each case which
would, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, each Obligor agrees to undertake, and/or to cause any
of their respective Subsidiaries, tenants or occupants to undertake, at their
sole expense, any investigation, removal, remedial or other action, each as
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required pursuant to Environmental Laws to mitigate and eliminate any such
adverse effect; PROVIDED, HOWEVER, that no Obligor or any of its
Subsidiaries shall be required to comply with any order or directive which is
being contested in good faith and by proper proceedings so long as it has
maintained adequate reserves with respect to such compliance to the extent
required in accordance with GAAP.
D. Each Obligor will promptly give notice to the Lenders upon
becoming aware of (i) any violation of any Environmental Law, (ii) any inquiry,
proceeding, investigation or other action, including a request for information
or a notice of potential liability under any Environmental Law from any Person
or (iii) the discovery of the Release or threatened Release of any Hazardous
Material at, on, upon, under or from any of the Real Properties or any facility
or equipment thereat in excess of reportable quantities or allowable standards
or levels under any Environmental Law, or in a manner and/or amount which could
reasonably be expected to result in liability under any Environmental Law, in
each case of (i) through (iii) which would, either individually or in the
aggregate, have a Material Adverse Effect.
E. Each Obligor shall as promptly as practicable notify the
Lenders of the occurrence of any event specified in Section 5.09C. and shall
thereafter keep the Lenders informed on a periodic basis of any material actions
taken in response to such event and the results of such actions.
F. Each Obligor shall provide the Lenders with copies of any
material notice, submittal or documentation provided by such Obligor or any of
its Subsidiaries to any Governmental Authority or third party under any
Environmental Law if the matter which is the subject of the notice, submittal or
other documentation could, either individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. Such notice, submittal or
documentation shall be provided to the Lenders promptly and, in any event,
within ten Business Days after such material is provided to the Governmental
Authority or third party.
5.10 PAYMENTS IN U.S. DOLLARS
All payments of any Obligations to be made hereunder or under the
Notes or any other Senior Loan Document by any Obligor shall be made solely in
U.S. Dollars or such other currency as is then legal tender for public and
private debts in the United States of America.
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5.11 REGISTER
The Borrower shall maintain a register (the "REGISTER") on which
it will record the Senior Loan made by each Lender and the repayment in respect
of the principal amount of the Senior Loan of each Lender. Failure to make any
such recordation, or any error in such recordation, shall not affect any
Obligor's obligations in respect of the Senior Loan. The transfer of the Senior
Loan Commitments of Lender and the rights to the principal of, and interest on,
the Senior Loan made pursuant to the Senior Loan Commitments shall not be
effective until such transfer is recorded on the Register with respect to
ownership of the Senior Loan Commitments and the Senior Loan and prior to such
recordation all amounts owing to the transferor with respect to such Senior Loan
Commitments and Senior Loan shall remain owing to the transferor. The
registration of assignment or transfer of all or part of the Senior Loan
Commitment and the Senior Loan shall be recorded by the Company on the Register
only upon the receipt by the Company of a properly executed and delivered
assignment and assumption agreement pursuant to Section 10.2A. Coincident with
the delivery of such an assignment and assumption agreement to the Company for
acceptance and registration of assignment or transfer of all or part of the
Senior Loan, or as soon thereafter as practicable, each Lender shall surrender
the Note(s) evidencing the Senior Loan, and thereupon a new Note(s) of the same
type and in the same aggregate principal amount shall be issued to the assigning
or transferor Lender and/or each new Lender.
5.12 WARRANT MATTERS
A. INITIAL WARRANTS. The Borrower will issue to the Lenders on
the earlier to occur of (x) the Minimum IPO Consummation Date, (y) March 31,
1997 and (z) the date of the Extension Notice (in any such case whether or not
any Senior Loan is made hereunder) Warrants exercisable for 1.5% of the Common
Stock of the Borrower on a fully diluted basis as of the date of such issuance
after giving effect to (w) the issuance of such Warrants, (x) the Minimum IPO
(assuming a minimum of 2,750,000 shares of Common Stock of the Borrower issued
thereunder (or such larger number as may actually be issued)), (y) the
consummation of the CommcoCCC Acquisition (assuming a minimum of 6,000,000
shares of Common Stock of the Borrower issued in connection therewith (or such
larger number as may actually be issued)) and (z) all Equity Rights (other than
the Warrants) exercisable as of such date (calculated based on the treasury
method). Such Warrants shall be earned on the date of execution of this
Agreement. The Borrower will issue to the Lenders on the date of
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the making of the Initial Senior Loan (and regardless of the amount thereof)
Warrants exercisable for 1.5% of the Common Stock of the Borrower on a fully
diluted basis as of the date of such issuance after giving effect to (w) the
issuance of such Warrants and any Warrants previously issued and outstanding,
(x) the Minimum IPO (assuming a minimum of 2,750,000 shares of Common Stock of
the Borrower issued thereunder (or such larger number as may actually be
issued)), (y) the consummation of the CommcoCCC Acquisition (assuming a minimum
of 6,000,000 shares of Common Stock of the Borrower issued in connection
therewith (or such larger number as may be actually issued)) and (z) all Equity
Rights (other than the Warrants) exercisable as of such date (calculated based
in the treasury method). If the actual number of shares issued pursuant to the
Minimum IPO (including pursuant to the over-allotment option granted under the
Minimum IPO Underwriting Agreement) or the CommcoCCC Acquisition is greater than
the assumed amounts set forth in the first and third sentences of this Section
5.12, then the number of Initial Warrants issued (whether prior to or on the
date of the making of the Initial Senior Loan) shall be increased such that the
total number of Initial Warrants issued would be that number that would have
been issued if such greater amount had been taken into account at the time of
the issuance of any such Initial Warrants (which such additional Warrants shall
be issued PRO RATA to the Lenders). No adjustment shall be made to the
number of Warrants issued to the extent that the actual number of shares of
Common Stock issued in the Minimum IPO (including pursuant to such
over-allotment option) or the CommcoCCC Acquisition is less than the amounts set
forth in the first and third sentences of this Section 5.12. Any Warrants
issued pursuant to this Section 5.12A. are referred to herein as the "INITIAL
WARRANTS."
B. ADDITIONAL WARRANTS. On each date occurring on the
corresponding date in each calendar month which is a six calendar month interval
after the date of the making of the Initial Senior Loan and during which Senior
Loans remain outstanding, the Borrower shall issue Warrants to the Lenders (the
"ADDITIONAL WARRANTS") exercisable for an additional 3.0% of the Common
Stock of the Borrower on a fully diluted basis after giving effect to (x) the
issuance of such Warrants and all other Warrants then issued and outstanding and
(y) all Equity Rights (other than Warrants) exercisable as of such date
(calculated based on the treasury method); PROVIDED, HOWEVER, that if the
Extension Notice is given, the first six month interval shall be calculated from
the Minimum IPO Consummation Date. Following the first such six month interval,
such Additional Warrants issued after such first six month interval shall be
issued on a PRO RATA
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basis based on the actual number of days elapsed to the date of repayment of the
Senior Loans.
C. IPO PRICE ADJUSTMENT. For every $2.75 that the per share
price of the Minimum IPO is below $16.50, the Initial Warrants and Additional
Warrants issuable pursuant to paragraphs A. and B. above shall increase by 0.5%
of the fully diluted number of shares of Common Stock of the Borrower
outstanding (giving effect to all transactions and Equity Rights (including the
Warrants) referred to therein). For every $2.75 that the per share price of the
Minimum IPO is above $16.50 (up to and including $22.00), the Initial Warrants
and Additional Warrants issuable pursuant to paragraphs A. and B. above shall
decrease by 0.5% of the fully diluted number of shares of Common Stock of the
Borrower outstanding (giving effect to all transactions and Equity Rights
(including the Warrants) referred to therein). Following the first full
adjustment of $2.75, such adjustment shall be made on a PRO RATA basis based
upon the actual per share price of the Minimum IPO.
D. WARRANT AGREEMENT; REGISTRATION RIGHTS. The Warrants shall
be issued to the Lenders on a PRO RATA basis based, prior to the making of
the Initial Senior Loan, upon each Lender's Senior Loan Commitment or,
thereafter, such Lender's then outstanding principal amount of the Senior Loan,
and shall be issued pursuant to the Warrant Agreement and holders thereof (and
their transferees) will have the benefits of the Registration Rights Agreement
and the Registration Rights Agreement Amendment.
E. EXERCISE PRICE; ANTIDILUTION. All such Warrants shall on
the date of initial issuance have an exercise price of $0.01 and have the
benefit of antidilution protection provisions.
F. RESERVE FOR WARRANT SHARES; COOPERATION. The Borrower shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, for the purpose of effecting the exercise of the
Warrants and otherwise complying with the terms of this Agreement and the
Warrant Agreement, such number of its duly authorized shares of Common Stock as
shall be sufficient to effect the exercise of the Warrants from time to time
outstanding or otherwise to comply with the terms of this Agreement and the
Warrant Agreement. If at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the exercise of the Warrants
or otherwise to comply with the terms of this Agreement and the Warrant
Agreement, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued
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shares of Common Stock to such number of shares as shall be sufficient for such
purposes. The Company will obtain any authorization, consent, approval or other
action by or make any filing with any court or administrative body that may be
required under applicable state securities laws in connection with the issuance
of shares of Common Stock upon exercise of the Warrants. The Borrower shall
assist and cooperate with any holder of Warrants required to make any
governmental filings or obtain any governmental approvals prior to or in
connection with any exercise of any Warrant (including, without limitation,
making any filings required to be made by the Borrower).
5.13 ADDITIONAL PLEDGE OF FOREIGN SUBSIDIARY CAPITAL STOCK
If following a change in the relevant sections of the Code or the
regulations, rules, rulings, notices or other official pronouncements issued or
promulgated thereunder, counsel for the Borrower reasonably acceptable to the
Required Lenders does not within 30 days after a request from the Required
Lenders deliver its opinion with respect to any Foreign Subsidiary which has not
already had all of its stock owned by the Borrower or any of its Subsidiaries
pledged pursuant to a Security Agreement, that a pledge to secure the
Obligations of the Company or the Guarantor which is the parent of such Foreign
Subsidiary, as the case may be, (x) of 66 2/3% or more of the total combined
power of all classes of Capital Stock of such Foreign Subsidiary entitled to
vote and (y) any promissory note issued by such Foreign Subsidiary to the
Borrower or any of its Subsidiaries, in any such case could reasonably be
expected to cause (I) the undistributed earnings of such Foreign Subsidiary as
determined for Federal income tax purposes to be treated as a deemed dividend to
such Foreign Subsidiary's United States parent for Federal income tax purposes
or (II) any other material adverse Federal income tax consequences to the
Obligors, then that portion of such Foreign Subsidiary's outstanding Capital
Stock or any promissory notes so issued by such Foreign Subsidiary, in each case
not theretofore pledged pursuant to the Security Agreement, shall be pledged to
the Collateral Agent pursuant to a Security Agreement or another pledge
agreement in substantially similar form, if needed and with all documents
delivered pursuant to this Section 5.13 to be in form and substance reasonably
satisfactory to the Collateral Agent and the Required Lenders. At the request
of the Required Lenders, if an Event of Default under Section 7.1, 7.6 or 7.7
shall have occurred and is continuing, the Borrower shall pledge to the
Collateral Agent all of the Capital Stock of each Foreign Subsidiary not
theretofore pledged to the Collateral Agent.
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5.14 PERFORMANCE AND ENFORCEMENT UNDER CERTAIN AGREEMENTS
Each Obligor shall diligently and in good faith promptly perform in
all material respects all of its agreements and covenants under each Document
and each document and instrument related thereto or delivered in connection with
any thereof, in each case, to the extent reasonably within its control. Subject
to the provisions of the next sentence and the last sentence of this Section
5.14 each Obligor shall (A) diligently and in good faith promptly pursue the
performance of each other party to each such document, and (B) diligently seek
the enforcement of all rights and remedies under each such document, except, in
each case, where the failure to do so could not reasonably be expected to have a
Material Adverse Effect. Each Obligor shall confer with the Lenders in
enforcing or waiving any material rights of any Obligor under any such Document.
SECTION 6 NEGATIVE COVENANTS
Each Obligor covenants and agrees that from the date hereof and
until the satisfaction in full of the Senior Loan and the Note and all other
monetary Obligations due under this Agreement it will fully and timely perform
all covenants in this Section 6 (except that none of the following covenants
shall apply to the activities of any Foreign Subsidiary).
6.1 INDEBTEDNESS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, create, incur or suffer to exist or be
or become liable for any Indebtedness, except (each of which shall be given
independent effect):
(a) Indebtedness under the Senior Loan Documents;
(b) Indebtedness (including Contingent Obligations) outstanding on
the date hereof and listed in SCHEDULE 4.19 and specified on SCHEDULE
4.19 as to remain outstanding;
(c) Indebtedness of the Company or any Wholly Owned Subsidiary
owing to the Company or any Wholly Owned Subsidiary which is an Obligor;
PROVIDED, HOWEVER, that (i) if requested by the Majority Lenders, such
Indebtedness shall be evidenced by an Intercompany Note which shall be
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pledged to the Collateral Agent on behalf of the Lenders pursuant to
arrangements in form and substance satisfactory to the Collateral Agent
and (ii) such Indebtedness shall not be held by any Person other than the
Company or a Wholly Owned Subsidiary which is an Obligor and shall not be
subordinate to any other Indebtedness or other obligation of the obligor
other than the Senior Loans;
(d) Indebtedness of the Company and the Subsidiaries secured by
Liens permitted under Section 6.2(h) or (q) not exceeding in the
aggregate, when aggregated with all Capitalized Lease Obligations in
respect of sale-leasebacks permitted by Section 6.21, $5.0 million at any
one time outstanding;
(e) Indebtedness arising from honoring a check, draft or similar
instrument against insufficient funds; PROVIDED, HOWEVER, that such
Indebtedness is extinguished within two Business Days of its incurrence;
(f) obligations under operating leases permitted by Section 6.19
and Contingent Obligations permitted by Section 6.5; and
(g) unsecured Indebtedness of the Company or any Subsidiary which
is an Obligor which is assumed or incurred in connection with an
Acquisition in an aggregate principal amount not to exceed $5.0 million at
any time outstanding; PROVIDED HOWEVER, that (x) if such Indebtedness
shall have been incurred in connection with any Acquisition, such
Indebtedness must be only Permitted Subordinated Indebtedness and (y) if
such Indebtedness shall have been assumed in connection with such
Acquisition, such Indebtedness shall not have been incurred in connection
with or in contemplation of such Acquisition and the Company shall use its
best efforts to procure that such Indebtedness is subordinated on the
terms set forth in EXHIBIT X.
All intercompany debt shall be unsecured and subordinate in right of
payment to the Obligations.
6.2 LIENS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien upon any item constituting Collateral, whether now owned or
hereafter acquired, except for the Lien of the Security Documents relating
thereto,
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the Prior Liens applicable thereto and other Permitted Liens. No Obligor will,
nor will any of them permit any of their respective Subsidiaries to, create,
incur, assume or suffer to exist any Lien upon or with respect to any Property
which does not constitute Collateral, whether now owned or hereafter acquired,
or sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets or assign any
right to receive income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute, except the following, which are herein collectively referred to
as "PERMITTED LIENS":
(a) Liens created pursuant to or permitted by the Security
Documents;
(b) Liens in existence on the date hereof and identified in
SCHEDULE 4.19 (excluding, however, following the making of the Initial
Senior Loans hereunder, Liens securing Indebtedness to be repaid with the
proceeds of such Senior Loans, as indicated on SCHEDULE 4.19);
(c) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Borrower or the affected
Subsidiary, as the case may be, in accordance with GAAP;
(d) Liens in respect of Property of the Borrower or any Subsidiary
imposed by Law which were incurred in the ordinary course of business,
such as carriers', warehousemen's, landlords' and mechanics' Liens and
other similar Liens arising in the ordinary course of business, in each
case for sums the payment of which is not required by Section 9.03;
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation or the deposits securing
the liability to insurance carriers;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
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(g) leases, subleases, easements, rights-of-way, encroachments and
other survey defects, restrictions and other similar encumbrances incurred
in the ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract from
the value of the Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any Subsidiary;
(h) Liens upon tangible personal Property acquired after the date
hereof by the Borrower or any Subsidiary, each of which Liens either (a)
existed on such Property before the time of its acquisition and was not
created in anticipation thereof, or (b) was created solely for the purpose
of securing Indebtedness representing, or incurred to finance, refinance
or refund, the cost of such Property; PROVIDED, HOWEVER, that (x) no
such Lien shall extend to or cover any Property of the Borrower or such
Subsidiary other than the Property so acquired and improvements thereon
and (y) the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 100% of the fair market value (as determined in
good faith by a senior financial officer of the Borrower or such
Subsidiary) of such Property at the time it was acquired;
(i) Liens existing on any asset of any Person at the time such
Person becomes a Subsidiary or is merged or consolidated with or into a
Subsidiary and, in each case, not created in contemplation of or in
connection with such event; PROVIDED, HOWEVER, that such Liens do not
extend to any other Property of the Borrower or any Subsidiary;
(j) Liens (excluding Liens on Collateral) not otherwise permitted
hereunder securing obligations not at any time exceeding in the aggregate
$250,000;
(k) Liens arising under licensing agreements entered into in the
ordinary course of business for the use of Intellectual Property (other
than FCC Licenses) or other intangible assets, and settlements,
permissions, consents to use, and similar arrangements concerning
Intellectual Property (other than FCC Licenses) or other intangible assets
or judgments adjudicating rights in Intellectual Property (other than FCC
Licenses) or other intangible assets;
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(l) Liens evidenced by UCC financing statements regarding
operating and equipment leases permitted by this Agreement or in respect
of consigned goods;
(m) Liens solely in favor of the Borrower or any Wholly Owned
Subsidiary which is an Obligor;
(n) Liens securing obligations under Interest Rate Agreements with
Lenders;
(o) Liens consisting of judgment or judicial attachment liens
(including prejudgment attachment) the enforcement of which is effectively
stayed or payment of which is covered in full (subject to a customary
deductible) by insurance or which do not otherwise result in an Event of
Default under Section 7.8;
(p) Liens arising solely by virtue of any statutory or common Law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED, HOWEVER, that (i) such
deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Borrower or any Subsidiary
in excess of those set forth by regulations promulgated by the Board of
Governors of the Federal Reserve System, and (ii) such deposit account is
not intended by the Borrower or any Subsidiary to provide collateral to
the depository institution;
(q) Liens securing obligations in respect of Capital Leases (other
than in respect of FCC Licenses) solely on assets subject to such leases,
including Capital Leases arising as a result of any sale-leaseback
permitted by Section 6.21;
(r) statutory or contractual Liens with respect to any leased Real
Property; and
(s) any extension, renewal or replacement of the foregoing;
PROVIDED, HOWEVER, that the Liens permitted hereunder shall not cover
any additional Indebtedness or Property (other than like Property
substituted for Property covered by such Lien).
If the Borrower or any Subsidiary shall, directly or indirectly,
create or assume any Lien upon any of its Property, or on any income or profits
therefrom, whether now owned or
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hereafter acquired, other than Liens permitted by the provisions of this Section
6.2, it shall make or cause to be made effective provision (if and to the extent
effective provision therefor has not theretofore been made pursuant to the
Senior Loan Documents) whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness or other obligation
thereby secured as long as any such Indebtedness or other obligation shall be
secured; PROVIDED, HOWEVER, that the foregoing shall not be construed as a
consent by the Required Lenders or any Lender to any creation or assumption of
any such Lien not permitted by the provisions of this Section 6.2.
Except with respect to (I) specific Property encumbered pursuant to
a Lien permitted to be incurred pursuant to clause (h) of the second preceding
paragraph of this Section 6.2 or (II) specific Property to be sold pursuant to
an executed agreement with respect to a Disposition consummated in accordance
with this Agreement, no Obligor will, nor will any of them permit any of their
respective Subsidiaries to, directly or indirectly, enter into any agreement
after the date hereof (other than the Senior Loan Documents) prohibiting or
restricting in any manner (directly or indirectly and including by way of
covenant, representation or warranty or event of default) the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.3 RESTRICTED PAYMENTS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, (a) declare or pay any Dividend Payment
or (b) make any principal payment on, purchase, defease, redeem, prepay, or
otherwise acquire or retire for value, other than any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Indebtedness or Pari Passu Indebtedness of the Company (any such dividend,
distribution, purchase, redemption, acquisition, retirement, defeasance or
prepayment set forth in clauses (a) and (b) above a "RESTRICTED PAYMENT");
except that any Subsidiary of the Borrower may declare and make Dividend
Payments to the Borrower or any Wholly Owned Subsidiary.
