<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 000-20709
D & E Communications, Inc.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA
(State or other jurisdiction of
incorporation or organization)
I.R.S. Employer Identification Number: 23-2837108
Brossman Business Complex
124 East Main Street
P.O. Box 458
Ephrata, Pennsylvania 17522
(Address of principal executive offices)
Registrant's Telephone Number: (717) 733-4101
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 6, 1998
----- -------------------------------
Common Stock, par value $.16 per share 7,424,994 Shares
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Item No. Page
- -------- ----
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
1. Financial Statements
Consolidated Statements of Operations --
For the three months and nine months ended
September 30, 1998 and 1997................. 1
Consolidated Balance Sheets --
September 30, 1998 and December 31, 1997.... 2
Consolidated Statements of Cash Flows --
For the nine months ended
September 30, 1998 and 1997................. 3
Notes to Consolidated Financial Statements....... 4-7
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8-16
3. Quantitative and Qualitative Disclosure
about Market Risks............................... 16
PART II. OTHER INFORMATION
2. Changes in Securities ............................. 17
4. Submission of Matters to a Vote
of Security Holders................................ 17
6. Exhibits and Reports on Form 8-K .................. 17
SIGNATURES ........................................ 18
</TABLE>
i
<PAGE>
Form 10-Q Part I - Financial Information
Item 1. Financial Statements
D & E Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per-share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September30 September30
OPERATING REVENUE 1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Communication service revenues............................. $ 11,036 $ 9,426 $ 32,401 $ 28,130
Communication products sold................................ 1,921 2,833 5,405 7,318
Other...................................................... 283 290 872 901
----------- ----------- ----------- -----------
Total Operating Revenues................................ 13,240 12,549 38,678 36,349
----------- ----------- ----------- -----------
OPERATING EXPENSE
Communication service expenses............................. 4,109 2,814 12,213 7,956
Cost of communication products sold........................ 1,334 1,812 3,717 4,976
Depreciation and amortization.............................. 2,355 2,077 7,108 6,167
Marketing and customer services............................ 881 833 2,575 2,526
General and administrative services........................ 2,446 2,972 7,714 8,062
----------- ----------- ----------- -----------
Total Operating Expenses................................ 11,125 10,508 33,327 29,687
----------- ----------- ----------- -----------
Operating Income................................... 2,115 2,041 5,351 6,662
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Allowance for funds used during construction............... 9 24 47 59
Equity in net income (loss) of affiliates.................. (2,971) 119 (7,550) 177
Interest expense........................................... (524) (443) (1,889) (1,632)
Gain on sale of investment................................. 0 11,971 1,659 11,971
Other, net................................................. 412 (68) 1,365 130
----------- ----------- ----------- -----------
Total Other Income (Expense)............................ (3,074) 11,603 (6,368) 10,705
----------- ----------- ----------- -----------
Income (loss) before income taxes and
dividends on utility series preferred stock..... (959) 13,644 (1,017) 17,367
INCOME TAXES AND DIVIDENDS ON
UTILITY SERIES PREFERRED STOCK
Income taxes............................................... 332 5,935 923 7,434
Dividends on utility series preferred stock................ 16 16 49 49
----------- ----------- ----------- -----------
Total Income taxes and dividends
on utility series preferred stock...................... 348 5,951 972 7,483
----------- ----------- ----------- -----------
Net income (loss) before extraordinary item ....... (1,307) 7,693 (1,989) 9,884
Extraordinary loss on early extinguishment of
debt, net of income tax benefit of $220 ............... 0 0 (7,901) 0
----------- ----------- ----------- -----------
NET INCOME (LOSS)........................................... $(1,307) $ 7,693 $(9,890) $ 9,884
=========== =========== =========== ===========
Average common shares outstanding.......................... 7,447 6,116 7,411 6,011
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) before extraordinary item ................. ($ 0.18) $1.26 ($ 0.27) $1.64
Extraordinary loss ........................................ 0.00 0.00 (1.06) 0.00
----------- ----------- ----------- -----------
Earnings (loss) per common share....................... ($ 0.18) $1.26 ($ 1.33) $1.64
=========== =========== =========== ===========
Dividends per common share................................. $0.10 $0.10 $0.29 $0.29
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
D & E Communications, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30,
1998 December 31,
ASSETS Unaudited 1997
--------- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................ $ 5,862 $ 61
Temporary investments............................................ 15,000 ----
Accounts receivable.............................................. 6,763 6,824
Accounts receivable - affiliated companies....................... 2,470 4,630
Inventories, lower of cost or market, at average cost............ 984 891
Prepaid expenses................................................. 1,397 3,286
Other............................................................ 781 454
------------ -------------
TOTAL CURRENT ASSETS.......................................... 33,257 16,146
------------ -------------
INVESTMENTS
Investments and advances in affiliated companies................. 11,919 15,690
Other............................................................ 359 359
------------ -------------
12,278 16,049
------------ -------------
PROPERTY, PLANT AND EQUIPMENT
Telephone plant in service....................................... 121,680 116,655
Under construction............................................... 721 800
------------ -------------
122,401 117,455
Less accumulated depreciation.................................... 60,419 54,654
------------ -------------
61,982 62,801
------------ -------------
OTHER ASSETS
Accounts receivable - affiliated company......................... 404 113
PCS licenses and other assets.................................... 1,567 23,245
Other............................................................ 1,409 1,607
------------ -------------
3,380 24,965
------------ -------------
TOTAL ASSETS.................................................. $ 110,897 $ 119,961
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable.................................................... $ ---- $ ----
Long-term debt maturing within one year.......................... 1,063 1,063