6.4 INVESTMENTS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, make or permit to remain outstanding
any Investments, except:
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(a) operating deposit accounts and certificates of deposit with
banks in the ordinary course of business;
(b) cash and Cash Equivalents;
(c) Investments by the Company or any Subsidiary in any Wholly
Owned Subsidiary that is an Obligor and that has complied with Section
6.18;
(d) Investments outstanding on the date hereof and identified in
SCHEDULE 4.16 and any renewals, extensions, modifications and
replacements thereof that do not increase the amount thereof;
(e) Investments that constitute Indebtedness permitted under
Section 6.1 or Contingent Obligations permitted under Section 6.5;
(f) Investments by the Company in Interest Rate Agreements entered
into as BONA FIDE hedges and not for speculative purposes;
(g) the ART West Acquisition to the extent effected in all
material respects in accordance with the ART West Acquisition Documents as
in effect on the date hereof, the Telecom Acquisition to the extent
effected in all material respects in accordance with the Telecom
Acquisition Documents as in effect on the date hereof and the DCT
Acquisition to the extent effected in all material respects in accordance
with the DCT Acquisition Documents as in effect on the date hereof (it
being understood that the exercise of any right of first refusal or
similar right granted under the Documents relating to any such Pending
Acquisition is not permitted by this Section 6.4(g));
(h) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in
the ordinary course of business;
(i) pledges or deposits required in the ordinary course of
business in connection with worker's compensation, unemployment insurance
and other social security or similar legislation;
(j) pledges or deposits in connection with (i) the non-delinquent
performance of bids, trade contracts (other than for borrowed money),
leases or statutory obligations,
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(ii) contingent obligations on surety or appeal bonds, and (iii) other
non-delinquent obligations of a like nature, in each case incurred in the
ordinary course of business;
(k) advances, loans or extensions of credit to suppliers in the
ordinary course of business by the Borrower or any Subsidiary, in each
case solely with respect to the suppliers of each such Person and its
Subsidiaries;
(l) the consummation of any Acquisition or the purchase of any 38
GHz license with an amount of cash equal to the amount of cash to be paid
(and not yet paid) by the Company to the seller to consummate any of the
ART West Acquisition, the Telecom Acquisition or the DCT Acquisition as
set forth in the ART West Acquisition Agreement, the Telecom Acquisition
Agreement and the DCT Acquisition Agreement, respectively, on the date
hereof, if and to the extent that such amount of cash is not paid by the
Company to the seller in connection with the consummation of any such
Pending Acquisition; PROVIDED, HOWEVER, that any Acquisition
consummated pursuant to this Section 6.4(l) must be pursuant to a
transaction in which the assets, business or division acquired is by, or
the Person acquired is merged with or into, or thereby becomes, the
Borrower or a Wholly Owned Subsidiary which is an Obligor;
(m) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(n) the CommcoCCC Acquisition to the extent effected in all
material respects in accordance with the CommcoCCC Acquisition Documents
as in effect on the date hereof;
(o) [Reserved];
(p) capital expenditures made in the ordinary course;
(q) Investments by the Borrower or any Subsidiary in (x) any
non-Wholly Owned Subsidiary, (y) any Subsidiary which is not an Obligor or
(y) any Joint Ventures of the Borrower or any Subsidiary; PROVIDED,
HOWEVER, that (i) the aggregate amount of such Investments pursuant to
this clause (q) shall not exceed $5.0 million in the aggregate outstanding
at any time and (ii) all such Investments evidenced by Intercompany Notes
shall be pledged to the
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Collateral Agent pursuant to documentation reasonably satisfactory to the
Required Lenders;
(r) any Investment (including (subject to Section 6.10)
Acquisitions) made by the Company in which the sole consideration provided
is Common Stock of the Company, except that, in connection with any
Acquisition, the consideration therefor may include (x) cash consideration
in an amount equal to an aggregate of the difference between $2.50 million
and the aggregate amount of Investments made and outstanding (without
giving effect to any write-off or write-down thereof) under clause (w) of
this Section 6.4, PLUS any cash permitted to be utilized by Section
6.4(l) to the extent not previously expended pursuant to Section 6.4(l)
and (y) Indebtedness assumed or Indebtedness incurred pursuant to Section
6.1(g); PROVIDED, HOWEVER, that in any Acquisition utilizing cash
permitted to be utilized by Section 6.4(l), such Acquisition must be
pursuant to a transaction in which the assets, business or division
acquired is by, or the Person acquired is merged with or into, or thereby
becomes, the Borrower or a Wholly Owned Subsidiary which is an Obligor;
(s) the Borrower and any Subsidiary may hold additional
Investments in any Foreign Subsidiary which is not an Obligor to the
extent that such Investments reflect an increase in the stockholders'
equity of such Foreign Subsidiary resulting from retained earnings of such
Subsidiary;
(t) the consummation of the Merger;
(u) the creation of Subsidiaries in accordance with Section 6.13;
(v) Investments consisting of non-cash consideration received in
the form of securities, notes or similar obligations in connection with a
Disposition permitted by Section 6.6(k); PROVIDED, HOWEVER, that (i)
the aggregate amount of such non-cash consideration received in connection
with any such Disposition shall not exceed 20% of the total consideration
received in connection with such Disposition and (ii) such non-cash
consideration is pledged pursuant to the Security Agreement; and
(w) in addition to the foregoing, other Investments (including
(subject to Section 6.10) Acquisitions) not exceeding the excess of (x)
$2.50 million in the aggregate
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at any time outstanding, net of any returns of capital, cash dividends and
distributions received in respect thereof and net cash proceeds of
Dispositions thereof but not net of write-downs or write-offs over (y) the
aggregate amount of cash utilized pursuant to clause (r) of this Section
6.4 to effect Acquisitions.
6.5 CONTINGENT OBLIGATIONS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, create or become or be liable with
respect to any Contingent Obligation, except:
(a) pursuant to Section 9;
(b) Contingent Obligations in respect of operating leases to the
extent permitted under Section 6.19;
(c) Contingent Obligations of the Company or any Subsidiary in
respect of Indebtedness or other liabilities of the Company or any Wholly
Owned Subsidiary which is an Obligor to the extent that the existence of
such Indebtedness or other liabilities is not prohibited under this
Agreement;
(d) other Contingent Obligations which do not exceed $1.0 million
in the aggregate at any time outstanding;
(e) endorsements for collection or deposit in the ordinary course
of business;
(f) Contingent Obligations of the Borrower or any Subsidiary
existing as of the Closing Date and listed in SCHEDULE 4.19 and
renewals, extensions, modifications and replacements thereof that do not
increase the amount thereof or provide for terms materially less favorable
to any Obligor; and
(g) Contingent Obligations in connection with Dispositions
permitted under Section 6.6 arising in connection with indemnification and
other agreements in respect of any contract relating to such Disposition,
not to exceed the consideration received by the Borrower or any Subsidiary
in connection with such Disposition and excluding in all cases any
Contingent Obligation with respect to any obligation of any third person
incurred in connection with
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the acquisition of the Property which is the subject of such Disposition.
6.6 RESTRICTION ON FUNDAMENTAL CHANGES, ACQUISITIONS AND
DISPOSITIONS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, (1) enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), (2) acquire any business or
Property from, or Capital Stock of, or be a party to any Acquisition of, any
Person or effect any Acquisition, or (3) effect any Disposition or convey, sell,
lease, assign, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or a substantial part of its business or Property, whether
now owned or hereafter acquired, including receivables and leasehold interests.
Notwithstanding the foregoing provisions of this Section 6.6, (x) the
consummation of the Merger in accordance with the Merger Agreement as in effect
on the date hereof and the CommcoCCC Acquisition in accordance with the
CommcoCCC Acquisition Agreement as in effect on the date hereof shall in each
case not be prohibited in any respect and (y) each of the following shall be
permitted:
(a) purchases of inventory and other Property to be sold or used
in the ordinary course of business;
(b) Investments permitted by Section 6.4 (it being understood that
the only Acquisitions permitted are under Section 6.4(g), Section 6.4(l),
Section 6.4(r) and Section 6.4(w));
(c) any Subsidiary may be merged or consolidated or dissolved or
liquidated with or into: (i) the Company if the Company shall be the
continuing or surviving corporation or (ii) any Wholly Owned Subsidiary
which is an Obligor; PROVIDED, HOWEVER, that a Wholly Owned Subsidiary
which is an Obligor shall be the continuing or surviving corporation;
(d) Acquisitions permitted by Section 6.4 (g), Section 6.4 (l),
Section 6.4(r) or Section 6.6(w);
(e) any Subsidiary may sell, lease, transfer or otherwise dispose
of any or all of its Property (upon voluntary liquidation or otherwise) to
the Company and its other equity holders in proportion to their equity
interests or to one or more Subsidiary Guarantors;
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(f) Dispositions of used, worn out, obsolete or surplus equipment
or other Property by the Company or any Subsidiary, all in the ordinary
course of business; PROVIDED, HOWEVER, that the proceeds thereof are
reinvested in the business of the Borrower or any Subsidiary within one
year of such Disposition;
(g) any non-Wholly Owned Subsidiary may be merged or consolidated
or dissolved or liquidated with or into any other non-Wholly Owned
Subsidiary; PROVIDED, HOWEVER, that if a Subsidiary which is an
Obligor is involved in such transaction then an Obligor shall be the
continuing or surviving corporation and immediately after such transaction
the Borrower owns not less than that percentage of the Capital Stock of
the surviving or continuing corporation as the highest percentage of the
Capital Stock the Borrower owned in each of the subject Subsidiaries
immediately prior thereto;
(h) the Borrower or any Subsidiary may sell or discount, in each
case without recourse, accounts receivable arising in the ordinary course
of business, but only in connection with the compromise or collection
thereof;
(i) the Borrower or any Subsidiary may, in the ordinary course of
business, enter into licensing agreements with Persons for the use of
Intellectual Property or other intangible assets, and settlements,
permissions, consents to use, and similar arrangements concerning
Intellectual Property or other intangible assets, so long as the Borrower
or its Subsidiary uses reasonable commercial efforts to procure that each
such license is permitted to be assigned pursuant to the Security
Agreement and does not otherwise prohibit the granting of Lien therein by
any Obligor pursuant to the Security Agreement;
(j) the abandonment or other disposition of Intellectual Property
and other Property that is, in the reasonable judgment of the Person
owning such Intellectual Property and other Property, no longer
economically practicable to maintain or useful in the conduct of the
business of such Person; and
(k) Dispositions for fair market value if (x) the portion of
the consolidated revenue of the Borrower for the latest fiscal year
immediately prior to such sale attributable to such Disposition (or latest
twelve months prior to January 1, 1997, and PRO FORMA for the
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Transactions), PLUS the trailing twelve month revenue of all other
Dispositions effected pursuant to this clause (k) (measured at the time of
sale) does not exceed 10.0% of the consolidated revenue of the Borrower
for the latest fiscal year (or latest twelve months prior to January 1,
1997 and PRO FORMA for the Transactions) (before giving effect to the
current contemplated Disposition) or (y) the portion of the book value of
the Property subject to such Disposition at the time of sale, PLUS the
book value of all other Property subject to Disposition pursuant to this
clause (k) (measured at the time of sale) does not exceed 10% of the book
value of the consolidated total assets of the Borrower as of the end of
the immediately preceding fiscal year (or prior to January 1, 1997, as of
the latest twelve months and PRO FORMA for the Transactions);
PROVIDED, HOWEVER, that the Net Available Proceeds therefrom are
reinvested as specified in Section 2.4A(ii)(III) or applied to the
prepayment of the Senior Loans as specified in Section 2.4A(ii)(III).
To the extent the Required Lenders waive the provisions of this
Section 6.6 with respect to any Disposition of any Collateral, or any Collateral
is sold or otherwise disposed of as permitted by this Section 6.6 (and such
Collateral is released (or permitted to be released) from the Liens created by
the Security Agreement), such Collateral in each case shall be sold or otherwise
disposed of free and clear of the Liens created by the Security Agreement and
the Collateral Agent shall take such actions as are appropriate in connection
therewith.
6.7 LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
such Subsidiary to (a) pay dividends or make any other distributions on such
Subsidiary's Capital Stock or any other interest or participation in its profits
owned by the Borrower or any Subsidiary, or pay any Indebtedness or any other
obligation owed to the Borrower or any Subsidiary, (b) make loans or advances to
the Borrower or any Subsidiary or guarantee any Indebtedness of the Borrower or
any Subsidiary or (c) transfer any of its properties or assets to the Borrower
or any Subsidiary, except for such encumbrances or restrictions existing under
or by reason of (i) applicable Law, (ii) this Agreement and the other Senior
Loan Documents, (iii) such restrictions with respect to the transfer of those
assets subject to a Lien permitted under Section 6.2(h), (i) or
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(q) as are contained in the respective documentation with respect thereto, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Borrower or any Subsidiary and (v) with respect to
restrictions described in clause (c) only, restrictions in any agreement
relating to the Disposition of Property to the extent that such Disposition is
permitted under this Agreement.
6.8 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
A. No Obligor will, nor will any of them permit any of their
respective Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any Affiliate of the
Company (each such transaction, an "AFFILIATE TRANSACTION") or of any such
holder other than (x) Affiliate Transactions permitted under paragraph (B.)
below and (y) Affiliate Transactions on terms that are no less favorable than
those that might reasonably have been obtained in a comparable transaction at
such time on an arm's-length basis from a Person that is not an Affiliate of the
Company or such Subsidiary. With respect to any Affiliate Transaction (or
series of related Affiliate Transactions related to a common plan) that involves
aggregate payments or other Property equal to or in excess of $100,000 and less
than $500,000 the Company or such Subsidiary, as the case may be, shall have
delivered an Officers' Certificate to the Lenders certifying that such
transaction or series of transactions complies with clause (y) above. Each
Affiliate Transaction (and each series of related Affiliate Transactions that
are similar or part of a common plan) that involves aggregate payments or other
Property with a fair market value in excess of $500,000 and less than $2.0
million shall be approved by the Board of Directors of the Company or such
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Subsidiary enters into an Affiliate Transaction (or a series of related
Affiliate Transactions related to a common plan) that involves aggregate
payments or other Property with a fair market value of more than $2.0 million
the Company or such Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and deliver the same to the Lenders.
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B. The foregoing restriction shall not apply to the following
"PERMITTED AFFILIATE TRANSACTIONS": (i) reasonable and customary fees paid to
members of the Board of Directors of the Company or of any Subsidiary, (ii)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of the Company or any Subsidiary,
as determined by the Board of Directors of the Company or any such Subsidiary or
the senior management thereof in good faith, including, without limitation,
issuances of stock, payment of bonuses and other transactions pursuant to
employment or compensation agreements, stock option agreements, indemnification
agreements and other arrangements in effect on the Closing Date or substantially
similar thereto and (iii) the agreements and transactions described with
particularity on SCHEDULE 6.8 (the "EXISTING AFFILIATE AGREEMENTS") as such
agreements or transactions are in effect on the date hereof.
6.9 SUBSIDIARY STOCK
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity securities of
any of its Subsidiaries, except (i) to qualify directors if required by
applicable Law, (ii) to the Company or to a Wholly Owned Subsidiary and (iii) a
sale of all of the Capital Stock of such Subsidiary owned by the Borrower and
the Subsidiaries if the Borrower complies with Section 6.6(k) and Section
2.4A(iii).
6.10 BUSINESS ACTIVITIES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, materially alter the nature of the
consolidated business of the Company and the Subsidiaries from that described in
the Prospectus immediately after giving effect to the Transactions or similar or
related businesses.
6.11 AMENDMENTS TO CHARTER DOCUMENTS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, amend its certificate of incorporation or bylaws in any respect
that would be materially adverse to the interests of any Lender.
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6.12 [Reserved]
6.13 CREATION OF SUBSIDIARIES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, establish or create or acquire any
interest in any Subsidiary; PROVIDED, HOWEVER, that the Borrower and the
Subsidiaries shall be permitted to (a) establish or create Wholly Owned
Subsidiaries so long as (i) at least 10 days' prior written notice thereof is
given to the Lenders, (ii) all of the Capital Stock of such new Subsidiary owned
by the Borrower or any Subsidiary is pledged pursuant to a Security Agreement
and the certificates representing such stock, together with stock powers duly
executed in blank, are delivered to the Collateral Agent and (iii) any such new
Subsidiary shall comply with Sections 6.16, 6.18 and 6.24 and (b) create or
acquire an interest in non-Wholly Owned Subsidiaries so long as such Investment
is permitted pursuant to Section 6.4(q) or Section 6.4(w).
6.14 TRANSFER OF ASSETS TO SUBSIDIARIES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, transfer (other than in the ordinary
course of business and other than pursuant to a transaction permitted by Section
6.4) any Property to any Subsidiary unless such Subsidiary pays fair market
value therefor to the Company or to a Wholly Owned Subsidiary which is an
Obligor. For purposes of this Section 6.14, the fair market value paid by such
Subsidiary shall not consist in whole or in part of any securities or debt
instruments of such Subsidiary or of any Affiliate of such Subsidiary.
6.15 SALE OR DISCOUNT OF RECEIVABLES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, sell, with or without recourse, or
discount, or otherwise sell for less that the face value thereof, notes or
accounts receivables, other than in connection with trade discounts in the
ordinary course of business or consistent with past practice.
6.16 SECURITY INTERESTS
A. Each Obligor shall, and shall cause each of its Subsidiaries
to, duly and punctually perform any and all acts and, at its expense, will
promptly execute or cause to be executed any and all further instruments and
documents and take
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such action as the Required Lenders deem necessary or desirable in obtaining the
full benefits of this Agreement, the Security Documents and of each other Senior
Loan Document and of the rights and powers herein and therein granted as may, in
the reasonable judgment of the Required Lenders, be necessary or desirable in
order to grant and maintain in favor of the Lender a valid and perfected first
priority security interest in the Collateral, subject to no other Liens except
as may be expressly permitted under Section 6.2.
B. If the Collateral Agent or the Required Lenders determine that
they are required by Law to have appraisals prepared in respect of Mortgaged
Real Property, the Obligors shall provide to the Collateral Agent appraisals
which satisfy the applicable requirements of the Real Estate Appraisal Reform
Amendments of FIRREA and which shall be in form and substance satisfactory to
the Collateral Agent and the Required Lenders.
6.17 IMPAIRMENT OF SECURITY INTEREST
No Obligor will take or omit to take any action which action or
omission would have the result of adversely affecting or impairing the security
interest in favor of the Lenders with respect to the Collateral, and no Obligor
shall grant to any Person, or suffer any Person (in each case other than to the
Creditors or to the Borrower or the Subsidiaries to the extent permitted hereby)
to have any interest whatsoever in the Collateral. No Obligor will enter into
any agreement or instrument that by its terms requires the proceeds received
from any sale of Collateral to be applied to repay, redeem, defease or otherwise
acquire or retire any Indebtedness of any Person, other than pursuant to this
Agreement and the Notes.
6.18 ADDITIONAL GUARANTEES
In the event that, after the date hereof, the Borrower or any
Subsidiary creates or acquires a Wholly Owned Subsidiary or a Subsidiary of
which the Company directly or indirectly owns not less than 80% of the Capital
Stock (each such Subsidiary referred to herein as an "ADDITIONAL OBLIGOR" and
collectively as the "ADDITIONAL OBLIGORS"), then, upon such Person becoming
such a Subsidiary, the Borrower shall cause such Subsidiary to execute and
deliver a Joinder Agreement substantially in the form of EXHIBIT XIII and
execute and deliver all such other agreements, guarantees, documents and
certificates (including any amendments to the Senior Loan Documents) as the
Required Lenders may reasonably request and do such other acts and things as the
Required Lenders may reasonably request in order to have such
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Subsidiary guarantee the Obligations in accordance with the terms of the Senior
Loan Documents.
6.19 RESTRICTION ON LEASES
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, become liable in any way, whether, directly or by assignment or
as a guarantor or other surety, for the obligations of the lessee under any
operating lease, unless, immediately after giving effect to the incurrence of
liability with respect to such lease, the Consolidated Rental Payments of the
Company at the time in effect shall not exceed $2.0 million PER ANNUM.
6.20 RESTRICTION ON TAX CONSOLIDATION
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, file or consent to the filing of any consolidated income tax
return with any Person other than the Borrower and the Subsidiaries.
6.21 SALE AND LEASE-BACKS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, become or thereafter remain liable as
lessee or as guarantor or other surety with respect to the lessee's obligations
under any lease, whether an operating lease or a capital lease, of any Property,
whether now owned or hereafter acquired, (i) which such Person has sold or
transferred or is to sell or transfer to any other Person or (ii) which sale and
such lease are part of the same transaction or a series of related transactions
or such sale and such lease occur within one year of each other or are with the
same other Person, except for sale-leasebacks resulting in Capitalized Lease
Obligations and operating lease payments not in excess of $1.0 million.
6.22 LIMITATION ON OTHER RESTRICTIONS ON AMENDMENT OF SENIOR
LOAN DOCUMENTS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, enter into, suffer to exist or become
or remain subject to any agreement or instrument, except for the Senior Loan
Documents, that would prohibit or restrict (including by way of a covenant,
representation or warranty or event of default), or require the consent of any
Person to, any amendment to, or waiver or consent to departure from the terms
of, any of the Senior Loan Documents.
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6.23 MODIFICATIONS OF CERTAIN DOCUMENTS; ETC.
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, (a) consent to any amendment,
modification, supplement or waiver of any of the provisions of (i) the Warrants,
the Warrant Agreement or any Subordinated Indebtedness or (ii) any other
Document where (in the case of this clause (ii) only) the effect of such
amendment, modification, supplement or waiver would be material and adverse to
the interest of the Lenders, and in each case (i) and (ii) without the prior
written approval of the Required Lenders; and (b) amend, modify or change in any
manner which is reasonably likely to be materially adverse to the Lenders its
certificate of incorporation (including, without limitation, by the filing of
any certificate of designation) or its by-laws (or any other organizational
document), or any agreement entered into with respect to its Capital Stock, or
enter into any new agreement with respect to its Capital Stock in any manner
which would be materially adverse to the Lenders.
6.24 PLEDGE OF ADDITIONAL COLLATERAL
Promptly, and in any event within 30 days, after the acquisition of
any Property of the type that would have constituted Pledged Collateral at the
Closing Date (the "ADDITIONAL COLLATERAL"), each Obligor will, and each of
them will cause each of their respective Subsidiaries to, take all action
necessary or desirable, including the execution and delivery of all such
agreements, assignments, documents and instruments (including amendments to the
Senior Loan Documents) and the filing of appropriate financing statements under
the provisions of the UCC or applicable governmental requirements in each of the
offices where such filing is necessary or appropriate, to grant the Collateral
Agent for the benefit of the Lenders a duly perfected first priority Lien on
such Property pursuant to and to the full extent required by the Security
Agreement and this Agreement; PROVIDED, HOWEVER, that (subject to Section
5.13) not more than 65% of the Capital Stock of any Foreign Subsidiary need be
pledged. In the event that, after the date hereof, any Obligor acquires or
holds a fee interest in any Real Property with a value of $1.0 million or more
that is not pledged under an existing Mortgage, such Obligor will (i) take such
actions and execute such documents (including a Mortgage) as the Collateral
Agent shall reasonably require to confirm the Lien of an existing Mortgage, if
applicable, or to create a new mortgage on such Real Property and (ii) cause
to be delivered to the Collateral Agent, on behalf of the Lenders, the documents
and instruments reasonably requested by the Collateral Agent or the
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Required Lenders. The costs of all actions taken by the parties in connection
with any action to be taken under this Section 6.24, including reasonable costs
of counsel for the Collateral Agent, shall be for the account of the Obligors,
which shall pay all sums due on demand.
6.25 PAYMENTS WITH RESPECT TO SUBORDINATED INDEBTEDNESS
No Obligor will, nor will any of them permit any of their respective
Subsidiaries to, directly or indirectly, purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or other
analogous fund for, the purchase, redemption, retirement or other acquisition
of, or make any payment (whether voluntary or otherwise) or prepayment of the
principal of or interest on, or any other amount owing in respect of, any
Permitted Subordinated Indebtedness; PROVIDED, HOWEVER, that subject to the
subordination provisions thereof, regularly scheduled interest payments may be
made on any Permitted Subordinated Indebtedness in accordance with its terms.
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur and be continuing:
7.1 FAILURE TO MAKE PAYMENTS WHEN DUE
(i) The Company shall default in the payment when due of any
principal of any Senior Loan or (ii) the Company shall default in the payment
when due of interest on any Senior Loan or any fee or any other amount payable
by it hereunder or under any other Senior Loan Document when due and such
default under this clause (ii) shall have continued unremedied for three or more
Business Days; or
7.2 DEFAULT IN OTHER AGREEMENTS
The Borrower or any Subsidiary (the Borrower and such Subsidiaries
herein collectively called the "RELEVANT PARTIES" and each, a "RELEVANT
PARTY") shall default in the payment when due of any principal of or interest
on any of its Indebtedness (other than the Senior Loans) aggregating $1.0
million or more, beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created, after giving effect to
any consents or waivers relating thereto obtained before the expiration of any
such period of grace; or any event specified in any note, agreement, indenture
or other document
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evidencing or relating to any Indebtedness aggregating $1.0 million or more if
the effect of such event (after giving effect to any consents or waivers
relating thereto obtained before the expiration of any such period of grace) is
to cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become due, or
to be prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity; or
7.3 BREACH OF CERTAIN COVENANTS
Failure of any Obligor to perform or comply with any covenant, term
or condition contained in Section 2.4A(ii), 2.4A(iv) or 6; or
7.4 BREACH OF WARRANTY
Any representation, warranty or certification made by Relevant Party
in any Senior Loan Document or in any statement or certificate at any time given
by any Relevant Party in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false or incorrect in any material respect on the
date as of which made or deemed made; or
7.5 OTHER DEFAULTS UNDER SENIOR LOAN DOCUMENTS
Any Relevant Party shall default in the performance of or compliance
with any covenant, term or condition contained in any Senior Loan Document
(other than those covered by Section 7.1, 7.3 or 7.4) and such default shall not
have been remedied or waived in accordance with this Agreement within 30 days
after the date of written notice of such default from any Lender; or
7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT
OF CUSTODIAN; ETC.
A court of competent jurisdiction enters a Bankruptcy Order under
any Bankruptcy Law that:
(A) is for relief against any Relevant Party in an involuntary
case or proceeding, or
(B) appoints a Custodian of any Relevant Party for all or
substantially all of its properties, or
(C) orders the liquidation of any Relevant Party; or
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and in each case the order or decree remains unstayed and in effect for 60 days;
or
7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT
OF CUSTODIAN; ETC.
Any Relevant Party pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief against
it in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors or
files a proposal or scheme of arrangement involving the rescheduling or
composition of its indebtedness, or
(E) consents to the filing of a petition in bankruptcy against it,
or
(F) shall generally not pay its debts when such debts become due
or shall admit in writing its inability to pay its debts generally; or
7.8 JUDGMENTS AND ATTACHMENTS
Except as and to the extent permitted by Section 6.6, any money
judgment, writ or warrant of attachment, or similar process involving in any
individual case or in the aggregate at any time an amount in excess of $1.0
million (to the extent not covered by third-party insurance as to which the
insurance company has acknowledged coverage) shall be entered or filed against
any Relevant Party or any of their respective properties or assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
7.9 DISSOLUTION
Except as and to the extent permitted by Section 6.6, any order,
judgment or decree shall be entered against any Relevant Party decreeing the
dissolution or split-up of any
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Relevant Party and such order shall remain undischarged or unstayed for a period
in excess of 30 days; or
7.10 GUARANTEE
(i) Any Guarantee or any provision thereof shall cease to be in
full force or effect (other than in accordance with its express terms), or (ii)
any Guarantor or any Person acting by or on behalf of such Guarantor shall deny
or disaffirm such Guarantor's obligations under its Guarantee, or (iii) any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed, after giving
effect to any applicable grace periods, pursuant to its Guarantee; or
7.11 COLLATERAL DOCUMENT DEFAULT
A. The Security Agreement (together with any other security
document delivered or to be delivered thereunder) after delivery thereof shall
for any reason fail to create or cease to maintain a valid and duly perfected
security interest in the Collateral until such Collateral is released in
accordance with the terms of this Agreement and the Security Documents; or
B. The Collateral shall become subject to a pledge not permitted
under the Security Documents on the Collateral or any Person takes any action to
foreclose on such Collateral or takes any action inconsistent with the security
interest held by the Lenders that could have a material adverse effect on the
validity or requisite priority of such pledge; or
C. The enforceability of the Lender's security interest in any
Collateral shall be contested by any Relevant Party; or
7.12 ERISA MATTERS
An event or condition specified in Section 5.1(xv) shall occur or
exist and, as a result of such event or condition, together with all other such
events or conditions (which have not been cured), the Company or any ERISA
Affiliate shall incur, or in the reasonable opinion of the Required Lenders
shall be reasonably likely to incur, a liability to a Plan, a Multiemployer
Plan, the PBGC or the Internal Revenue Service (or any combination of the
foregoing) that would (individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect; or
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7.13 ENVIRONMENTAL MATTERS
There shall have been asserted against any Relevant Party, claims or
liabilities, whether accrued, absolute or contingent, based on or arising from
the generation, storage, transport, handling or disposal of Hazardous Materials
by any Relevant Party or any Affiliate, or any predecessor in interest of any
Relevant Party or any Affiliate, or relating to any site or facility owned,
operated or leased by any Relevant Party or any Affiliate, which claims or
liabilities (insofar as they are payable by any Relevant Party but after
deducting any portion thereof which is reasonably expected to be paid,
discharged or forgiven by other creditworthy Persons jointly and severally
liable therefor), are reasonably likely to be determined adversely to any
Relevant Party, and the amount thereof is, singly or in the aggregate,
reasonably likely to have a Material Adverse Effect; or
7.14 NON-MONETARY JUDGMENT
Any non-monetary judgment, order or decree is entered against any
Relevant Party which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
7.15 INJUNCTION
Any Relevant Party is enjoined, restrained or in any way prevented
by the order of any Governmental Agency from conducting all or any material part
of its business and such order continues for more than 60 days; or
7.16 DAMAGE, STRIKE, CASUALTY
Any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than 60 consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of any Relevant
Party if any such event or circumstance could, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect; or
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7.17 LICENSES AND PERMITS
The loss, suspension or revocation of, or failure to renew, any
license or permit (including any FCC License) now held or hereafter acquired by
any Relevant Party, if such loss, suspension, revocation or failure to renew is,
singly or in the aggregate, reasonably likely to have a Material Adverse Effect;
or
7.18 SUBORDINATION PROVISIONS
The subordination provisions relating to any Permitted Subordinated
Indebtedness (the "SUBORDINATION PROVISIONS") shall fail in any material
respect to be enforceable by the Lenders (which have not effectively waived the
benefits thereof) in accordance with the terms thereof, or any Obligation shall
fail to constitute Senior Debt (as defined in the Permitted Subordinated
Indebtedness); or any Obligor shall, directly or indirectly, disavow or contest
in any manner any of the Subordination Provisions.
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Sections 7.6 or 7.7, the Senior Loan Commitments shall be
automatically and permanently terminated and all of the unpaid principal amount
of and accrued interest on the Senior Loan and all other outstanding Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by the Obligors, and (ii) upon the occurrence and during the
continuance of any other Event of Default, the Required Lenders may, by notice
to the Borrower declare all of the unpaid principal amount of and accrued
interest on the Senior Loan and all other outstanding Obligations to be, and the
same shall forthwith become, due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company, reduce any claim to judgment, take any other action
permitted by law and/or take any action permitted to be taken by the Security
Documents during the existence of an Event of Default.
SECTION 8 THE COLLATERAL AGENT
8.1 APPOINTMENT
The Lenders hereby irrevocably designate and appoint the Person
selected by the Company in satisfaction of Section
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3.1M and reasonably acceptable to the Required Lenders as Collateral Agent for
the Lenders to act as specified herein and in the other Senior Loan Documents,
and the Lenders hereby irrevocably authorize such Person as the Collateral Agent
to take such action on its behalf under the provisions of this Agreement and the
other Senior Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Collateral Agent by the terms of this
Agreement and the other Senior Loan Documents, together with such other powers
as are reasonably incidental thereto. The Collateral Agent agrees to act as
such upon the express conditions contained in this Section 8. Notwithstanding
any provision to the contrary elsewhere in this Agreement or in any other Senior
Loan Document, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Senior
Loan Documents, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Collateral Agent.
The provisions of this Section 8 are solely for the benefit of the Collateral
Agent and the Lenders, and no Obliger shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, the Collateral Agent shall act solely as agent of
the Lenders and the Lenders do not assume and shall not be deemed to have
assumed any obligation or relationship of agent or trust with or for any
Obligor.
8.2 DELEGATION OF DUTIES
The Collateral Agent may execute any of its duties under this
Agreement or any other Senior Loan Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care, except to the extent otherwise required by
Section 8.3.
8.3 EXCULPATORY PROVISIONS
Neither the Collateral Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Senior Loan Documents (except for
its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to the Lenders for any recitals,
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statements, representations or warranties made by any Obligor or any of their
respective officers contained in this Agreement, any other Senior Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in connection
with, this Agreement or any other Senior Loan Document or for any failure of any
Obligor or any of their respective officers to perform its obligations hereunder
or thereunder. The Collateral Agent shall not be under any obligation to the
Lenders to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or the other
Senior Loan Documents, or to inspect the properties, books or records of the
Obligors. The Collateral Agent shall not be responsible to the Lenders for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Agreement or any other Senior Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Collateral Agent to the Lenders or by or
on behalf of any Obligor to the Collateral Agent or the Lenders or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Senior Loan or of the existence or possible
existence of any Potential Event of Default or Event of Default.
8.4 RELIANCE BY COLLATERAL AGENT
The Collateral Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, facsimile, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company or any of the Subsidiaries),
independent accountants and other experts selected by the Collateral Agent. The
Collateral Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Senior Loan Document unless it shall
first receive such advice or concurrence of the Required Lenders (or the Lenders
hereunder otherwise required to give consent to any action hereunder or under
any other Senior Loan Document) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and
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all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. As between the Collateral Agent and the
Lenders, the Collateral Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Senior Loan
Documents in accordance with a request of the Required Lenders (or the Lenders
hereunder otherwise required to give consent to any action hereunder or under
any other Senior Loan Document), and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Lenders.
8.5 NOTICE OF DEFAULT
The Collateral Agent shall not be deemed to have knowledge or notice
of the occurrence of any Potential Event of Default or Event of Default
hereunder unless the Collateral Agent has actually received notice from a Lender
or the Company referring to this Agreement, describing such Potential Event of
Default or Event of Default and stating that such notice is a "notice of
default." In the event that the Collateral Agent receives such a notice, the
Collateral Agent shall give prompt notice thereof to each Lender. The
Collateral Agent shall take such action with respect to such Potential Event of
Default or Event of Default as shall be reasonably directed by the Required
Lenders; PROVIDED, HOWEVER, that, as between the Collateral Agent and the
Lender unless and until the Collateral Agent shall have received such
directions, the Collateral Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Potential Event
of Default or Event of Default as it shall deem advisable in the best interests
of the Lenders.
8.6 NON-RELIANCE ON COLLATERAL AGENT AND OTHER
COLLATERAL AGENTS
Each Lender expressly acknowledges that neither the Collateral Agent
nor any of its respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Collateral Agent hereinafter taken, including any
review of the affairs of the Borrower and the Subsidiaries, shall be deemed to
constitute any representation or warranty by the Collateral Agent to the
Lenders. The Lenders represent to the Collateral Agent that they have,
independently and without reliance upon the Collateral Agent, and based on such
documents and information as they have deemed appropriate, made their own
appraisal of and investigation into the business, assets, operations, property,
financial and other condition, prospects and creditworthiness of
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the Borrower and made their own decision to make the Senior Loan and enter into
this Agreement. The Lenders also represent that they will, independently and
without reliance upon the Collateral Agent or any Lender, and based on such
documents and information as they shall deem appropriate at the time, continue
to make their own credit analysis, appraisals and decisions in taking or not
taking action under this Agreement, and to make such investigation as they deem
necessary to inform themselves as to the business, assets, operations, property,
financial and other condition, prospects and creditworthiness of the Obligors.
The Collateral Agent shall not have any duty or responsibility to provide the
Lenders with any credit or other information concerning the business,
operations, assets, property, financial and other condition, prospects or
creditworthiness of any Obligor that may come into the possession of any Lender
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
8.7 INDEMNIFICATION
The Lenders, jointly and severally, agree to indemnify the
Collateral Agent in its capacity as such ratably according to their respective
Senior Loan Commitments or principal amount of Notes, as the case may be, as
used in determining the Required Lenders at such time, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, reasonable expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment in full of the Obligations) be imposed on, incurred by or asserted
against the Collateral Agent in its capacity as such in any way relating to or
arising out of this Agreement or any other Senior Loan Document, or any
documents contemplated by or referred to herein or the transactions contemplated
hereby of any action taken or omitted to be taken by the Collateral Agent under
or in connection with any of the foregoing, but only to the extent that any of
the foregoing is not paid by an Obligor; PROVIDED, HOWEVER, that the Lenders
shall not be liable to the Collateral Agent for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the gross
negligence or willful misconduct of the Collateral Agent. If any indemnity
furnished to the Collateral Agent for any purpose shall, in the opinion of the
Collateral Agent be insufficient or become impaired, the Collateral Agent may
call for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in
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this Section 8.7 shall survive the payment in full of all Obligations.
8.8 COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY
The Collateral Agent and its Affiliates may make loans to, accept
deposits from and generally engage in any kind of business with any Obligor as
though the Collateral Agent were not the Collateral Agent hereunder. With
respect to the Senior Loans made by it and all Obligations owing to it, the
Collateral Agent shall have the same rights and powers under this Agreement as
the Lenders and may exercise the same as though it were not the Collateral Agent
and the terms "Lender" and "Lenders" shall include the Collateral Agent in its
individual capacity if it has Senior Loans owing to it.
8.9 RESIGNATION OF THE COLLATERAL AGENT; SUCCESSOR
COLLATERAL AGENT
The Collateral Agent may resign as the Collateral Agent upon 20
days' notice to the Lenders and the Borrower. Upon the resignation of the
Collateral Agent, the Required Lenders shall appoint a successor Collateral
Agent that is a bank or a trust company for the Lenders subject to prior
approval by the Borrower (such approval not to be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Collateral Agent, and the term "Collateral Agent" shall include
such successor agent effective upon its appointment, and the resigning
Collateral Agent's rights, powers and duties as the Collateral Agent shall be
terminated, without any other or further act or deed on the part of such former
Collateral Agent or any of the parties to this Agreement. After the resignation
of the Collateral Agent hereunder, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement.
SECTION 9 GUARANTEE
9.1 UNCONDITIONAL GUARANTEE
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "GUARANTEE"), to
each of the Lenders and to the Collateral Agent and their respective successors
and assigns, that: (i) the principal of and interest on the Senior Loans will
be promptly paid in full when due, subject to any applicable grace period,
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whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Senior Loans and all other obligations of the Borrower to the Lenders or the
Collateral Agent hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (ii) in case
of any extension of time of payment or renewal of any of the Senior Loans or of
any such other obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration or
otherwise. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Loans or this Agreement, the absence of any action to enforce the same,
any waiver or consent by any of the Lenders with respect to any provisions
hereof or thereof, the recovery of any judgment against the Borrower, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Borrower, any right to require a
proceeding first against the Borrower, protest, notice and all demands
whatsoever and covenants that this Guarantee will not be discharged except by
complete performance of the obligations contained in the Senior Loans, this
Agreement and in this Guarantee. If any Lender or the Collateral Agent is
required by any court or otherwise to return to the Borrower, any Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Borrower or any Guarantor, any amount paid by such Borrower or any
Guarantor to the Collateral Agent or such Lender, this Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor further agrees that, as between each Guarantor, on the one hand, and
the Lenders and the Collateral Agent, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 7 for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 7, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor for the purpose of this
Guarantee.
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9.2 RANKING OF GUARANTEE
The obligations of each Guarantor to the Lenders and to the
Collateral Agent pursuant to the Guarantee of such Guarantor and this Agreement
are expressly senior in right of payment to all Indebtedness of such Guarantor.
9.3 SEVERABILITY
In case any provision of this Guarantee 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.
9.4 LIMITATION OF GUARANTOR'S LIABILITY
Each Guarantor and by its acceptance hereof each of the Lenders
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Guarantee not constitute a fraudulent transfer
or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or
state Law. To effectuate the foregoing intention, the Lenders and such
Guarantor hereby irrevocably agree that the obligations of such Guarantor under
the Guarantee shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor
(including, but not limited to, the Guarantor Senior Indebtedness of such
Guarantor) and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to Section 9.5, result in the
obligations of such Guarantor under the Guarantee not constituting such
fraudulent transfer or conveyance.
9.5 CONTRIBUTION
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, INTER SE, that in the event any payment or
distribution is made by any Guarantor (a "FUNDING GUARANTOR") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a PRO RATA amount based on the Adjusted Net Assets of
each Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Borrower'
obligations with respect to the Obligations. "ADJUSTED NET ASSETS" of such
Guarantor at any date shall mean the lesser of (x) the amount by which the fair
value
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of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date
(other than liabilities of such Guarantor under Subordinated Indebtedness)), but
excluding liabilities under the Guarantee, of such Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that will be required to pay the
probable liabilities of such Guarantor on its debts including, without
limitation, Guarantor Senior Indebtedness (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and after
giving effect to any collection from any Subsidiary of such Guarantor in respect
of the obligations of such Subsidiary under the Guarantee), excluding debt in
respect of the Guarantee of such Guarantor, as they become absolute and matured.
9.6 WAIVER OF SUBROGATION
Until the Senior Loan is indefeasibly paid in full, each Guarantor
hereby irrevocably waives any claim or other rights which it may now or
hereafter acquire against the Borrower that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under its Guarantee
and this Agreement, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Lender against the Borrower, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common Law,
including, without limitation, the right to take or receive from the Borrower,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
the Senior Loans shall not have been paid in full, such amount shall be deemed
to have been paid to such Guarantor for the benefit of, and held in trust for
the benefit of, the Lenders, and shall forthwith be paid to the Collateral Agent
for the benefit of such Lenders to be credited and applied upon the Senior
Loans, whether matured or unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section 9.6 is knowingly made in contemplation of
such benefits.
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9.7 EVIDENCE OF GUARANTEE
To evidence their guarantees to the Lenders set forth in this
Section 9, each of the Guarantors hereby agrees to execute the notation of
Guarantee in substantially the form included in EXHIBIT VI. Each such
notation of Guarantee shall be signed on behalf of each Guarantor by two
Officers, or an Officer and an Assistant Secretary or one Officer shall sign and
one Officer or an Assistant Secretary (each of whom shall, in each case, have
been duly authorized by all requisite corporate actions) shall attest to such
notation of Guarantee.
9.8 WAIVER OF STAY, EXTENSION OR USURY LAWS
Each Guarantor covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, 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 such Guarantor from
performing its Guarantee as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Agreement; and (to the extent that it may lawfully do so) each Guarantor
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 Collateral Agent, but will suffer and permit the execution of
every such power as though no such Law had been enacted.
SECTION 10 MISCELLANEOUS
10.1 [Reserved]
10.2 PARTICIPATIONS IN AND ASSIGNMENTS OR
SYNDICATION OF THE SENIOR LOAN AND NOTE
A. The Lenders shall have the right at any time to participate
out, sell, assign or syndicate all or any portion of a Note held by any of them
or the Senior Loan Commitment in an aggregate amount of not less than $500,000
(or all of such Lender's Note or Senior Loan Commitment, if less) to any
Eligible Assignee. In the case of any sale, transfer or negotiation of all or
part of the Note or the Senior Loan Commitment authorized under this Section
10.2A, the assignee, transferee or recipient shall become a party to this
Agreement as a Lender by execution of an assignment and assumption agreement;
PROVIDED, HOWEVER, that (i) at such time Section 2.1A shall be deemed
modified to
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reflect the Senior Loan Commitment of such new Lender and of any existing
Lenders and (ii) upon surrender of the Note(s), new Note(s) will be issued, at
the Borrower's expense, to such new Lender and to the assigning Lender, such new
Note(s) to be in conformity with the requirements of Section 2.1D (with
appropriate modifications) to the extent needed to reflect the revised Senior
Loan Commitment; PROVIDED, FURTHER, HOWEVER, that such transfer or
assignment will not be effective until recorded by the Borrower on the Register
pursuant to Section 5.11. To the extent of any assignment pursuant to this
Section 10.2A, the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Senior Loan Commitment, and the assignee,
transferee or recipient shall have, to the extent of such sale, assignment,
transfer or negotiation, the same rights, benefits and obligations (including
the rights and obligations of a Lender in Section 10.19) as it would if it were
a Lender with respect to such Note(s) or Senior Loan Commitment, including,
without limitation, the right to approve or disapprove actions that, in
accordance with the terms hereof, require the approval of the Lender. At the
time of each assignment pursuant to this Section 10.2A to an Eligible Assignee
that is not already a Lender hereunder and that is not a United States Person
(as such term is defined in Section 7701(a)(30) of the Code) for Federal income
tax purposes, the respective Eligible Assignee shall provide to the Borrower the
appropriate Internal Revenue Service Forms described in Section 10.2E.
B. The Lender may grant participations in all or any part of the
Note(s) or the Senior Loan Commitment in an aggregate amount of not less than
$500,000 to any Eligible Assignee.
C. The Company shall, at its own cost and expense, provide such
certificates, acknowledgments and further assurances in respect of this
Agreement and the Senior Loan as any Lender may reasonably require in connection
with any participation, transfer or assignment pursuant to this Section 10.2.
D. Nothing in this Agreement shall prevent or prohibit a Lender
from pledging its Senior Loan and any Note hereunder to a Federal Reserve Bank
in support of borrowings made by such Lender from such Federal Reserve Bank.
E. No Obligor may assign its respective rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders.
F. A Lender may furnish any information concerning the Borrower
or any of its Subsidiaries in the possession of such
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Lender from time to time to assignees and participants (including prospective
assignees and participants) subject, however, to the provisions of Section
10.21. In addition, any Lender may furnish any information concerning any
Obligor or any of its affiliates in such Lender's possession to any Affiliate of
such Lender (it being understood such Affiliate shall be bound by the provisions
of Section 10.21). The Obligors shall assist any Lender in effectuating any
assignment or participation pursuant to this Section 10.2 (including during
syndication) in whatever manner such Lender reasonably deems necessary,
including the participation in meetings with prospective transferees.
G. Anything in this Section 10.2 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Senior Loan held by it
hereunder to any Obligor or any of its Affiliates or Subsidiaries without the
prior written consent of each Lender.
10.3 EXPENSES
Whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of the Senior Loan Documents and
all the reasonable costs of furnishing all opinions by counsel for the Borrower
(including without limitation any opinions reasonably requested by the Lenders
as to any legal matters arising hereunder), and of the Borrower's performance of
and compliance with all agreements and conditions contained herein on its part
to be performed or complied with; (ii) the reasonable fees, expenses and
disbursements of special counsel to the Lenders in connection with the
negotiation, preparation, execution and administration of the Senior Loan
Documents and the Senior Loan hereunder, and any amendments, modifications and
waivers hereto or thereto and consents to departures from the terms hereof and
thereof (whether or not effective); (iii) after the occurrence and during the
continuance of an Event of Default, all reasonable costs and expenses (including
actual and reasonable attorneys fees and costs of settlement) incurred by the
Lenders or the Collateral Agent in enforcing any Obligations of or in collecting
any payments due from the Borrower or under the Note by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings and (iv) to pay or reimburse each of
the Lenders and the Collateral Agent for all reasonable costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection
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of any security interest contemplated by any Senior Loan Document or any other
document referred to therein.
10.4 INDEMNITY
In addition to the payment of expenses pursuant to Section 10.3,
whether or not the transactions contemplated hereby shall be consummated, the
Borrower agrees to indemnify, pay and hold each of the Collateral Agent, the
Lenders and any holder of any of the Notes, and each of their respective
officers, directors, partners, employees, agents, representatives and control
persons (collectively called the "INDEMNITEES"), harmless from, and that no
Indemnitee will have any liability for, and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits
and claims and reasonable costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated as a party thereto), that may
be suffered by, imposed on, incurred by, or asserted against that Indemnitee, in
any manner resulting from, connected with, in respect of, relating to or arising
out of this Agreement, the other Senior Loan Documents, the Commitment Letter,
the Lenders' agreements to make the Senior Loan, the use or intended use of any
of the proceeds of the Senior Loan hereunder, any breach of any Obligor of any
representation, warranty, covenant or other agreement contained in any of the
Senior Loan Documents, the use or proposed use of any of the Senior Loans or the
use of any collateral security for the Senior Loans (including the exercise by
the Collateral Agent or any Lender of the rights and remedies or any power of
attorney with respect thereto and any action or inaction in respect thereof)
(the "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER, that the Company shall
have no obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities to the extent such liabilities are finally judicially determined to
have resulted from the gross negligence or willful misconduct of that
Indemnitee. Without limiting the generality of the foregoing, the Obligors,
jointly and severally, will (x) indemnify the Collateral Agent for any payments
that the Collateral Agent is required to make under any indemnity issued to any
Lender referred to in Section 4.01(c) of the Security Agreement, or to any bank
referred to in Section 4.02 of the Security Agreement to which remittances in
respect of Accounts, as defined therein, are to be made and (y) indemnify each
Creditor and each other Indemnitee from, and hold each Creditor harmless
against, any Losses described in the preceding sentence
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(but excluding, as provided in the preceding sentence, any Loss to the extent
resulting from the gross negligence or bad faith of such Indemnitee) arising
under any Environmental Law as a result of (a) the past, present or future
operations of the Borrower or any Subsidiary (or any predecessor in interest to
the Borrower or any Subsidiary), (b) the past, present or future condition of
any site or facility owned, operated or leased at any time by the Borrower or
any Subsidiary (or any such predecessor in interest), or (c) any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period when any Creditor shall be in possession of any such site or
facility following the exercise by such Creditor of any of its rights and
remedies hereunder or under any of the Security Documents.
To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any Law or public policy, the Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable Law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
10.5 SETOFF
In addition to any rights now or hereafter granted under applicable
Law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default, the Lenders, the Collateral
Agent and any subsequent holder of any Note is hereby authorized by each Obligor
at any time or from time to time, without notice to any Obligor, or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured but not including trust accounts or any other accounts held
for the benefit of another Person) and any other Indebtedness at any time held
or owing by such Person or any such subsequent holder to or for the credit or
the account of such Obligor against and on account of the obligations and
liabilities of such Obligor to such Person or such subsequent holder under this
Agreement and the Note(s), including, but not limited to, all claims of any
nature or description arising out of or connected with this Agreement or any
Note, irrespective of whether or not (a) such Person or such subsequent holder
shall have made any demand hereunder or (b) such Person or such subsequent
holder shall have declared the principal of or the
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interest on its portion of the Senior Loan and its Note(s) and other amounts due
hereunder to be due and payable as permitted by Section 7 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
10.6 AMENDMENTS AND WAIVERS
No amendment, modification, termination or waiver of any term or
provision of this Agreement, of the Notes or of the Security Agreement shall in
any event be effective of without the prior written concurrence of the Borrower
and the Required Lenders; PROVIDED, HOWEVER, that without the prior written
consent of each Lender affected, an amendment, modification, termination or
waiver of this Agreement, any Note, the Security Agreement or consent to
departure from a term or provision hereof or thereof may not: (i) reduce the
principal amount of Notes whose holders must consent to any such amendment,
modification, termination, waiver or consent; (ii) reduce the rate of or extend
the time for payment of principal or interest on any Note; (iii) reduce the
principal amount of any Note; (iv) make any Note payable in money other than
that stated in the Note; (v) make any change in Section 2.4A(iv) or in the
definition of Change of Control or waive any Event of Default in the Company's
performance of its obligations thereunder or make any change in the last
paragraph of Section 7, Section 5.12, Section 10.4, Section 10.5 or in this
Section 10.6; (vi) reduce the rate or extend the time of payment of fees or
other compensation payable to any Lender hereunder; (vii) increase (it being
understood that assignments of Senior Loan Commitments effected in accordance
with this Agreement are not within the ambit of this clause) or extend the final
maturity of any of the Senior Loan Commitments (it being understood that any
waiver or modification of any condition precedent, covenant, Event of Default or
Potential Event of Default shall not constitute a change in the terms of any
Senior Loan Commitment of any Lender) or extend the time or waive any
requirement for the reduction or termination of any of the Senior Loan
Commitments; (viii) modify the definition of the term "Required Lenders"; (ix)
release any Guarantor from its obligations under Section 9 (unless permitted by
this Agreement); (x) alter any provision of this Agreement or any other Senior
Loan Document requiring the consent of all Lenders; (xi) consent to the
assignment or transfer by any Obligor of any of its rights and obligations under
any Senior Loan Document; or (xii) release all or substantially all the
Collateral or terminate the Lien under any Senior Loan Document in respect of
all or substantially all the Collateral (except as permitted by the Security
Agreement or this Agreement); PROVIDED, FURTHER, HOWEVER, that without the
consent of each Lender, no such amendment, modification,
<PAGE>
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termination or waiver may amend, modify, terminate or waive any provision of
Section 8 as the same applies to the Collateral Agent or any other provision of
this Agreement as it relates to the rights or obligations of the Collateral
Agent; PROVIDED, FURTHER, STILL, HOWEVER, that no consent of any Lender
is needed to add any future Subsidiary as a Guarantor pursuant to Section 6.18
or for any Obligor to pledge Additional Collateral pursuant to Section 6.24.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on an
Obligor in any case shall entitle an Obligor to any further notice or demand in
similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.6 shall be binding
upon each holder of the Note at the time outstanding, each further holder of the
Note and, if signed by the Borrower, on the Borrower and each other Obligor. In
the case of any waiver effected in accordance with this Section 10.6, the
Obligors and the Creditors shall be restored to their former position and rights
under each Senior Loan Document, and any Event of Default or Potential Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Event of Default or Potential
Event of Default, or impair any right consequent thereon.
10.7 INDEPENDENCE OF COVENANTS
All covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
10.8 ENTIRETY
The Senior Loan Documents embody the entire agreement of the parties
and supersede all prior agreements and understandings, if any, relating to the
subject matter hereof and thereof.
10.9 NOTICES
Unless otherwise provided herein, any notice or other communications
herein required or permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by mail and shall be deemed to
have been given when delivered in person, upon receipt of telecopy or telex
against
<PAGE>
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receipt of answer back or four Business Days after depositing it in the mail,
registered or certified, with postage prepaid and properly addressed;
PROVIDED, HOWEVER, that notices shall not be effective until received. For
the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Section 10.9) shall be set forth
under each party's name on the signature pages hereto.
10.10 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS
A. All agreements, representations and warranties made herein
shall survive the execution and delivery of this Agreement and the Commitment
Letter, the making of the Senior Loan hereunder and the execution and delivery
of the Note and, notwithstanding the making of the Senior Loan, the execution
and delivery of the Note or any investigation made by or on behalf of any party,
shall continue in full force and effect. The closing of the transactions herein
contemplated shall not prejudice any right of one party against any other party
in respect of anything done or omitted hereunder or in respect of any right to
damages or other remedies.
B. Notwithstanding anything in this Agreement or implied by Law
to the contrary, the agreements of the Obligors set forth in Sections 10.3,
10.4, 10.14, 10.15, 10.17, 10.19 and 10.22 shall survive the payment of the
Senior Loan and the Note or Notes, as the case may be, and the termination of
this Agreement.
10.11 Failure or Indulgence Not Waiver;
REMEDIES CUMULATIVE
No failure or delay on the part of the Collateral Agent, the Lenders
or any holder of any Note in the exercise of any power, right or privilege
hereunder, under the Notes or any other Senior Loan Document shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies existing under this
Agreement or, each Note and each other Senior Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
10.12 SEVERABILITY
In case any provision in or obligation under this Agreement or any
Note shall be invalid, illegal or unenforceable
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in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.13 HEADINGS
Section and Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.14 APPLICABLE LAW
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
10.15 SUCCESSORS AND ASSIGNS; SUBSEQUENT
HOLDERS OF NOTES
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lender. The terms and provisions
of this Agreement shall inure to the benefit of any assignee or transferee of
any Note pursuant to Section 10.2A, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. In determining whether the holders
of a sufficient aggregate principal amount of the Senior Loan shall have
consented to any action under this Agreement, any amount of the Senior Loans
owned or held by the Borrower or any of its respective Affiliates shall be
disregarded.
10.16 COUNTERPARTS; EFFECTIVENESS
This Agreement and any amendments, waivers, consents or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto, and delivery
thereof to counsel for the Lenders or, in the case of the Lenders, written telex
or facsimile notice or telephonic
<PAGE>
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notification (confirmed in writing) of such execution and delivery.
10.17 CONSENT TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL; ETC.
A. Any legal action or proceeding with respect to this Agreement
or the Note may be brought in the courts of the State of New York or of the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, each of the parties to this Agreement hereby
irrevocably accepts for itself and in respect of its respective property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
of the parties to this Agreement hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such party, and agrees not to plead
or claim, in any legal action or proceeding with respect to this Agreement or
the Note brought in any of the aforesaid courts, that any such court lacks
jurisdiction over such party. Each of the parties to this Agreement irrevocably
consents to the service of process in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such party, at its respective address for notices pursuant to Section 10.9, such
service to become effective 30 days after such mailing. To the extent permitted
by Law, each of the parties to this Agreement hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
the Note that service of process was in any way invalid or ineffective. Nothing
herein shall affect the right of any party to this Agreement to serve process in
any other manner permitted by Law or to commence legal proceedings or otherwise
proceed against any party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably
waives any objection that it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in connection with
this Agreement or the Note brought in the courts referred to in clause A above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
C. To the extent permitted by applicable law, each of the parties
to this Agreement hereby irrevocably waives all right to a trial by jury in any
action, proceeding or counterclaim arising out of or relating to this Agreement,
any other Senior
<PAGE>
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Loan Document or the Note or the transactions contemplated hereby or thereby.
D. Each Obligor, the Collateral Agent and each Lender waives, to
the maximum extent not prohibited by Law, any right it may have to claim or
recover any special, exemplary or punitive damages in any proceeding in
connection with, arising out of, or in any way related to the transactions
contemplated herein or in any other Senior Loan Document.
10.18 SHARING OF BENEFITS
Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Senior Loan Documents, or
otherwise) that is applicable to the payment of the principal of, or interest
on, the Senior Loan of a sum that with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the Borrower to such Lenders in such amount as shall result in a
proportional participation by all of the Lenders in such amount; PROVIDED,
HOWEVER, that, if all or any portion of such excess amount is thereafter
recovered from such Lender, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
10.19 NET PAYMENTS
A. Except as provided in this Section 10.19, all payments by any
Obligor to each Lender or any Collateral Agent under this Agreement and any
other Senior Loan Document shall be made free and clear of, and without
deduction or withholding for, any Covered Taxes with respect to such payments.
In addition, the Borrower agrees to pay any current or future stamp, intangible
or documentary taxes or any other excise or property taxes, charges or similar
levies (including mortgage recording taxes and similar fees but not including
any taxes imposed on or measured by net income or net profits) that arise from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement, or any other document in connection with this Agreement or any Senior
Loan Document (all such taxes, charges
<PAGE>
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and levies are hereinafter referred to as, collectively, "OTHER TAXES").
B. If any Obligor shall be required by law to deduct or withhold
any Covered Taxes from or in respect of any sum payable hereunder to any Lender
or any Collateral Agent, then except as provided in this Section 10.19: (i) the
sum payable shall be increased as necessary so that after making all such
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section 10.19) such Lender or
such Collateral Agent, as the case may be, receives an amount equal to the sum
it would have received had no such deductions or withholdings been made; (ii)
such Obligor shall make such deductions and withholdings; and (iii) such Obligor
shall pay the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law. Within 30 days after the date of
any payment by any Obligor of Covered Taxes or Other Taxes, such Obligor shall
furnish to the Lenders the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment reasonably satisfactory to the
Lenders.
C. The Company agrees to indemnify and hold harmless each Lender
and each Collateral Agent for (i) the full amount of all Other Taxes and (ii)
the full amount of Covered Taxes (including any Covered Taxes imposed on amounts
payable under this Section) which arise from any payment made under this
Agreement or any other Senior Loan Document and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Covered Taxes were correctly or legally
asserted. A certificate as to the amount of any such required indemnification
payment determined on a reasonable basis by the Lender or such Collateral Agent
shall be final, conclusive and binding for all purposes. Payment under this
indemnification shall be made within 30 days after the date such Lender or such
Collateral Agent makes written demand therefor by the delivery of such
certificate.
D. If a Lender or Collateral Agent shall become aware that it is
entitled to receive a refund in respect of Taxes paid by any Obligor pursuant to
paragraph B. or C. of this Section 10.19, it shall promptly notify such Obligor
of the availability of such refund and the anticipated amount of all
out-of-pocket expenses involved in applying for such refund and shall, within 30
days after receipt of a request by such Obligor and payment in advance by such
Obligor of such anticipated expenses, apply for such refund. If a Lender or
Collateral Agent receives a refund or credit of Taxes paid by any Obligor
pursuant to paragraph B.
<PAGE>
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or C. of this Section 10.19, then such Lender or Collateral Agent shall promptly
repay such Obligor such refund or credit net of all out-of-pocket expenses
related thereto; PROVIDED, HOWEVER, that if, due to any adjustment of such
Taxes, such Lender or such Collateral Agent loses the benefit of all or any
portion of such refund or credit, the Borrower will indemnify and hold harmless
such Lender or such Collateral Agent in accordance with this subsection.
E. If any Obligor is required to pay additional amounts to any
lender or any Collateral Agent behalf of any Lender pursuant to this Section
10.19, then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) take appropriate action so as to eliminate or reduce
any such additional payment by such Obligor which may thereafter accrue, if such
action in the sole discretion of such Lender is not otherwise disadvantageous to
such Lender.
F. (i) Each Lender which is not a U.S. Person agrees that:
(a) it shall, no later than the Closing Date (or, in the case of a
Lender which becomes a party hereto after the Closing Date, the date upon
which such Lender becomes a party hereto) notify the Borrower that it is
not a U.S. Person and deliver to the Borrower such certificates, documents
or other evidence as required by the Code or Treasury Regulations issued
pursuant thereto, including (x) two accurate and complete signed originals
of Internal Revenue Service Form 4224 or any successor thereto ("FORM
4224"), or two accurate and complete signed originals of Internal Revenue
Service Form 1001 or any successor thereto ("FORM 1001"), as
appropriate, or (y) if such Lender is not a "bank" within the meaning of
Section 881(c)(3)(a) of the Code and cannot deliver either Form 1001 or
Form 4224 pursuant to clause (x) above, a certificate substantially in the
form of EXHIBIT I (any such certificate, a "SECTION 10.19
CERTIFICATE") and, in the case of either (x) or (y), two accurate and
complete original signed copies of Internal Revenue Service Form W-8 or
any successor thereto ("FORM W-8") or Internal Revenue Service Form W-9
or any successor thereto ("FORM W-9"), whichever is applicable; and
(b) it shall, on or before the date that any such form or any
other required document or certificate expires or becomes obsolete or
immediately after the occurrence of any event requiring a change in the
most recent Form 4224, Form 1001, Form W-8, Form W-9 or Section 10.19
Certificate
<PAGE>
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previously delivered by such Lender or change in or the delivery of any
other required documents or certificates, deliver to the Borrower two
accurate and complete original signed copies of the appropriate documents
or certificates in replacement of or in addition to the forms previously
delivered by such Lender.
(ii) Each Lender that is a U.S. Person shall provide two properly
completed and duly executed copies of Form W-9 at the times specified for
delivery of forms under paragraph F.(i) of this subsection.
(iii) Each Lender shall, unless unable to do so by virtue of a
Change in Law occurring after the date such Lender becomes a party hereto,
certify (x) in the case of a Form 1001 or 4224, that it is entitled to receive
payments under this Agreement without deduction of any United States Federal
income withholding tax, (y) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from United States backup withholding tax and (z) in
the case of any other form required to be delivered pursuant to this Section
10.19, that it is entitled to receive payments under this Agreement without
deduction of any United States Federal income withholding tax or is exempt from
backup withholding tax, according to the requirements of such form.
Notwithstanding the foregoing provisions of this subsection F. or any other
provision of this Section 10.19, no Lender shall be required to deliver any form
pursuant to this Section 10.19 if such Lender is not legally able to do so by
virtue of a Change in Law occurring after the date such Lender becomes a party
hereto.
(iv) If, as the result of a Change in Law occurring after the date
a Lender becomes a party hereto, a Lender is unable to provide to the Borrower a
form or document otherwise required to be delivered by it pursuant to Section
10.19 F(i), (ii) and (iii) hereunder, the Borrower may, at its option, prepay
the Senior Loans held by such Lender.
10.20 WAIVER OF STAY, EXTENSION OR USURY LAWS
The Borrower covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, 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 it from paying all or any
portion of the principal of or interest on the Senior Loan as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the
<PAGE>
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performance of this Agreement; and (to the extent that it may lawfully do so)
the Borrower 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 Collateral Agent, but will suffer and permit the
execution of every such power as though no such Law had been enacted.
10.21 CONFIDENTIALITY
The Lenders shall hold all non-public information obtained pursuant
to the requirements of or in connection with this Agreement that has been
identified as confidential by the Borrower in accordance with the Lenders'
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by the Borrower that (i) in any event each Lender may make disclosures
reasonably required by any BONA FIDE assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of the
Senior Loan or any participation therein or as required or requested by any
Governmental Authority or representative thereof or pursuant to legal process;
PROVIDED, HOWEVER, that unless specifically prohibited by applicable Law or
court order, each Lender shall notify the Borrower of any request by any
Governmental Authority or representative thereof (other than any such request in
connection with any examination of the financial condition of the Lender by such
Governmental Authority) for disclosure of any such non-public information prior
to disclosure of such information and (ii) each Lender may share with any of its
affiliates, and such affiliates may share with the Lender, any information
related to the Borrower, or the Borrower's affiliates (including information
relating to creditworthiness); PROVIDED, FURTHER, HOWEVER, that in no
event shall any Lender be obligated or required to return any materials
furnished by the Borrower. In connection with any sales, assignments or
transfers referred to in Section 10.2A, the Lender shall obtain agreements from
the purchasers, assignees or transferees, as the case may be, reasonably
satisfactory to the Company, that such parties will comply with this Section
10.21.
10.22 REQUIREMENTS OF LAW
A. In the event that any change in Law occurring after the date
that any lender becomes a Lender party to this Agreement with respect to such
Lender shall, in the opinion of such Lender, require that the Senior Loan
Commitment of such Lender be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be
<PAGE>
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maintained by such Lender or any corporation controlling such Lender, and such
change in Law shall have the effect of reducing the rate of return on such
Lender's or such corporation's capital, as the case may be, as a consequence of
such Lender's obligations hereunder to a level below that which such Lender or
such corporation, as the case may be, could have achieved but for such change in
Law (taking into account such Lender's or such corporation's policies, as the
case may be, with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time following notice by such Lender to
the Borrower of such change in Law as provided in paragraph (b) of this Section
10.22, within 15 days after demand by such Lender, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation, as the case may be, for such reduction.
B. The Borrower shall not be required to make any payments to any
Lender for any additional amounts pursuant to this Section 10.22B unless such
Lender has given written notice to the Borrower of its intent to request such
payments prior to or within 60 days after the date on which such Lender became
entitled to claim such amounts.
10.23 ACKNOWLEDGMENTS
The Obligors hereby acknowledge that:
A. each of them has been advised by counsel in connection with
the negotiation, execution and delivery of the Senior Loan Documents;
B. no Creditor has any fiduciary relationships to any Obligor and
the relationship between the Creditors on the one hand, and the Obligors,
on the other hand, is solely that of debtor and creditor, and
C. no Joint Venture exists among the Creditors or among the
Obligors and the Creditors.
10.24 ROLE OF SPECIAL COUNSEL
The role of Cahill Gordon & Reindel, special counsel to the Lenders,
has been limited to functioning on the Senior Loan Documents and such firm has
not performed a due diligence investigation with respect to the Company, any
Subsidiary or their respective affairs.
<PAGE>
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10.25 JOINT AND SEVERAL LIABILITY
Except as otherwise expressly provided herein, the Obligors shall be
jointly and severally liable for the performance of all Obligations and
covenants under this Agreement and the Notes.
10.26 COLLATERAL AGENT THIRD PARTY BENEFICIARY
Notwithstanding any provision herein to the contrary, the Collateral
Agent is an express third party beneficiary hereof of all provisions herein
relating to the Collateral Agent.
[Signature Pages Follow]
<PAGE>
S-1
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BORROWER:
ADVANCED RADIO TELECOM CORP.
By:
----------------------------------------
Name:
Title:
Notice Address:
500 108th Avenue, N.E.
Suite 2600
Bellevue, Washington 98004
Attention: Thomas Grina
Telephone: (206) 688-8700
Telecopy: (206) 688-0703
GUARANTORS:
ART LICENSING CORP.
By:
----------------------------------------
Name:
Title:
Notice Address:
500 108th Avenue, N.E.
Suite 2600
Bellevue, Washington 98004
Attention: Thomas Grina
Telephone: (206) 688-8700
Telecopy: (206) 688-0703
<PAGE>
S-2
LENDERS:
CIBC WG ARGOSY MERCHANT FUND 2,
L.L.C.
Commitment: $20,000,000
By:
-----------------------------------------
Name:
Title:
Notice Address:
CIBC Wood Gundy Securities Corp.
425 Lexington Avenue
3rd Floor
New York, New York 10013
Attention:
Telephone: (212) 885-4485
Telecopy: (212) 885-4998
<PAGE>
S-3
CONTINENTAL CASUALTY COMPANY
Commitment: $18,000,000
By:
-----------------------------------------
Name: Richard W. Dubberke
Title: Vice President
Notice Address:
Continental Casualty Company
c/o Loews Corporation
667 Madison Avenue
New York, New York 10021-8087
Attention: High Yield
7th Floor
Telephone: (212) 545-3004
Telecopy: (212) 935-6797
<PAGE>
S-4
Notices for Continental Casualty Company
LEGAL NOTICES AND FINANCIAL INFORMATION:
Continental Casualty Company
c/o Loews Corporation
667 Madison Avenue
New York, NY 10021-8087
Attention: High Yield
7th Floor
Draws and Interest Rate Changes on Term Loans,
REVOLVING LOANS AND LETTERS OF CREDIT:
Continental Casualty Company
c/o Loews Corporation
667 Madison Avenue
New York, NY 10021-8087
Attention: Diane Rogers
7th Floor
Telephone: (212) 545-3004
Fax (212) 935-6797
PAYMENT INSTRUCTIONS:
First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
ABA No. 071000013
Acct.: No. 10-82825
Attention: Mike Long
Reference:
<PAGE>
S-5
THE PALLADIAN GROUP, L.P.
Commitment: $6,000,000
By:
-----------------------------------------
Name:
Title:
Notice Address:
----------------------------------------------
----------------------------------------------
----------------------------------------------
Attention:
Telephone: (212)
Telecopy: (212)
<PAGE>
S-6
VALUE LINE AGGRESSIVE INCOME TRUST
Commitment: $1,000,000
By:
-----------------------------------------
Name: John W. Risner
Title: V.P. Portfolio Manager
Notice Address:
Value Line Convertible Fund
220 East 42nd Street
6th Floor
New York, New York 10017
Attention: John Risner
Telephone: (212) 907-1523
Telecopy: (212) 682-7271
<PAGE>
S-7
WESTERN ASSET MANAGEMENT
Commitment: $5,000,000
By:
-----------------------------------------
Name:
Title:
Notice Address:
Attention:
Telephone: (212)
Telecopy: (212)
<PAGE>
EXHIBIT I
Each Note that is issued with original issue discount within the
meaning of Section 1273(a) of the Internal Revenue Code of 1986, as amended,
shall bear the following legend on the face thereof:
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT WITHIN THE MEANING OF
SECTION 1273(a) OF THE INTERNAL REVENUE CODE OF 1986. THE ISSUE PRICE IS
$[ ] FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT. THE ORIGINAL ISSUE
DISCOUNT IS $[ ] FOR EACH $1,000 OF STATED PRINCIPAL AMOUNT. THE
ISSUE DATE IS [ ], 1996. THE YIELD TO MATURITY IS [ ]%
COMPOUNDED QUARTERLY.
<PAGE>
[FORM OF SENIOR NOTE]
ADVANCED RADIO TELECOM CORP.
SENIOR SECURED PROMISSORY NOTE
New York, New York
$__________ October [], 1996
FOR VALUE RECEIVED, Advanced Radio Telecom Corp., a Delaware
corporation (the "Company") promises to pay to the order of
("Payee"), on October [ ], 1998, the principal amount of
Dollars ($ ).
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and at the
times which shall be determined in accordance with the provisions of the Senior
Secured Credit Agreement dated as of October [ ], 1996, as the same may at any
time be amended, modified or supplemented and in effect (the "Credit Agreement")
between the Company, the Guarantors named therein, the Lenders named therein,
and [ ], as Agent.
The Company may, other than upon any prepayment, repayment,
repurchase pursuant to Section 2.4A(iv) of the Credit Agreement or maturity of
the Senior Loan, pay all or a portion of the interest payable on any interest
payment date by issuance of additional Notes (valued at 100% of the face amount
thereof) in an aggregate principal amount equal to the amount of such interest
then owing. Accrued interest payable on prepayment, repayment, repurchase
pursuant to Section 2.4A(iv) of the Credit Agreement or maturity of the Senior
Loan shall be paid solely in cash.
This Note is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Senior Loan evidenced
hereby was made and is to be repaid. This Note is also entitled to the benefits
of the Security Agreement and the Guarantees. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds to
Payee at the [ ] located at
<PAGE>
-3-
[ ], or at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement. Each of Payee and
any subsequent holder of this Note agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of all
principal payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a notation of
any payment made on this Note shall not limit or otherwise affect the obligation
of the Company hereunder with respect to payments of principal or interest on
this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4A(ii) of the Credit Agreement and prepayment at the option of the
Company as provided in subsection 2.4A(i) of the Credit Agreement.
The obligations of the Company under this Note are guaranteed, on a
senior basis, by the Guarantors as provided in Section 9 of the Credit
Agreement. Attached hereto are endorsements of the Guarantors evidencing the
Guarantees.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
<PAGE>
-4-
The Company promises to pay all reasonable costs and expenses,
including all reasonable attorneys' fees, all as provided in Section 10.3 of the
Credit Agreement, actually incurred in the collection and enforcement of this
Note. The Company and endorsers of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officers, as of the day and year and at the
place first above written.
ADVANCED RADIO TELECOM CORP.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
<PAGE>
TRANSACTIONS ON NOTE
Amount of Outstanding
Principal Principal
Paid Balance Notation
Date This Date This Date Made By
- ---- --------- ----------- --------
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have this Note purchased by the Borrower
pursuant to Section 2.4A(iv) of the Credit Agreement (which relates to a Change
of Control), check the box: / /
If you wish to elect to have only part of this Note purchased by the
Borrower pursuant to Section 2.4A(iv) of the Credit Agreement, state the amount:
$[ ]
Date: Your Signature:
---------------------- -------------------------------
(Sign exactly as
your name appears
on the other side
of this Note)
Signature Guarantee:
-----------------------------------------------------------
<PAGE>
[GUARANTEE ENDORSEMENTS TO BE ATTACHED]
<PAGE>
EXHIBIT VIII
- --------------------------------------------------------------------------------
WARRANT AGREEMENT
Between
ADVANCED RADIO TELECOM CORP.
and
[ ]
as
Warrant Agent
_________________________
Dated as of [ ], 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Appointment of Warrant Agent..................................... 1
2. Warrant Certificates............................................. 1
3. Execution of Warrant Certificates................................ 2
4. Registration and Countersignature................................ 2
5. Transfer and Exchange of Warrants................................ 3
6. Registration of Transfers and Exchanges.......................... 4
7. Terms of Warrants; Exercise of Warrants.......................... 6
8. Payment of Taxes................................................. 9
9. Mutilated or Missing Warrant Certificates........................ 9
10. Reservation of Warrant Shares.................................... 10
11. Obtaining Stock Exchange Listings................................ 11
12. Adjustment of Number of Warrant Shares Issuable.................. 11
13. Fractional Interests............................................. 22
14. Notices to Warrant Holders....................................... 23
15. Notices to the Company and Warrant Agent......................... 25
16. Supplements and Amendments....................................... 25
17. Concerning the Warrant Agent..................................... 26
18. Change of Warrant Agent.......................................... 29
19. Identity of Transfer Agent....................................... 29
20. Registration Rights.............................................. 30
21. Successors....................................................... 30
22. Termination...................................................... 30
23. Governing Law.................................................... 30
24. Benefits of This Agreement....................................... 30
25. Counterparts..................................................... 30
26. Headings......................................................... 30
Exhibit A. Form of Warrant Certificate.......................... A-1
Exhibit B. Certificate.......................................... B-2
Exhibit C. Legends.............................................. C-1
Exhibit D. Transferee Letter.................................... D-1
-i-
<PAGE>
WARRANT AGREEMENT (the "AGREEMENT"), dated as of [ ], 1996,
between Advanced Radio Telecom Corp., a Delaware corporation (together with any
successors and assigns, the "COMPANY"), and [ ], as
Warrant Agent (the "WARRANT AGENT").
WHEREAS, pursuant to a certain Senior Secured Credit Agreement,
dated as of November [ ], 1996 (as amended, amended and restated, supplemented
or otherwise modified from time to time, the "CREDIT AGREEMENT"; capitalized
terms used herein and not defined shall have the meanings assigned to them in
the Credit Agreement), among the Company, the Guarantors named therein and the
Lenders named therein, the Lenders have agreed to make to or for the account of
the Borrower a senior secured bridge loan up to an aggregate principal amount of
$50,000,000;
WHEREAS, it is a condition to the obligations of the Lenders to make
the Senior Loans under the Credit Agreement that the Company execute and deliver
this Agreement;
WHEREAS, the Company may from time to time issue to the Lenders
warrants (the "WARRANTS") to purchase shares of common stock, par value $0.001
per share, of the Company (the "COMMON STOCK," and the shares of Common Stock
issuable upon exercise of the Warrants being referred to herein as the "WARRANT
SHARES") pursuant to the terms of the Credit Agreement; and
WHEREAS, the holders of Warrants and Warrant Shares shall, from time
to time, have certain rights and obligations with respect thereto as set forth
in the Second Restated and Amended Registration Rights Agreement, dated as of
July 3, 1996, among the Company and the parties named therein (as amended and in
effect from time to time in accordance with its terms, the "REGISTRATION RIGHTS
AGREEMENT");
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. WARRANT CERTIFICATES. The Warrants will initially be
issued in registered form as definitive Warrant certificates. Any certificates
(the "WARRANT CERTIFICATES") evidencing the Warrants to be delivered pursuant
to this Agreement shall be substantially in the form set forth in EXHIBIT A
hereto.
SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant
<PAGE>
-2-
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President, Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, a Vice President, Secretary or
Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be countersigned and delivered or
disposed of such person shall have ceased to hold such office. The seal of the
Company may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 4. REGISTRATION AND COUNTERSIGNATURE. The Warrants shall
be numbered and shall be registered on the books of the Company maintained at
the principal office of the Warrant Agent in the Borough of Manhattan, city of
New York (the "WARRANT REGISTER") as they are issued.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, a Vice President, the Secretary or an Assistant Secretary of the
Company, initially countersign and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares
<PAGE>
-3-
referred to above in the first recital hereof and shall thereafter countersign
and deliver Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holders (the "HOLDERS") of the Warrant Certificates as the absolute owners
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone) for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant Agent
shall from time to time, subject to the limitations of Section 6, register the
transfer of any outstanding Warrants upon the records to be maintained by it for
that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Certificates shall make
such request in writing delivered to the Warrant Agent, and shall surrender,
duly endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall countersign
and deliver by certified or first class mail a new Warrant Certificate or
Certificates to the persons entitled thereto. The Warrant Certificates may be
exchanged at the option of the Holder thereof, when surrendered at the office or
agency of the Company maintained for such purpose, which initially will be the
corporate trust office of the Warrant Agent in New York, New York for another
Warrant Certificate, or other Warrant Certificates of different denominations,
of like tenor and representing in the aggregate the right to purchase a like
number of Warrant Shares.
No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that is
imposed in connection with any such exchange or registration of transfer.
<PAGE>
-4-
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF WARRANTS. When Warrants are
presented to the Warrant Agent with a request:
(i) to register the transfer of the Warrants; or
(ii) to exchange such Warrants for an equal number of Warrants of other
authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements under this Agreement are met; PROVIDED, HOWEVER, that
the Warrants presented or surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by
the Holder thereof or by such Holder's attorney, duly authorized in
writing; and
(y) in the case of Warrants (the "RESTRICTED WARRANTS") which
constitute Restricted Securities (as such term is defined in Rule
144(a)(3) of the Securities Act of 1933, as amended (the
"SECURITIES ACT")), such Warrants shall be accompanied, in the
sole discretion of the Company, by the following additional
information and documents, as applicable, however, it being
understood that the Warrant Agent need not determine which clause
(A) through (C) below is applicable:
(A) if such Restricted Warrant is being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such holder to that
effect (in substantially the form of EXHIBIT B hereto); or
(B) if such Restricted Warrant is being transferred pursuant to an
exemption from registration in accordance with Rule 144 under
the Securities Act or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect (in
substantially the form of EXHIBIT B hereto) and an opinion
of counsel reasonably acceptable to the Company and the
Warrant Agent to the effect that such transfer does not
require registration under the Securities Act; or
(C) if such Restricted Warrant is being transferred in
<PAGE>
-5-
reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (in substantially the form of EXHIBIT B hereto) and
an opinion of counsel reasonably acceptable to the Company and
to the Warrant Agent to the effect that such transfer does not
require registration under the Securities Act;
(b) LEGENDS.
(i) Except as permitted by the following paragraph (ii), each Warrant
Certificate evidencing the Warrants (and all Warrants issued in
exchange therefor or substitution thereof) shall bear a legend
substantially as set forth in EXHIBIT C hereto:
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act, the Warrant Agent shall permit the Holder thereof to
exchange such Restricted Warrant for a Warrant that does not bear
the first paragraph of the legend set forth in EXHIBIT C hereto
and rescind any related restriction on the transfer of such Warrant.
(c) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
WARRANTS.
(i) To permit registrations of transfers and exchanges in accordance
with the terms of this Agreement, the Company shall execute, and the
Warrant Agent shall countersign the Warrants.
(ii) All Warrants issued upon any registration, transfer or exchange of
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement as the Warrants
surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute owner
of such Warrant, and neither the Warrant Agent nor the Company shall
be affected by notice to the contrary.
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to
the terms of this Agreement, each Holder shall have the right, which may be
exercised commencing on or after the earlier to
<PAGE>
-6-
occur of (i) 180 days after the Minimum IPO Consummation Date, (ii) September
30, 1997 and (iii) the date of occurrence of a Reorganization (as defined in
Section 12(j) hereof) (the "EXERCISABILITY DATE") and until 5:00 p.m., New
York City time, on [ ], 2006 (the "EXPIRATION DATE"), to receive from
the Company the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as defined below) then in effect for such Warrant
Shares; provided that if in the opinion of counsel to the Company approval of
the Federal Communications Commission (the "FCC") is required before the
Company may issue Warrant Shares upon the exercise of any Warrant, the Company
may defer the issuance of such Warrant Shares until such time as approval of the
FCC is obtained or is no longer required. The Company shall promptly notify in
writing the Warrant Agent of any event which requires it to suspend exercise of
Warrants pursuant to the proviso of the preceding sentence and of the
termination of any such suspension. Subject to the next paragraph of this
Section, each Warrant not exercised prior to the Expiration Date shall become
void and all rights thereunder and all rights in respect thereof under this
Agreement shall cease as of such time. No adjustments as to dividends will be
made upon exercise of the Warrants.
The Company agrees to promptly commence any proceeding before the
FCC required to permit the exercise of the outstanding Warrants and to use its
reasonable efforts to obtain any order of the FCC or similar approval necessary
to permit such exercise and maintain such approval in full force and effect. In
the event that at any time prior to the Expiration Date the exercise of Warrants
shall have been suspended for any period of time, the Expiration Date shall be
extended by such period of time; PROVIDED, that any such extension shall be
for a minimum of 10 Business Days following receipt of notice by the Holders
from the Company of the termination of such suspension.
The exercise price per Warrant (the "EXERCISE PRICE") shall be
$.01. A Warrant may be exercised upon surrender at the office or agency of the
Company maintained for such purpose, which initially will be the corporate trust
office of the Warrant Agent in New York, New York, of the certificate or
certificates evidencing the Warrants to be exercised with the form of election
to purchase on the reverse thereof duly filled in and signed, which signature
shall be guaranteed by a participant in a recognized Signature Guarantee
Medallion Program, and upon payment to the Warrant Agent for the account of the
Company of the Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by certified or official bank check to the order
<PAGE>
-7-
of the Company in New York Clearing House Funds. Notwithstanding the foregoing
sentence, a Warrant may also be exercised solely by the surrender of the
Warrant, and without the payment of the Exercise Price in cash, for such number
of Warrant Shares equal to the product of (1) the number of Warrant Shares for
which such Warrant is exercisable with payment in cash of the Exercise Price as
of the date of exercise and (2) the Cashless Exercise Ratio. For purposes of
this Agreement, the "CASHLESS EXERCISE RATIO" shall equal a fraction, the
numerator of which is the excess of the Current Market Value of the Common Stock
on the date of exercise (calculated as set forth in Section 12(d) hereof) over
the Exercise Price Per Share as of the date of exercise and the denominator of
which is the Current Market Value of the Common Stock on the date of exercise
(calculated as set forth in Section 12(d) hereof). An exercise of a Warrant in
accordance with the immediately preceding sentences is herein called a
"CASHLESS EXERCISE." Upon surrender of a Warrant Certificate representing
more than one Warrant in connection with the holder's option to elect a Cashless
Exercise, the number of Warrant Shares deliverable upon a Cashless Exercise
shall be equal to the number of Warrants that the holder specifies is to be
exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise
Ratio. All provisions of this Agreement shall be applicable with respect to an
exercise of a Warrant Certificate pursuant to a Cashless Exercise for less than
the full number of Warrants represented thereby. "EXERCISE PRICE PER SHARE"
means the Exercise Price divided by the number of Warrant Shares for which a
Warrant is then exercisable (without giving effect to the Cashless Exercise
option). No payment or adjustment shall be made on account of any dividends on
the Warrant Shares issued upon exercise of a Warrant. The Warrant Agent shall
have no obligation under this section to calculate the Cashless Exercise Ratio.
Subject to the provisions of Section 6 hereof, upon such surrender
of Warrants and payment of the Exercise Price, the Company shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 12;
PROVIDED, HOWEVER, that if any consolidation, merger or lease or sale of
assets as an entirety or substantially as an entirety is proposed to be effected
by the Company as described in subsection (j) of Section 12 hereof, or a tender
offer or an exchange offer for shares of Common Stock of the Company shall be
made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall, as soon as possible, but in any event not later
than three days, other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are not open for business ("BUSINESS
DAY") thereafter, issue
<PAGE>
-8-
and cause to be delivered the full number of Warrant Shares issuable upon the
exercise of such Warrants in the manner described in this sentence together with
cash as provided in Section 13. Such certificate or certificates shall be
deemed to have been issued and any person so named therein shall be deemed to
have become a holder of record of such Warrant Shares as of the date of the
surrender of such Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section 7 and of Section 3
hereof, and the Company, whenever required by the Warrant Agent, will promptly
supply the Warrant Agent with Warrant Certificates duly executed on behalf of
the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in a manner consistent with the Warrant
Agent's customary procedure for such disposal and in a manner reasonably
satisfactory to the Company. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by the Holders during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 8. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant Shares
upon the exercise of Warrants; PROVIDED, HOWEVER, that the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any certificates
for Warrant Shares in a name other than that of the registered Holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such
<PAGE>
-9-
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATES. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may in its discretion issue and the Warrant Agent may countersign,
in exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
SECTION 10. RESERVATION OF WARRANT SHARES. The Company will at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the Common
Stock (the "TRANSFER AGENT") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 13. The Company
will furnish such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to Section 14
hereof.
The Company covenants that all Warrant Shares which may
<PAGE>
-10-
be issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof. The Company will take no action
to increase the par value of the Common Stock to an amount in excess of the
Exercise Price, and the Company will not enter into any agreements inconsistent
in any material respect with the rights of Holders hereunder. The Company will
use its reasonable efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.
SECTION 11. OBTAINING STOCK EXCHANGE LISTINGS. In the event
that, at any time during the period in which the Warrants are exercisable, the
Common Stock is not listed on any principal securities or exchanges or markets
within the United States of America, the Company will use its best efforts to
permit the Warrant Shares to be designated PORTAL securities in accordance with
the rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the Private Offerings, Resales and Trading
through Automated Linkages market.
SECTION 12. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. The
number of shares of Common Stock issuable upon the exercise of each Warrant (the
"EXERCISE RATE") is subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 12.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If the Company:
(1) pays or declares a dividend or makes or declares a
distribution on its Common Stock in shares of its Common Stock or other
capital stock of the Company; or
(2) subdivides, combines or reclassifies its outstanding shares of
Common Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such Holder would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after
<PAGE>
-11-
the record date in the case of a dividend or distribution (the "TIME OF
DETERMINATION") and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the board
of directors of the Company shall determine reasonably and in good faith the
allocation of the adjusted Exercise Price between the classes of capital stock.
After such allocation, the exercise privilege and the Exercise Price of each
class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 12.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR CERTAIN ISSUANCES OF COMMON STOCK.
If the Company issues or sells shares of its Common Stock or
distributes any rights, options or warrants to any Person entitling them to
purchase shares of Common Stock, or securities convertible into or exchangeable
for Common Stock, at a price per share less than the Current Market Value at the
Time of Determination, the Exercise Rate shall be adjusted in accordance with
the formula:
E' = E x O + N
---------
O + N X P
-----
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
O = the number of shares of Common Stock outstanding
immediately prior to the Time of Determination for
any such issuance, sale or distribution.
N = the number of additional shares of Common Stock issued,
sold or issuable upon exercise of such rights, options
or warrants.
P = the consideration received in the case of any
<PAGE>
-12-
issuance or sale of Common Stock or rights, options or
warrants inclusive of the exercise price per share of
Common Stock upon exercise of such rights, options or
warrants.
M = the Current Market Value per share of Common Stock on
the Time of Determination for any such issuance, sale
or distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. Notwithstanding the foregoing, the Exercise Rate
shall not be subject to adjustment in connection with (i) the issuance of any
shares of Common Stock upon exercise of any such rights, options or warrants
which have previously been the subject of an adjustment under this Agreement for
which the required adjustment has been made or (ii)(a) the exercise of the
Warrants, (b) any options, warrants or rights to acquire Common Stock currently
outstanding under, or subsequently granted or issued pursuant to, the Company's
Equity Incentive Plan and Directors Plan, as such plans are in existence as of
the date hereof, or other employee or director compensation plans approved by a
majority of the independent directors of the board of directors of the Company,
and (c) any options, warrants or rights to acquire Common Stock which options,
warrants or rights are issued as part of a unit issued to investors consisting
of such options, warrants or rights and debt securities of the Company, which
unit is sold by the Company pursuant to a bona fide public offering registered
under the Securities Act or pursuant to a bona fide transaction to initial
purchasers who intend to immediately redistribute to purchasers such units
pursuant to Rule 144A thereunder, in any case not to exceed options, warrants or
rights exercisable for more than 3,000,000 shares of Common Stock (adjusted for
any subdivision, combination or reclassification of the Common Stock) in the
aggregate, and all such shares of Common Stock issued upon exercise of such
options, warrants or rights. If at the end of the period during which any such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Warrant shall be immediately readjusted to what
it would have been if "N" in the above formula had been the number of shares
actually issued.
<PAGE>
-13-
(c) ADJUSTMENT FOR OTHER DISTRIBUTION.
If the Company distributes to all holders of its Common Stock (i)
capital stock (other than Common Stock) or any evidences of indebtedness of the
Company or any of its subsidiaries, (ii) any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions or
distributions from current or retained earnings other than any Extraordinary
Cash Dividend), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
-----
M - F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date mentioned below
of the capital stock, indebtedness, assets, rights,
options or warrants distributable in respect of one
share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 12.
<PAGE>
-14-
(d) CURRENT MARKET VALUE; OTHER DEFINITIONS.
"CURRENT MARKET VALUE" per share of Common Stock or of any other
security (herein collectively referred to as a "SECURITY") at any date shall
be:
(1) if the Security is not registered under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), (i) the value of
the Security determined in good faith by the board of directors of the
Company and certified in a board resolution, based on the most recently
completed arm's length transaction between the Company and a person other
than an Affiliate of the Company and the closing of which occurs on such
date or shall have occurred within the six months preceding such date or
(ii) if no such transaction shall have occurred on such date or within
such six-month period, the value of the Security most recently determined
as of a date within the six months preceding such date by the board of
directors of the Company if the transaction is for less than $500,000 and
is not with an Affiliate and by an Independent Financial Expert selected
by the Company in all other instances, or
(2) if the Security is registered under the Exchange Act, the
average of the daily closing bid prices for each Business Day during the
period commencing 15 Business Days before such date and ending on the date
one day prior to such date or, if the Security has been registered under
the Exchange Act for less than 15 consecutive Business Days before such
date, then the average of the daily closing bid prices (as defined below)
for all of the Business Days before such date for which daily closing bid
prices are available. If the closing bid price is not determinable for at
least 10 Business Days in such period, the Current Market Value of the
Security shall be determined as if the Security was not registered under
the Exchange Act.
The "CLOSING BID PRICE" for any Security on each Business Day
means: (a) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (b) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last reported sale price
on such day, the average of the closing bid and the asked prices on such day, as
reported by a reputable quotation source designated by the Company or (c) if
neither clause (a) nor (b) is applicable, the average of the reported high bid
and low
<PAGE>
-15-
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City of New York,
customarily published on each Business Day, reasonably designated by the
Company. If there are no such prices on a Business Day, then the market price
shall not be determinable for such Business Day.
"INDEPENDENT FINANCIAL EXPERT" shall mean a nationally recognized
investment banking firm reasonably acceptable to the Warrant Agent (i) that does
not (and whose directors, officers, employees and Affiliates do not) have a
direct or indirect material financial interest in the Company, (ii) that has not
been, and, at the time it is called upon to serve as an Independent Financial
Expert under this Agreement is not (and none of whose directors, officers,
employees or Affiliates is) a promoter, director or officer of the Company, and
(iii) that, in the reasonable judgment of the board of directors of the Company
(certified by a board resolution), is otherwise qualified to serve as an
independent financial advisor. Any such person may receive customary
compensation and indemnification by the Company for opinions or services it
provides as an Independent Financial Expert.
"AFFILIATE" of any specified person means any other person which
directly or indirectly through one or more intermediaries controls or is
controlled by, or is under common control with, such specified person. For the
purposes of this definition, "CONTROL" (including with correlative meanings,
the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH")
as used with respect 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
agreement or otherwise; PROVIDED, HOWEVER, that beneficial ownership of at
least 10% of the voting securities of a person shall be deemed to be control and
that for so long as Laurence H. Zimmerman is a director or controls, directly or
indirectly, capital stock of the Company with the right to 5% of the vote of the
Common Stock then outstanding, his spouse, lineal descendants and any person
(including the voting trust created by the Voting Trust Agreement (as defined in
the Credit Agreement) and any other affiliated trusts) controlled by any of them
shall be Affiliates of the Company.
"EXTRAORDINARY CASH DIVIDEND" means any cash dividends with
respect to the Common Stock the aggregate amount of which prior to the
Exercisability Date in any fiscal year exceeds 6% of the net income (determined
in accordance with generally accepted accounting principles consistently
applied) of the Company and its subsidiaries for the fiscal year immediately
preceding the payment
<PAGE>
-16-
of such dividend.
(e) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Rate need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Rate. Notwithstanding the foregoing, any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment, provided
that no such adjustment shall be deferred beyond the date on which a Warrant is
exercised.
All calculations under this Section 12 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(f) WHEN NO ADJUSTMENT REQUIRED.
If an adjustment is made upon the establishment of a record date for
a distribution subject to subsections (a), (b) or (c) hereof and such
distribution is subsequently cancelled, the Exercise Rate then in effect shall
be readjusted, effective as of the date when the board of directors determines
to cancel such distribution, to that which would have been in effect if such
record date had not been fixed. If an adjustment would be required under two or
more of paragraphs (a), (b) and (c), such adjustments will be determined without
duplication.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(g) NOTICE OF ADJUSTMENT.
Whenever the Exercise Rate is adjusted, the Company shall provide
the notices required by Section 14 hereof.
(h) VOLUNTARY REDUCTION.
The Company from time to time may increase the Exercise Rate by any
amount for any period of time (including, without limitation, permanently) if
the period is at least 20 Business Days.
An increase of the Exercise Rate under this Subsection (h) (other
than a permanent increase) does not change or adjust the Exercise Rate otherwise
in effect for purposes of subsections (a), (b) or (c) of this Section 12.
<PAGE>
-17-
(i) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 12 shall require that an
adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Rate
prior to such adjustment, and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 13; PROVIDED, HOWEVER, that
the Company shall deliver to the Warrant Agent and shall cause the Warrant
Agent, on behalf of and at the expense of the Company, to deliver to such Holder
a due bill or other appropriate instrument evidencing such Holder's right to
receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(j) REORGANIZATIONS.
In case of any capital reorganization, other than in the cases
referred to in Sections 12(a), (b) or (c) hereof, or the consolidation or merger
of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock
into shares of other stock or other securities or property), or the sale of the
property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as
"REORGANIZATIONS"), there shall thereafter be deliverable upon exercise of any
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock that would otherwise have
been deliverable upon the exercise of such Warrant would have been entitled upon
such Reorganization if such Warrant had been exercised in full immediately prior
to such Reorganization. In case of any Reorganization, appropriate adjustment,
as determined in good faith by the board of directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any such shares or other securities or
property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization
<PAGE>
-18-
unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall (i) expressly assume, by a supplemental warrant
agreement or other acknowledgment executed and delivered to the Warrant Agent
the obligation to deliver to the Warrant Agent and to cause the Warrant Agent to
deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and the due and punctual performance and observance of each and every
covenant, condition, obligation and liability under this Agreement to be
performed and observed by the Company in the manner prescribed herein and (ii)
enter into an agreement providing to the Holders rights and benefits
substantially similar to those enjoyed by the Holders under the Registration
Rights Agreement.
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) LIQUIDATING DIVIDENDS.
If the Company declares or pays a dividend upon the Common Stock
payable otherwise than in cash out of current earnings or retained earnings
except for a stock dividend payable in shares of Common Stock (a "LIQUIDATING
DIVIDEND"), then the Company shall pay to each Holder of Warrants at the time
of payment thereof the Liquidating Dividend which would have been paid to such
Holder had the Warrants held by such Holder been fully exercised immediately
prior to the date on which a record is taken for such Liquidating Dividend, or,
if no record is taken, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined.
(l) PURCHASE RIGHTS.
If at any time the Company grants, issues or sells any options,
convertible securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"PURCHASE RIGHTS"), then each Holder shall be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
such Holder could have acquired if such Holder had held the number of Warrant
Shares acquirable upon complete exercise of the Warrants immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
<PAGE>
-19-
(m) ADJUSTMENT FOR TENDER OFFER.
If the Company or any subsidiary of the Company consummates a tender
offer for all or any portion of Common Stock and purchases shares pursuant to
such tender offer for an aggregate consideration having a fair market value (as
determined in good faith by the Board of Directors and described in a Board
resolution) as of the last time (the "EXPIRATION TIME") that tenders may be
made pursuant to such tender offer (as it shall have been amended) that,
together with (i) the aggregate of the cash plus the fair market value (as
determined in good faith by the Board of Directors and described in a Board
resolution) of the consideration paid in respect of any other tender offer by
the Company or a subsidiary of the Company for all or any portion of Common
Stock consummated within the 12 months preceding the Expiration Time and in
respect of which no Exercise Rate adjustment pursuant to this subsection (m) has
been made previously and (ii) the aggregate amount of any distributions to all
holders of Common Stock made exclusively in cash within the 12 months preceding
the Expiration Time and in respect of which no Exercise Rate adjustment pursuant
to subsection (c) of this Section has been made previously, exceeds 5.0% of the
product of the Current Market Value immediately prior to the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
shares) at the Expiration Time, the Exercise Rate shall be adjusted in
accordance with the formula:
E' = E x M X (O - N)
-----------
(M x O) - F
where:
E' = the adjusted Exercise Rate.
E = the then current Exercise Rate.
M = the Current Market Value per share of Common Stock
immediately prior to the Expiration Time.
O = the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration
Time.
F = the fair market value of the aggregate consideration
paid for all shares of Common Stock purchased pursuant
to the tender offer.
<PAGE>
-20-
N = the number of shares of Common Stock accepted for
payment in such tender offer.
If the number of shares accepted for payment in such tender offer or
the aggregate consideration payable therefor have not been finally determined by
the opening of business on the day following the Expiration Time, the adjustment
required by this subsection (m) shall, pending such final determination, be made
based upon the preliminary announced results of such tender offer, and, after
such final determination shall have been made, the adjustment required by this
subsection (m) shall be based upon the number of shares accepted for payment in
such tender offer and the aggregate consideration payable therefor as so finally
determined.
Notwithstanding the foregoing, if "F" in the above formula equals or
exceeds "(M x O)" in the above formula, then "M" in the above formula shall be
equal to the fair value per share of the Common Stock immediately prior to the
Expiration Time as determined in good faith by the Board of Directors and
described in a Board resolution which shall be filed with the Warrant Agent.
The Company shall not and shall cause its subsidiaries not to allow
the number of shares of Common Stock accepted for payment pursuant to any such
tender offer to equal the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time.
In no event shall any adjustment made pursuant to this subsection
(m) be made which would decrease the Exercise Rate.
(n) FORM OF WARRANTS.
Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
(o) WARRANT AGENT'S DISCLAIMER.
The Warrant Agent has no duty to determine when an adjustment under
this Section 12 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
warrant agreement under subsection (j) of this Section 12 are correct. The
Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants. The Warrant Agent shall
not be responsible for the Company's failure to comply with this Section 12.
<PAGE>
-21-
(p) MISCELLANEOUS.
For purpose of this Section 12 the term "SHARES OF COMMON STOCK"
shall mean (i) shares of the classes of stock designated as the Common Stock,
par value $0.0001 per share of the Company as of the date of this Agreement, and
(ii) shares of any other class of stock resulting from successive changes or
reclassification of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. In the event
that at any time, as a result of an adjustment made pursuant to this Section 12,
the Holders of Warrants shall become entitled to purchase any securities of the
Company other than, or in addition to, shares of Common Stock, thereafter the
number or amount of such other securities so purchasable upon exercise of each
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in subsections (a) through (m) of this Section 12,
inclusive, and the provisions of Sections 7, 8, 10 and 13 with respect to the
Warrant Shares or the Common Stock shall apply on like terms to any such other
securities.
SECTION 13. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same time
by the same Holder, the number of full Warrant Shares which shall be issuable
upon the exercise thereof shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the excess of the value (as
determined by the Board of Directors in good faith) of a Warrant Share over the
Exercise Price Per Share on the day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 14. NOTICES TO WARRANT HOLDERS. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice of
such adjustment to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, within 10 days after notification
is received by the Warrant Agent of such adjustment, to mail by first class
mail, postage prepaid, to each Holder a notice of such adjustment(s) and shall
deliver to the Warrant Agent a certificate of the Chief Financial Officer of the
Company, accompanied by the report thereon by a firm of independent public
accountants selected by the board of directors of the Company (who may be the
regular accountants for the Company), setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of each Warrant and
<PAGE>
-22-
the Exercise Price of such Warrant after such adjustment(s), (ii) a brief
statement of the facts requiring such adjustment(s) and (iii) the computation by
which such adjustment(s) was made. Where appropriate, such notice may be given
in advance and included as a part of the notice required under the other
provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets; or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change
in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or a tender
offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Exercise Rate pursuant to Section 12;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant Register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of
<PAGE>
-23-
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The Company shall not effect any such distribution,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up without first providing the notice required hereby.
The Company shall give prompt written notice to the Warrant Agent
and shall cause the Warrant Agent, on behalf of and at the expense of the
Company to give to each Holder written notice of any determination to make a
distribution or dividend to the holders of its Common Stock of any assets
(including cash), debt securities, preferred stock, or any rights or warrants to
purchase debt securities, preferred stock, assets or other securities (other
than Common Stock, or rights, options, or warrants to purchase Common Stock) of
the Company, which notice shall state the nature and amount of such planned
dividend or distribution and the record date therefor, and shall be received by
the Holders at least 30 days prior to such record date therefor.
Nothing contained in this Agreement or in any Warrant Certificate
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company.
SECTION 15. NOTICES TO THE COMPANY AND WARRANT AGENT. Any notice
or demand authorized by this Agreement to be given or made by the Warrant Agent
or by any Holder to or on the Company shall be sufficiently given or made when
received at the office of the Company expressly designated by the Company as its
office for purposes of this Agreement (until the Warrant Agent is otherwise
notified in accordance with this Section 15 by the Company), as follows:
Advanced Radio Telecom Corp.
500 108th Avenue, N.E.
Suite 2600
Bellvue, Washington 98004
Attention: Chief Financial Officer
Any notice pursuant to this Agreement to be given by the Company or
by any Holder(s) to the Warrant Agent shall be
<PAGE>
-24-
sufficiently given when received by the Warrant Agent at the address appearing
below (until the Company is otherwise notified in accordance with this Section
by the Warrant Agent).
Warrant Agent
[Address]
Attention: Corporate Trust Administration
Fax Number:
SECTION 16. SUPPLEMENTS AND AMENDMENTS. Any amendment or
supplement to this Agreement shall require the written consent of registered
holders of a majority of the then outstanding Warrants. In determining whether
the holders of a majority of outstanding Warrants have given their consent,
Warrants owned by the Company or its affiliates shall be disregarded. The
consent of each holder of a Warrant affected shall be required for any amendment
pursuant to which (i) the Exercise Price would be increased, (ii) the number of
Warrant Shares purchasable upon exercise of Warrants would be decreased (not
including adjustments contemplated hereunder) or (iii) the Expiration Date would
be changed to a date earlier than as provided in Section 7 hereof. The Warrant
Agent shall be entitled to receive and shall be fully protected in relying upon
an officers' certificate and opinion of counsel as conclusive evidence that any
such amendment or supplement is authorized or permitted hereunder, that it is
not inconsistent herewith, and that it will be valid and binding upon the
Company in accordance with its terms.
SECTION 17. CONCERNING THE WARRANT AGENT. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant Certificate
shall be taken as statements of the Company, and the Warrant Agent assumes
no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or any action taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrants
except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
<PAGE>
-25-
(c) The Warrant Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself
(through its employees) or by or through its attorneys or agents (which
shall not include its employees) and shall not be responsible for the
misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal counsel
satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
Holder in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such
counsel.
(e) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless such evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, Chief Financial Officer, one of the
Vice Presidents, the Treasurer or the Secretary of the Company and
delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the Warrant
Agent for all reasonable expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent
(including reasonable fees and expenses of the Warrant Agent's counsel and
agents) in the performance of its duties under this Agreement, and to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything
done or omitted by the Warrant Agent in the performance of its duties
under this Agreement, except as a result of the Warrant Agent's negligence
or bad faith.
(g) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders shall furnish
the Warrant Agent with
<PAGE>
-26-
reasonable security and indemnity satisfactory to the Warrant Agent for
any reasonable costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without
any such security or indemnity. All rights of action under this Agreement
or under any of the Warrants may be enforced by the Warrant Agent without
the possession of any of the Warrants or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery or judgment shall be for the ratable
benefit of the Holders, as their respective rights or interests may
appear.
(h) The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants
or other securities of the Company or become pecuniarily interested in any
transactions in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though
it were not Warrant Agent under this Agreement or such director, officer
or employee. Nothing herein shall preclude the Warrant Agent from acting
in any other capacity for the Company or for any other legal entity
including, without limitation, acting as Transfer Agent or as a lender to
the Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or
bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate,
or other paper, document or instrument reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(k) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant (except its
countersignature thereof); nor shall the Warrant Agent by any act
hereunder be deemed to make any representation or warranty as to the
<PAGE>
-27-
authorization or reservation of any Warrant Shares (or other stock) to be
issued pursuant to this Agreement or any Warrant, or as to whether any
Warrant Shares (or other stock) will, when issued, be validly issued,
fully paid and nonassessable, or as to the Exercise Price or the number or
amount of Warrant Shares or other securities or other property issuable
upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President or the
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for
any action taken or suffered to be taken by it in good faith and without
negligence in accordance with instructions of any such officer or
officers.
SECTION 18. CHANGE OF WARRANT AGENT. The Warrant Agent may
resign at any time and be discharged from its duties under this Agreement by
giving to the Company 30 days' notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the Warrant
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by any Holder (who
shall with such notice submit his Warrant for inspection by the Company), then
any Holder may apply to any court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor warrant
agent, either by the Company or by such court, the duties of the Warrant Agent
shall be carried out by the Company. Any successor warrant agent, whether
appointed by the Company or such a court, shall be a bank or trust company in
good standing, incorporated under the laws of the United States of America or
any State thereof or the District of Columbia and having at the time of its
appointment as warrant agent a combined capital and surplus of at least
$10,000,000. After appointment, the successor warrant agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor warrant agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for such purpose. Failure to file
any notice provided for in this Section 18, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or
<PAGE>
-28-
the appointment of the successor warrant agent, as the case may be. In the
event of such resignation or removal, the Company or the successor warrant agent
shall mail by first class mail, postage prepaid, to each Holder, written notice
of such removal or resignation and the name and address of such successor
warrant agent.
SECTION 19. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares of
the Company's capital stock issuable upon the exercise of the Warrants, the
Company shall promptly file with the Warrant Agent a statement setting forth the
name and address of such Transfer Agent.
SECTION 20. REGISTRATION RIGHTS. The Holders shall be entitled
to all of the benefits of the Registration Rights Agreement in connection with
the Warrants and Warrant Shares.
SECTION 21. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrant Agent or any holder
of Warrants shall bind and inure to the benefit of their respective successors
and assigns hereunder.
SECTION 22. TERMINATION. This Agreement shall terminate at 5:00
p.m. New York City time on [ ], 2006 (or such later date as provided in
Section 7 hereof). Notwithstanding the foregoing, this Agreement will terminate
on any earlier date if all Warrants have been exercised or redeemed pursuant to
this Agreement.
SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
SECTION 24. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered Holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered Holders of the Warrant Certificates.
SECTION 25. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
<PAGE>
-29-
SECTION 26. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
ADVANCED RADIO TELECOM CORP.
By:
-----------------------------------------
Name:
Title:
[ ],
as Warrant Agent
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE
AND ON OR BEFORE [ ], 2006 (Subject to extension)
No. _______ _______ Warrants
Warrant Certificate
ADVANCED RADIO TELECOM CORP.
This Warrant Certificate certifies that ______, or registered
assigns, is the registered holder of Warrants expiring [ ], 2006 (subject
to extension) (the "WARRANTS") to purchase shares of Common Stock, par value
$0.001 per share (the "COMMON STOCK"), of Advanced Radio Telecom Corp., a
Delaware corporation (the "COMPANY"). Each Warrant entitles the holder upon
exercise to receive from the Company on or after the Exercisability Date and on
or before 5:00 p.m. New York City Time on [ ], 2006, one fully paid and
nonassessable share of Common Stock (a "WARRANT SHARE") at the initial
exercise price per Warrant (the "EXERCISE PRICE") of $.01 payable in lawful
money of the United States of America upon surrender of this Warrant Certificate
and payment of the Exercise Price at the office or agency of the Warrant Agent,
subject only to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.
No Warrant may be exercised before the Exercisability Date or after
5:00 p.m., New York City Time, on , 2006 (or such later date as
extended pursuant to the Warrant Agreement) and to the extent not exercised by
such time such Warrants shall become void.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
A-1
<PAGE>
IN WITNESS WHEREOF, Advanced Radio Telecom Corp. has caused this
Warrant Certificate to be signed by its President and by its Secretary, each by
a facsimile of his signature, and has caused a facsimile of its corporate seal
to be affixed hereunto or imprinted hereon.
Dated:
ADVANCED RADIO TELECOM CORP.
By:
---------------------------------
President
By:
---------------------------------
Secretary
Countersigned:
[ ],
as Warrant Agent
By:
-----------------------------
Authorized Signature
A-2
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring [ ], 2006, entitling the
holder on exercise to receive shares of Common Stock, of the Company (the
"CLASS A COMMON STOCK"), par value $0.001 per share, and are issued or to be
issued pursuant to a Warrant Agreement dated as of [ ], 1996 (the
"WARRANT AGREEMENT"), duly executed and delivered by the Company to [
], a [ ] corporation, as warrant agent (the "WARRANT AGENT"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or after the
"EXERCISABILITY DATE" and on or before [ ], 2006, subject to
extension as provided in the Warrant Agreement. The holder of Warrants
evidenced by this Warrant Certificate may exercise them by surrendering this
Warrant Certificate, with the form of election to purchase set forth hereon
properly completed and executed, together with payment of the Exercise Price in
cash at the office of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than
the total number of Warrants evidenced hereby, there shall be issued to the
holder hereof or his assignee a new Warrant Certificate evidencing the number of
Warrants not exercised. No adjustment shall be made for any dividends on any
Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the number of Warrants set forth on the face hereof may, subject to
certain conditions, be adjusted. No fractions of a share of Common Stock will
be issued upon the exercise of any Warrant, but the Company will pay the cash
value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Warrants and the Common Stock purchasable upon
exercise thereof. Such registration rights are set forth in the Second
Restated and Amended Registration Rights Agreement, dated as of July 3, 1996,
among the Company and the parties named therein.
A-3
<PAGE>
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-4
<PAGE>
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive _____ shares of Common Stock
and herewith tenders payment for such shares to the order of Advanced Radio
Telecom Corp. in the amount of $_____ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of ______________, whose address is __________ and that such shares be
delivered to _________ whose address is ______________. If said number of
shares is less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of _____________, whose address
is ________, and that such Warrant Certificate be delivered to ___________,
whose address is ________________.
Signature:
Date:
Signature Guaranteed:
A-5
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "WARRANTS")
of Advanced Radio Telecom Corp.
This Certificate relates to ____ Warrants held in certificated form
by ______ (the "TRANSFEROR").
The Transferor has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Warrant Agreement (the "AGREEMENT")
relating to the Warrants and the restrictions on transfers thereof as provided
in Section 6 of such Agreement, and that the transfer of this Warrant requested
hereby does not require registration under the Securities Act (as defined below)
because[*]:
/ / Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(a) of the Agreement).
/ / Such Warrant is being transferred in accordance with Regulation S
under the Securities Act of 1933 (the "Securities Act"). An opinion of counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate.
/ / Such Warrant is being transferred in accordance with Rule 144
under the Securities Act. An opinion of counsel to the effect that such
transfer does not require registration under the Securities Act accompanies
this Certificate.
/ / Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144 or Regulation S under the Securities Act. An opinion of
counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate.
B-1
<PAGE>
----------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-----------------------------------
Date:
----------------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE OR TRANSFER AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE WARRANT AGENT FOR THIS SECURITY), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE ACT (IF AVAILABLE)
OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
(2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND, IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF SUCH TRANSFER IS MADE IN ACCORDANCE
WITH CLAUSES (C) OR (D) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE WARRANT AGENT AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE
ACT.
C-1
<PAGE>
EXHIBIT D
Transferee Letter of Representation
Advanced Radio Telecom Corp.
500 108th Avenue, N.E.
Suite 2600
Bellvue, Washington 98004
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants to
purchase Common Stock (the "SECURITIES") of Advanced Radio Telecom Corp. (the
"COMPANY"), we confirm that:
1. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the Warrant
Agreement dated as of [ ], 1996 relating to the Securities and
the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "SECURITIES ACT").
2. We understand that the Securities have not been registered
under the Securities Act, and that the Securities may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities within three
years after the original issuance of the Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) outside the United
States to a foreign person in compliance with Rule 904 of Regulation S
under the Securities Act, (C) pursuant to the exemption from registration
under the Securities Act (if available), or (D) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing any of the Securities from us a notice
advising such purchaser that resales of the Securities are restricted as
stated herein.
3. We understand that, on any proposed resale of any Securities,
we will be required to furnish to the Company such certifications, legal
opinions and other information as the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions.
We
D-1
<PAGE>
further understand that the Securities purchased by us will bear a legend
to the foregoing effect.
4. We are an institutional "ACCREDITED INVESTOR" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own
account or for one or more accounts (each of which is an institutional
"ACCREDITED INVESTOR") as to each of which we exercise sole investment
discretion.
The Company is entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
-----------------------------------------
(Name of Purchaser)
By:
--------------------------------------
Date:
------------------------------------
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:
---------------------------------
Address:
------------------------------
Taxpayer ID Number:
-------------------
D-2
<PAGE>
Exhibit VII
[Form of Security Agreement]
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of [ ], 1996 between Advanced
Radio Telecom Corp., a corporation duly organized and validly existing under the
laws of the State of [ ] (the "COMPANY"); EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE A HERETO (the "GUARANTORS"); and [NAME], as collateral
agent for the lenders or other financial institutions or entities party, as
lenders, to the Credit Agreement referred to below (in such capacity, together
with its successors in such capacity, the "AGENT").
The Company, the Guarantors, certain lenders and the Agent are
parties to a Credit Agreement dated as of [ ], 1996 (as modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
to be made by said lenders to the Company.
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Debtor (as
hereinafter defined) has agreed to pledge, mortgage and grant a security
interest in the Pledged Collateral (as hereinafter defined) as security for the
Secured Obligations (as so defined). Accordingly, the parties hereto agree as
follows:
Section 1. DEFINITIONS. Terms defined in the Credit Agreement
are used herein as defined therein. In addition, as used herein:
"ACCOUNTS" shall have the meaning ascribed thereto in Section 3(e)
hereof.
"ART 38 GHZ AUTHORIZATIONS" refers to all 38 GHz Authorizations of
any Debtor, including a list containing latitude and longitude of the
rectangular service area, date granted and channels authorized.
"ART PENDING APPLICATIONS" refers to the Pending Applications of
any Debtor, including latitude and longitude of the requested rectangular
service area, channels requested, date filed, public notice dates and
amendments.
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01(a) hereof.
<PAGE>
"CONTRACTS" shall mean all contracts, undertakings, or other
agreements, as the same may be amended from time to time, and (a) all rights of
any Debtor to receive moneys due and to become due thereunder or in connection
therewith, (b) all rights of any Debtor to damages arising out of or for breach
or default in respect thereof and (c) all rights of any Debtor to exercise
remedies thereunder.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now
owned or hereafter acquired by any Debtor, including each Copyright identified
in ANNEX 2 hereto.
"COPYRIGHTS" shall mean all copyrights, copyright registrations
and applications for copyright registrations, including, without limitation, all
renewals and extensions thereof, the right to recover for all past, present and
future infringements thereof, and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
"DEBTOR" shall mean each of the Company and the Guarantors.
"DOCUMENTS" shall have the meaning ascribed thereto in Section
3(k) hereof.
"EQUIPMENT" shall have the meaning ascribed thereto in Section
3(i) hereof.
"FCC" means the Federal Communications Commission.
"INSTRUMENTS" shall have the meaning ascribed thereto in Section
3(f) hereof.
"INTELLECTUAL PROPERTY" shall mean, collectively, all Copyright
Collateral, all Patent Collateral and all Trademark Collateral, together with
(a) all inventions, processes, production methods, proprietary information,
know-how and trade secrets; (b) all licenses or user or other agreements granted
to any Debtor with respect to any of the foregoing, in each case whether now or
hereafter owned or used including, without limitation, the licenses or other
agreements with respect to the Copyright Collateral, the Patent Collateral or
the Trademark Collateral, listed in ANNEX 5 hereto; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys, engineering
reports, test reports, manuals, materials standards, processing standards,
performance standards, catalogs, computer and automatic machinery software and
programs; (d) all field repair data, sales data and other information relating
to sales or service of products now or hereafter manufactured; (e) all
accounting information and all
<PAGE>
media in which or on which any information or knowledge or data or records may
be recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; and (f) all licenses,
consents, permits, variances, certifications and approvals of governmental
agencies now or hereafter held by any Debtor (other than 38 GHz Authorizations
and Pending Applications); and (g) all causes of action, claims and warranties
now or hereafter owned or acquired by the Debtors in respect of any of the items
listed above.
"INVENTORY" shall have the meaning ascribed thereto in Section
3(g) hereof.
"ISSUERS" shall mean, collectively, the respective corporations
identified beneath the names of the Debtors on ANNEX 1A hereto under the
caption "ISSUER," together with any corporation created or acquired after the
date hereof, the capital stock of which is required to be pledged hereunder
pursuant to the Credit Agreement.
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"PATENT COLLATERAL" shall mean all Patents, whether now owned or
hereafter acquired by any Debtor, including each Patent identified in ANNEX 3
hereto, excluding, however, the Patents identified as "Excluded Patents" on said
ANNEX 3.
"PATENTS" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements described and
claimed therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties, damages and
payments now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, the right to sue for past, present and future
infringements thereof, and all rights corresponding thereto throughout the
world.
"PENDING APPLICATION" means an application that was filed with the
FCC prior to November 13, 1995, to obtain a 38 GHz Authorization, which as of
the date hereof has not been granted or dismissed by the FCC, and which was
placed on public notice by the FCC and held in abeyance pursuant to the notice
of proposed rulemaking issued by the FCC on December 15, 1995 pursuant to which
it proposed to amend its current rules to provide for, among other things, (i)
the adoption of an auction procedure for the issuance of licenses in the 38 GHz
band, including a possible auction of the lower 16 channels in the 38 GHz band
that have not been previously
<PAGE>
available for commercial use, (ii) the continuation of the 100 MHZ-based
channeling plan and licensing rules for point-to-point microwave operations in
the lower 16 channels, (iii) licensing frequencies using predefined geographic
service areas, (iv) the imposition of minimum construction requirements for new
authorizations and existing 38 GHz licenses as a condition to the retention of
existing authorizations and (v) the implementation of certain technical rules
designed to avoid radio frequency interference among licensees.
"PLEDGED COLLATERAL" shall have the meaning ascribed thereto in
Section 3 hereof.
"PLEDGED STOCK" shall have the meaning ascribed thereto in Section
3(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal
of and interest on the Loans made by the Lenders to, and the Notes held by each
Lender of, the Company and all other amounts from time to time owing to the
Creditors by the Company under the Senior Loan Documents, (b) all obligations of
the Company arising under any Interest Rate Agreement between the Company and
any Lender, (c) all obligations of the Guarantors under the Credit Agreement and
the other Senior Loan Documents (including, without limitation, in respect of
their Guarantees under Section 9 of the Credit Agreement) and (d) all
obligations of the Debtors to the Creditors hereunder.
"SPECIAL EVENT OF DEFAULT" shall mean any Event of Default that
arises pursuant to Section 7.1, 7.3, 7.6 or 7.7 of the Credit Agreement.
"STOCK COLLATERAL" shall mean, collectively, the Pledged
Collateral described in clauses (a) through (c) of Section 3 hereof and the
proceeds of and to any such property and, to the extent related to any such
property or such proceeds, all books, correspondence, credit files, records,
invoices and other papers.
"38 GHZ AUTHORIZATIONS" means construction permits granted by the
FCC for the construction and operation of millimetric microwave
telecommunications systems on specific 100 MHZ channels between 37.0 GHz and
40.0 GHz on the radio frequency spectrum each within a specific geographic
footprint with up to a 50-mile radius.
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now
owned or hereafter acquired by any Debtor, including each Trademark identified
in ANNEX 4 hereto. Notwithstanding the foregoing, the Trademark Collateral
does not and shall not include any Trademark that would be rendered invalid,
abandoned, void or
<PAGE>
unenforceable by reason of its being included as part of the Trademark
Collateral.
"TRADEMARKS" shall mean all trade names, trademarks and service
marks, logos, trademark and service mark registrations, and applications for
trademark and service mark registrations, including, without limitation, all
renewals of trademark and service mark registrations, all rights corresponding
thereto throughout the world, the right to recover for all past, present and
future infringements thereof, all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together, in each case, with the product lines
and goodwill of the business connected with the use of, and symbolized by, each
such trade name, trademark and service mark.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Debtor
represents and warrants to the Creditors that:
(a) Such Debtor is the sole beneficial owner of the Pledged
Collateral in which it purports to grant a security interest pursuant to
Section 3 hereof and no Lien exists or will exist upon such Pledged
Collateral at any time (and no right or option to acquire the same exists
in favor of any other Person) except for Liens permitted under Section 6.2
of the Credit Agreement and except for the pledge and security interest in
favor of the Agent for the benefit of the Lenders created or provided for
herein, which pledge and security interest shall (upon the filing of the
financing statements delivered by the Company pursuant to the Credit
Agreement in locations specified by the Obligors to the Agent or
possession of Collateral which is required for perfection) constitute a
first priority perfected pledge and security interest in and to all of
such Pledged Collateral (other than Pledged Collateral subject to Liens
permitted under Section 6.2 of the Credit Agreement and other than the ART
38 GHz Authorization and the ART Pending Applications) in which a Security
Interest may be perfected by filing financing statements or possession
(other than Intellectual Property registered or otherwise located outside
of the United States of America).
(b) The Pledged Stock represented by the certificates identified
under the name of such Debtor in ANNEX 1A hereto is, and all other
Pledged Stock in which such Debtor shall hereafter grant a security
interest pursuant to Section 3 hereof will be, duly authorized, validly
existing, fully paid and non-assessable and none of such Pledged Stock is
or will
<PAGE>
be subject to any contractual restriction, or any restriction under the
charter or by-laws of the respective Issuer of such Pledged Stock, upon
the transfer of such Pledged Stock (except for any such restriction
contained herein or in the Credit Agreement or as permitted by the Credit
Agreement).
(c) The Pledged Stock represented by the certificates identified
under the name of such Debtor in ANNEX 1A hereto constitutes all of the
issued and outstanding shares of capital stock of any class of the Issuers
beneficially owned by such Debtor on the date hereof or such percentage of
the capital stock of any Issuer created or acquired after the date hereof
that is required to be pledged hereunder pursuant to the Credit Agreement
(whether or not registered in the name of such Debtor) and said ANNEX 1A
correctly identifies, as at the date hereof, or, with respect to any
Issuer created or acquired after the date hereof, as of the date of pledge
hereunder, the respective Issuers of such Pledged Stock, the respective
class and par value of the shares comprising such Pledged Stock and the
respective number of shares (and registered owners thereof) represented by
each such certificate.
(d) As of the date hereof, (x) the Intercompany Notes identified
on ANNEX 1B hereto constitute all of the Intercompany Notes of such
corporations as identified on ANNEX 1B, and (y) other than the
Intercompany Notes, no Debtor owns, directly or indirectly, any other
Intercompany Notes of any Debtor.
(e) ANNEXES 2, 3 AND 4 hereto, respectively, set forth under the
name of such Debtor a complete and correct list of all Copyrights, Patents
and Trademarks owned by such Debtor on the date hereof which have been
registered or for which an application for registration has been made;
except pursuant to licenses and other user agreements entered into by such
Debtor in the ordinary course of business, that are listed in ANNEX 5
hereto, on and as of the date hereof (i) such Debtor owns and possesses
the right to use, and has done nothing to authorize or enable any other
Person to use, any Copyright, Patent or Trademark listed in said ANNEXES
2, 3 and 4, and (ii) all registrations listed in said ANNEXES 2, 3 AND 4
are valid and in full force and effect; and except as may be set forth in
said ANNEX 5, such Debtor owns and possesses the right to use all
Copyrights, Patents end Trademarks on and as of the date hereof.
(f) ANNEX 5 hereto sets forth a complete and correct list of all
material licenses and other user agreements included in the Intellectual
Property on the date hereof.
<PAGE>
(g) To such Debtor's knowledge, on and as of the date hereof: (i)
except as set forth in ANNEX 5 hereto, there is no violation by others
of any right of such Debtor with respect to any Copyright, Patent or
Trademark listed in ANNEXES 2, 3 AND 4 hereto, respectively, under the
name of such Debtor and (ii) such Debtor is not infringing in any respect
upon any Copyright, Patent or Trademark of any other Person; and no
proceedings have been instituted or are pending against such Debtor or, to
such Debtor's knowledge, threatened, and no claim against such Debtor has
been received by such Debtor, alleging any such violation, except as may
be set forth in said ANNEX 5, except with respect to clauses (i) and
(ii) where any of the foregoing could not reasonably be expected to have a
Material Adverse Effect.
(h) Any goods now or hereafter produced by such Debtor or any of
its Subsidiaries included in the Pledged Collateral have been and will be
produced in compliance with the requirements of the Fair Labor Standards
Act of 1938, as amended, except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
Section 3. COLLATERAL. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations owing by such Debtor, each Debtor hereby
pledges and mortgages to the Agent, for the benefit of the Creditors as
hereinafter provided, and grants to the Agent, for the benefit of the Creditors
as hereinafter provided, a security interest in, all of such Debtor's right,
title and interest in the following property, whether now owned by such Debtor
or hereafter acquired and whether now existing or hereafter coming into
existence (all being collectively referred to herein as "PLEDGED COLLATERAL"):
(a) the shares of common and/or preferred stock of the Issuers
represented by the certificates identified in ANNEX 1A hereto under the
name of such Debtor and all other shares of capital stock of whatever
class of the Issuers, now or hereafter owned by such Debtor, in each case
together with the certificates evidencing the same (collectively, the
"PLEDGED STOCK");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
<PAGE>
(c) all Intercompany Notes;
(d) without affecting the obligations of such Debtor under any
provision prohibiting such action hereunder or under the Credit Agreement,
in the event of any consolidation or merger in which an Issuer is not the
surviving corporation, all shares of each class of the capital stock of
the successor corporation owned by the Debtors (unless such successor
corporation is such Debtor itself) formed by or resulting from such
consolidation or merger;
(e) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Debtor constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to such Debtor in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to such Debtor under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by such Debtor and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "ACCOUNTS");
(f) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of such Debtor evidencing,
representing, arising from or existing in respect of, relating to, or
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of exchange
and trade acceptances (herein collectively called "INSTRUMENTS");
(g) all inventory (as defined in the Uniform Commercial Code) of
such Debtor, all goods obtained by such Debtor in exchange for such
inventory, any products made or processed from such inventory including
all substances, if any, commingled therewith or added thereto, and any
such inventory as is temporarily out of such Debtor's custody or
possession, including inventory held by others on consignment, inventory
on the premises of others and items in transit (herein collectively called
"INVENTORY");
(h) all Intellectual Property and all other accounts or general
intangibles (each as defined in the Uniform Commercial Code) not
constituting Intellectual Property or Accounts;
(i) all equipment (as defined in the Uniform Commercial Code) of
such Debtor, including all Motor Vehicles (herein collectively called
"EQUIPMENT");
<PAGE>
(j) all Contracts;
(k) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of such Debtor covering, evidencing or
representing Inventory or Equipment (herein collectively called
"DOCUMENTS");
(l) all rights, claims and benefits of such Debtor against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by such Debtor, including, without limitation, any
such rights, claims or benefits against any Person storing or transporting
such Inventory or Equipment;
(m) the balance from time to time in the Collateral Account;
(n) the ART 38 GHz Authorizations and the ART Pending
Applications; and
(o) all other tangible and intangible personal property and
fixtures of such Debtor, including, without limitation, all proceeds,
products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of such
Debtor described in the preceding clauses of this Section 3 (including,
without limitation, any proceeds of insurance thereon and all causes of
action, claims and warranties now or hereafter held by any Debtor in
respect of any of the items listed above) and, to the extent related to
any property described in said clauses or such proceeds, products and
accessions, all books, correspondence, credit files, records, invoices and
other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of
such Debtor or any computer bureau or service company from time to time
acting for such Debtor.
Notwithstanding the foregoing, the Pledged Collateral does not and shall not
include any contract to which any Debtor is a party which would be rendered void
or unenforceable by reason of its being included as part of the Pledged
Collateral or which is not assignable by its terms, unless a consent to the
assignment has been received by such Debtor and/or the Agent.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01. COLLATERAL ACCOUNT.
(a) There is hereby established with the Agent a cash collateral
account (the "COLLATERAL ACCOUNT") in the name and under
<PAGE>
the control of the Agent into which there shall be deposited from time to time
certain cash proceeds of any of the Pledged Collateral as provided in Section
4.02 below (including proceeds of insurance covering the Pledged Collateral) and
into which the Debtors may from time to time deposit any additional amounts that
any of them wishes to pledge to the Agent for the benefit of the Lenders as
additional collateral security hereunder.
(b) The balance from time to time in the Collateral Account shall
constitute part of the Pledged Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as hereinafter provided. So
long as no Special Event of Default has occurred and is continuing, the Agent
shall remit the collected balance outstanding to the credit of the Collateral
Account to or upon the order of the respective Debtor as such Debtor shall from
time to time instruct; PROVIDED, HOWEVER, that any amounts deposited in the
Collateral Account in respect of Casualty Events, Disposition Events, takings,
destructions or loss of title with respect to Mortgaged Real Property shall be
disbursed to the relevant Debtor in periodic installments consistent with the
provisions of Section 2.4A(iii) of the Credit Agreement. However, at any time
following the occurrence and during the continuance of a Special Event of
Default, the Agent may (and, if instructed by the Required Lenders, shall) in
its (or their) discretion apply or cause to be applied (subject to collection)
the balance from time to time outstanding to the credit of the Collateral
Account to the payment of the Secured Obligations in the manner specified in
Section 5.09 hereof. The balance from time to time in the Collateral Account
shall be subject to withdrawal only as provided herein.
(c) If requested by the Company and agreed to by any Lender that
is an Original Lender, and subject to documentation reasonably satisfactory to
the Agent and such Lender, the Agent shall designate such Lender as a collateral
sub-agent for the Agent in respect of all or any portion of the Collateral
Account and provide written notice to the Company of such designation.
4.02. PROCEEDS OF ACCOUNTS. At any time after the occurrence and
during the continuance of an Event of Default, each Debtor shall, upon the
request of the Agent, instruct all account debtors and other Persons obligated
in respect of all Accounts to make all payments in respect of the Accounts
either (a) directly to the Agent (by instructing that such payments be remitted
to a post office box which shall be in the name and under the control of the
Agent) or (b) to one or more other banks in the United States of America (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the Agent) under arrangements, in form and
substance satisfactory to the Agent, pursuant to which such Debtor shall have
irrevocably
<PAGE>
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Agent for deposit into the Collateral
Account. All payments made to the Agent, as provided in the preceding sentence,
shall be immediately deposited in the Collateral Account. In addition to the
foregoing, each Debtor agrees that, if the proceeds of any Pledged Collateral
hereunder (including the payments made in respect of Accounts) shall be received
by it, such Debtor shall as promptly as possible deposit such proceeds into the
Collateral Account. Until so deposited, all such proceeds shall be held in
trust by such Debtor for and as the property of the Agent and the Lenders and
shall not be commingled with any other funds or property of such Debtor.
4.03. INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the respective Debtor (or, after the occurrence and
during the continuance of an Event of Default, the Agent) shall determine, which
Permitted Investments shall be held in the name and be under the control of the
Agent; PROVIDED, HOWEVER, that at any time after the occurrence and during
the continuance of an Event of Default, the Agent may (and, if instructed by the
Required Lenders, shall) in its (or their) discretion at any time and from time
to time elect to liquidate any such Permitted Investments and to apply or cause
to be applied the proceeds thereof to the payment of the Secured Obligations in
the manner specified in Section 5.09 hereof.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Debtors hereby jointly and severally agree with each Lender and the Agent as
follows:
5.01. DELIVERY AND OTHER PERFECTION. Each Debtor shall:
(a) if any of the above-described shares or securities (or only if
an Event of Default has occurred and is continuing) moneys or property)
required to be pledged by such Debtor under clauses (a), (b), (c) and (d)
of Section 3 hereof are received by such Debtor, forthwith either (x)
transfer and deliver to the Agent such shares or securities so received by
such Debtor (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers
duly executed in blank), all of which thereafter shall be held by the
Agent, pursuant to the terms of this Agreement, as part of the Pledged
Collateral or (y) take such other action as the Agent shall deem necessary
or appropriate to duly record the Lien created hereunder in such shares,
securities, moneys or property in said clauses (a), (b), (c) and (d);
<PAGE>
(b) deliver and pledge to the Agent any and all Instruments,
endorsed and/or accompanied by such instruments of assignment and transfer
in such form and substance as the Agent may request; PROVIDED,
HOWEVER, that so long as no Event of Default shall have occurred and be
continuing, such Debtor may retain for collection in the ordinary course
any Instruments received by such Debtor in the ordinary course of business
and the Agent shall, promptly upon request of such Debtor, make
appropriate arrangements for making any other Instrument pledged by such
Debtor available to such Debtor for purposes of presentation, collection
or renewal (any such arrangement to be effected, to the extent deemed
appropriate by the Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the reasonable judgment of the Agent) to
create, preserve, perfect or validate the security interest granted
pursuant hereto or to enable the Agent to exercise and enforce its rights
hereunder with respect to such pledge and security interest, including,
without limitation, after the occurrence and during the continuance of an
Event of Default, causing any or all of the Stock Collateral to be
transferred of record into the name of the Agent or its nominee (and the
Agent agrees that if any Stock Collateral is transferred into its name or
the name of its nominee, the Agent will thereafter promptly give to the
respective Debtor copies of any notices and communications received by it
with respect to the Stock Collateral); PROVIDED, HOWEVER, that notices
to account debtors in respect of any Accounts or Instruments shall be
subject to the provisions of clause (i) below;
(d) keep full and accurate books and records relating to the
Pledged Collateral, and stamp or otherwise mark all such material books
and records in such manner as the Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(e) furnish to the Agent upon its reasonable request statements
and schedules further identifying and describing the Copyright Collateral,
the Patent Collateral and the Trademark Collateral, respectively, and such
other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as the Agent may reasonably
request, all in reasonable detail;
(f) promptly upon request of the Agent, following receipt by the
Agent of any statements, schedules or reports pursuant to clause (e)
above, modify this Agreement by
<PAGE>
amending ANNEXES 2, 3 AND/OR 4 hereto, as the case may be, to include
any Copyright, Patent or Trademark that becomes part of the Pledged
Collateral under this Agreement;
(g) permit representatives of the Agent, upon reasonable notice,
at any time during normal business hours to inspect and make abstracts
from its books and records pertaining to the Pledged Collateral;
(h) upon the occurrence and during the continuance of any Event of
Default, permit representatives of the Agent to be present at such
Debtor's place of business to receive copies of all communications and
remittances relating to the Pledged Collateral, and forward copies of any
notices or communications received by such Debtor with respect to the
Pledged Collateral, all in such manner as the Agent may require; and
(i) upon the occurrence and during the continuance of any Event of
Default, upon request of the Agent, except as otherwise expressly provided
herein, promptly notify (and such Debtor hereby authorizes the Agent so to
notify) each account debtor in respect of any Accounts or Instruments that
such Pledged Collateral has been assigned to the Agent for the benefit of
the Lenders hereunder, and that any payments due or to become due in
respect of such Pledged Collateral are to be made directly to the Agent.
5.02. OTHER FINANCING STATEMENTS AND LIENS. Except as otherwise
permitted under Section 6.2 of the Credit Agreement, without the prior written
consent of the Agent (granted with the authorization of the Required Lenders),
no Debtor shall file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to the Pledged Collateral in which the Agent is not
named as the sole secured party for the benefit of the Lenders.
5.03. PRESERVATION OF RIGHTS. The Agent shall not be required to
take steps necessary to preserve any rights against prior parties to any of the
Pledged Collateral.
5.04. SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.
(a) STOCK COLLATERAL.
(1) The Debtors will cause the Pledged Stock to constitute at all
times, with respect to any Issuer existing on the date hereof, 100% or, with
respect to any Issuer created or acquired after the date hereof, the percentage
required by the
<PAGE>
Credit Agreement to be pledged hereunder, of the total number of shares of each
class of capital stock of each Issuer then outstanding.
(2) So long as no Event of Default shall have occurred and be
continuing, the Debtors shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein; PROVIDED, HOWEVER, that the Debtors jointly and severally agree
that they will not vote the Stock Collateral in any manner that is inconsistent
with the terms of this Agreement, the Credit Agreement, the Notes or any such
other instrument or agreement; and the Agent shall execute and deliver to the
Debtors or cause to be executed and delivered to the Debtors all such proxies,
powers of attorney, dividend and other orders, and all such instruments, without
recourse, as the Debtors may reasonably request for the purpose of enabling the
Debtors to exercise the rights and powers that they are entitled to exercise
pursuant to this Section 5.04(a).
(3) The Debtors shall be entitled to receive and retain any
dividends on the Stock Collateral to the extent that the payment of such
dividends is permitted by the Credit Agreement.
(4) If any Event of Default shall have occurred, then so long as
such Event of Default shall continue, and whether or not the Agent or any Lender
exercises any available right to declare any Secured Obligation due and payable
or seeks or pursues any other relief or remedy available to it under applicable
law or under this Agreement, the Credit Agreement, the Notes or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Stock Collateral shall be paid directly to the Agent and
retained by it as part of the Pledged Collateral, subject to the terms of this
Agreement, and, if the Agent shall so request in writing, the Debtors jointly
and severally agree to execute and deliver to the Agent appropriate additional
dividend, distribution and other orders and documents to that end; PROVIDED,
HOWEVER, that (a) if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Agent shall, upon request of the Debtors
(except to the extent theretofore applied to the Secured Obligations), be
returned by the Agent to the Debtors and (b) nothing contained in this paragraph
(4) shall prohibit any Dividend Payment permitted by Section 6.3 of the Credit
Agreement.
<PAGE>
(b) INTELLECTUAL PROPERTY.
(1) For the purpose of enabling the Agent, during the continuance
of an Event of Default, to exercise rights and remedies under Section 5.05
hereof at such time as the Agent shall be lawfully entitled to exercise such
rights and remedies, and for no other purpose, each Debtor hereby grants to the
Agent, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such Debtor) to
use, assign, license or sublicense any of the Intellectual Property now owned or
hereafter acquired by such Debtor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 6.6 of the Credit Agreement that limit the
right of the Debtors to dispose of their respective property, so long as no
Event of Default shall have occurred and be continuing, the Debtors will be
permitted to exploit, use, enjoy, protect, license, sublicense, assign, sell,
dispose of or take other actions with respect to the Intellectual Property in
the ordinary course of the business of the Debtors. In furtherance of the
foregoing, unless an Event of Default shall have occurred and be continuing the
Agent shall from time to time, upon the request of the respective Debtor,
execute and deliver any instruments, certificates or other documents, in the
form so requested, that such Debtor shall have certified are appropriate (in its
judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (1) immediately above
as to any specific Intellectual Property). Further, upon the payment in full of
all of the Secured Obligations and cancellation or termination of the
Commitments and Letter of Credit Liabilities or earlier expiration of this
Agreement or release of the Pledged Collateral, the Agent shall grant back to
the Debtors the license granted pursuant to clause (1) immediately above. The
exercise of rights and remedies under Section 5.05 hereof by the Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Debtors in accordance with the first sentence of this clause (2).
(3) The Agent agrees that it will not exercise any of its rights
and remedies pursuant to Section 5.05 hereof prior to having received the
required consents, if any, under any licensing agreements to which any Debtor is
a party to the exercise of such rights and remedies.
<PAGE>
(c) MOTOR VEHICLES. At any time after the occurrence and during
the continuance of an Event of Default, each Debtor shall, upon the request of
the Agent, deliver to the Agent originals of the certificates of title or
ownership for the Motor Vehicles, and any other Equipment covered by
certificates of title or ownership, owned by it with the Agent listed as
lienholder.
5.05. EVENTS OF DEFAULT, ETC. During the period during which an
Event of Default shall have occurred and be continuing:
(a) each Debtor shall, at the request of the Agent, assemble the
Pledged Collateral owned by it at such place or places, reasonably
convenient to both the Agent and such Debtor, designated in its request;
(b) the Agent may make any reasonable compromise or settlement
deemed desirable with respect to any of the Pledged Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms, of any of the Pledged Collateral;
(c) the Agent shall have all of the rights and remedies with
respect to the Pledged Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in effect
in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to
the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Pledged Collateral as if
the Agent were the sole and absolute owner thereof (and each Debtor
agrees to take all such action as may be appropriate to give effect to
such right);
(d) the Agent in its discretion may, in its name or in the name of
the Debtors or otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange
for any of the Pledged Collateral, but shall be under no obligation to do
so; and
(e) the Agent may, upon ten business days' prior written notice to
the Debtors of the time and place, with respect to the Pledged Collateral
or any part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Agent, the Lenders or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any
part of such Pledged Collateral, at such place or places as the Agent
deems best, and for cash or for credit or for future
<PAGE>
delivery (without thereby assuming any credit risk), at public or private
sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Agent or any Lender or anyone else may be the purchaser, lessee, assignee
or recipient of any or all of the Pledged Collateral so disposed of at any
public sale (or, to the extent permitted by law, at any private sale) and
thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Debtors, any such demand, notice and right or equity
being hereby expressly waived and released. In the event of any sale,
assignment, or other disposition of any of the Trademark Collateral, the
goodwill connected with and symbolized by the Trademark Collateral subject
to such disposition shall be included, and the Debtors shall supply to the
Agent or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the Agent in
Section 5.04(b) hereof, shall be applied in accordance with Section 5.09 hereof.
The Debtors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Agent may be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Debtors acknowledge that any such private sales may be at prices and on terms
less favorable to the Agent than those obtainable through a public sale without
such restrictions, and, notwithstanding such circumstances, agree that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Agent shall have no obligation to engage in public sales and
no obligation to delay the sale of any Pledged Collateral for the period of time
necessary to permit the respective Issuer or issuer thereof to register it for
public sale.
<PAGE>
The Agent agrees that any public or private sale of the Pledged
Collateral will be held in a commercially reasonable manner.
5.06. DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Pledged Collateral pursuant to Section 5.05 hereof
are insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligations, the Debtors shall remain liable for
any deficiency.
5.07. REMOVALS, NAME CHANGE, ETC. Without at least 30 days'
prior written notice to the Agent, no Debtor shall (i) maintain any of its books
and records with respect to the Pledged Collateral at any office or maintain its
principal place of business at any place, or permit any Inventory or Equipment
to be located anywhere, other than at the address indicated beneath the
signature of the Company to the Credit Agreement or at one of the locations
identified in ANNEX 6 hereto or at the premises of a Person processing or
storing such Inventory or Equipment, if such Person has executed Uniform
Commercial Code Financing Statements naming such Debtor as secured party (which
financing statements are hereby assigned to the Agent) or such Person has
executed a supplier subordination agreement satisfactory to the Required Lenders
in form and substance or in transit from one of such locations to another or
Equipment installed at locations for purposes of conducting the Debtors
business, provided that such Debtor may permit Equipment to be located at such
other premises to the extent permitted as an Investment pursuant to Section
6.4(w) of the Credit Agreement or (ii) change its corporate name, or the name
under which it does business, from the name shown on the signature pages hereto.
5.08. PRIVATE SALE. No Creditors shall incur liability as a
result of the sale of the Pledged Collateral, or any part thereof, at any
private sale pursuant to Section 5.05 hereof conducted in a commercially
reasonable manner. Each Debtor hereby waives any claims against any Creditor
arising by reason of the fact that the price at which the Pledged Collateral may
have been sold at any such private sale held in a commercially reasonable manner
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if the Agent
accepts the first offer received and does not offer the Pledged Collateral to
more than one offeree.
5.09. APPLICATION OF PROCEEDS. Except as otherwise herein
expressly provided and except as provided below in this Section 5.09, the
proceeds of any collection, sale or other realization of all or any part of the
Pledged Collateral pursuant hereto, and any other cash at the time held by the
Agent under
<PAGE>
Section 4 hereof or this Section 5, shall be applied by the Agent:
FIRST, to the payment of the reasonable costs and expenses of such
collection, sale or other realization, including reasonable out-of-pocket
costs and expenses of the Agent and the reasonable fees and expenses of
its agents and counsel, and all reasonable expenses incurred and advances
made by the Agent in connection therewith;
NEXT, to the payment in full of the Secured Obligations, in each
case equally and ratably in accordance with the respective amounts thereof
then due and owing or as the Lenders holding the same may otherwise agree;
and
FINALLY, to the payment to the respective Debtor, or its
successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.
As used in this Section 5, "PROCEEDS" of Pledged Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Pledged Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Debtors or any issuer of or obligor on
any of the Pledged Collateral. Notwithstanding the foregoing, the proceeds of
any cash or other amounts held in the "Letter of Credit Liabilities Sub-Account"
of the Collateral Account pursuant to Section 4.04 hereof shall be applied
FIRST to the Letter of Credit Liabilities outstanding from time to time and
SECOND to the other Secured Obligations in the manner provided above in this
Section 5.09.
5.10. ATTORNEY-IN-FACT. Without limiting any rights or powers
granted by this Agreement to the Agent while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default the Agent is hereby appointed the attorney-in-fact of each Debtor for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments that the Agent may deem reasonably
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, upon and during the continuance of any Event of
Default, so long as the Agent shall be entitled under this Section 5 to make
collections in respect of the Pledged Collateral, the Agent shall have the right
and power to receive, endorse and collect all checks made payable to the order
of any Debtor representing any dividend, payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.
<PAGE>
5.11. PERFECTION. Prior to or concurrently with the execution
and delivery of this Agreement, each Debtor shall (i) file such financing
statements and other documents in such offices as the Agent may reasonably
request to perfect the security interests granted by Section 3 of this
Agreement, (ii) deliver to the Agent all certificates identified in ANNEX 1A
hereto, accompanied by undated stock powers duly executed in blank and (iii)
deliver to the Agent all Intercompany Notes required to be delivered pursuant to
the Credit Agreement.
5.12. TERMINATION. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement and
all Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Agent shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Pledged Collateral and money received
in respect thereof, to or on the order of the respective Debtor and to be
released and canceled all licenses and rights referred to in Section 5.04(b)
hereof. The Agent shall also execute and deliver to the respective Debtor upon
such termination or upon the sale or other disposition of Property permitted by
Section 6.6 of the Credit Agreement such Uniform Commercial Code termination
statements, certificates for terminating the Liens on the Motor Vehicles and
such other documentation as shall be reasonably requested by the respective
Debtor to effect the termination and release of the Liens on the Pledged
Collateral.
5.13. EXPENSES. The Debtors jointly and severally agree to pay
to the Agent all reasonable out-of-pocket expenses (including reasonable
expenses for legal services of every kind) of, or incident to, the enforcement
of any of the provisions of this Section 5, or performance by the Agent of any
obligations of the Debtors in respect of the Pledged Collateral which the
Debtors have failed or refused to perform, or any actual or attempted sale, or
any exchange, enforcement, collection, compromise or settlement in respect of
any of the Pledged Collateral, and for the care of the Pledged Collateral and
defending or asserting rights and claims of the Agent in respect thereof, by
litigation or otherwise, including expenses of insurance, and all such expenses
shall be Secured Obligations to the Agent secured under Section 3 hereof.
5.14. FURTHER ASSURANCES. Each Debtor agrees that, from time to
time upon the written request of the Agent, such Debtor will execute and deliver
such further documents and do such other acts and things as the Agent may
reasonably request in order fully to effect the purposes of this Agreement.
<PAGE>
Section 6. MISCELLANEOUS.
6.01. NO WAIVER. No failure on the part of the Agent or any of
its agents to exercise, and no course of dealing with respect to, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Agent or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
6.02. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.03. NOTICES. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at as specified pursuant to the Credit Agreement and shall be deemed
to have been given at the times specified in the Credit Agreement.
6.04. WAIVERS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each Debtor
and the Agent (with the consent of the Required Lenders. Any such amendment or
waiver shall be binding upon each Creditor, each holder of any of the Secured
Obligations and each Debtor.
6.05. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of each
Debtor, the Creditors and each holder of any of the Secured Obligations
(PROVIDED, HOWEVER, that no Debtor shall assign or transfer its rights or
obligations hereunder without the prior written consent of the Creditors).
6.06. CAPTIONS. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.07. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
6.08. AGENTS. The Agent may employ agents and attorneys-in-fact
in connection herewith and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
<PAGE>
6.09. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Creditors in order
to carry out the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
6.10. FCC NOTIFICATION. In the event that the requirements of 47
C.F.R. Section 22.917, or any successor regulation, are or become applicable to
this Agreement, the Agent agrees, to the extent required to do so, to notify the
Company and the FCC in writing at least ten days prior to repossession, in
accordance with this Agreement, of all or any part of the Pledged Collateral
that is subject to said regulation.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year first above
written.
ADVANCED RADIO TELECOM CORP.
By:
----------------------------------
Name:
Title:
ART LICENSING CORP.
By:
----------------------------------
Name:
Title:
[NAME],
as Agent
By:
----------------------------------
Name:
Title:
<PAGE>
ANNEX 1A
PLEDGED STOCK
[See Section 2(b)]
Borrower
- --------
Certificate Registered
Issuer No. Owner Number of Shares
- ------ ----------- ---------- ----------------
GUARANTORS
- ----------
Certificate Registered
Issuer Nos. Owner Number of Shares
- ------ ----------- ---------- ----------------
<PAGE>
ANNEX 1B
INTERCOMPANY NOTES
Intercompany Notes owned by Borrower:
Original Final
Name of Principal Date of Maturity
Obligor Amount Note Date
- ------- --------- ------- --------
Intercompany Notes owned by Guarantors:
Original Final
Name of Principal Date of Maturity
Obligor Amount Note Date
- ------- --------- ------- --------
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 of
our report dated April 26, 1996, except for Note 5B as to which the date is June
26, 1996 and except for the first paragraph of Note 2A, Note 2C and the second
paragraph of Note 9 as to which the date is October 11, 1996, on our audit of
the financial statements of Advanced Radio Technologies Corporation as of
December 31, 1995 and 1994, for the years then ended, and for the period from
August 23, 1993 (date of inception) to December 31, 1993 and of our report dated
April 26, 1996, except for the second paragraph of Note 1B and Note 2B, as to
which the date is October 11, 1996, on our audit of the financial statements of
Advanced Radio Telecom Corp. as of December 31, 1995 and for the period from
March 28, 1995 (date of inception) to December 31, 1995. We also consent to the
reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New York, New York
October 30, 1996