Accounts payable................................................. 5,883 8,285
Accrued taxes.................................................... 336 617
Accrued interest and dividends................................... 636 1,290
Advance billings, customer deposits and other.................... 1,441 3,100
------------ -------------
TOTAL CURRENT LIABILITIES..................................... 9,359 14,355
------------ -------------
LONG-TERM DEBT...................................................... 23,778 41,657
------------ -------------
OTHER LIABILTIES
Deferred income taxes............................................ 6,517 6,863
Other............................................................ 2,507 2,615
------------ -------------
9,024 9,478
------------ -------------
PREFERRED STOCK OF UTILITY SUBSIDIARY par value $100,
cumulative, callable at par, at the option of the Company,
authorized 20,000 shares, outstanding:
Series A 4 1/2%: 14,456 shares............................ 1,446 1,446
------------ -------------
COMMITMENTS
SHAREHOLDERS' EQUITY
Common stock, par value $.16, authorized shares 30,000,000....... 1,187 977
Outstanding shares: 7,452,286 at September 30, 1998
6,128,672 at December 31, 1997
Additional paid-in capital....................................... 36,428 10,341
Unearned ESOP Compensation....................................... (695) (695)
Retained earnings................................................ 30,370 42,402
------------ -------------
67,290 53,025
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....................... $ 110,897 $ 119,961
============ =============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
D & E Communications, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)............................................................................ $(9,890) $ 9,884
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary loss on early extinguishment of debt......................................... 8,361 ---
Depreciation and amortization.............................................................. 7,119 6,183
Deferred income taxes...................................................................... (346) 475
Undistributed losses from affiliates....................................................... 7,550 (177)
Tax benefits applicable to ESOP............................................................ 9 18
Gain on sale of investments................................................................ (1,659) (11,971)
Loss on retirement of property, plant and equipment........................................ 40 56
Allowance for funds used during construction............................................... (47) (1,103)
Losses applicable to minority interest..................................................... 0 (50)
Changes in operating assets and liabilities:
Accounts receivable and notes receivable................................................... 61 (462)
Inventories................................................................................ (93) 88
Prepaid expenses........................................................................... 1,889 1,328
Accounts payable........................................................................... (2,402) 2,911
Accrued taxes and accrued interest......................................................... 242 4,673
Advance billings, customer deposits and other.............................................. (1,660) (1,150)
Other, net................................................................................. (502) (40)
---------- ----------
Net Cash Provided By Operating Activities.................... 8,672 10,663
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures......................................................................... (5,829) (13,606)
Allowance for funds used during construction................................................. 47 1,103
Proceeds from sale of temporary investments.................................................. 12,000 ---
Purchase of temporary investments............................................................ (27,000)
Proceeds from sale of assets................................................................. 96 165
Proceeds from sale of investments ........................................................... 2,375 17,897
Cost of removal of plant retired............................................................. (84) (68)
Acquisition of other assets.................................................................. --- (2,333)
Increase in investments and advances to affiliates........................................... (24,979) (3,467)
Decrease in investments and repayments from affiliates....................................... 22,355 1,529
---------- ----------
Net Cash Provided By (Used In) Investing Activities.......... (21,019) 1,220
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on common stock.................................................................... (2,029) (1,693)
Net proceeds from (payments on) revolving lines of credit.................................... 0 (7,140)
Payments on long-term debt................................................................... (6,000) (162)
Proceeds from issuance of common stock....................................................... 26,177 327
---------- ----------
Net Cash Provided By (Used In) Financing Activities.......... 18,148 (8,668)
---------- ----------
INCREASE IN CASH
AND CASH EQUIVALENTS......................................................................... 5,801 3,215
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD.......................................................................... 61 315
---------- ----------
END OF PERIOD................................................................................ $ 5,862 $ 3,530
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 1. Notes to Consolidated Financial Statements
----------------------------------------------------
(Dollar amounts are in thousands)
(Unaudited)
(1) BASIS OF PRESENTATION
---------------------
D&E Communications, Inc. is a telecommunications holding company. The
accompanying consolidated financial statements include the accounts of
Denver and Ephrata Telephone and Telegraph Company ("D&E Telephone"); D&E
Holdings, L.P. ("Holdings L.P."); D&E Telephone and Data Systems ("TDS");
D&E Marketing Corp. ("Marketing"); D&E Wireless, Inc. ("Wireless"); and D&E
Investments, Inc. ("Investments"). D&E Communications, Inc., including
these subsidiary companies, is defined and referred to herein as "D&E".
The accompanying financial statements are unaudited and have been
prepared by D&E pursuant to generally accepted accounting principles and
the rules and regulations of the Securities and Exchange Commission
("SEC"). In the opinion of management, the financial statements include all
adjustments (consisting of normal recurring adjustments) necessary to
present fairly the results of operations, financial position, and cash
flows of D&E for the periods presented. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules and regulations. The use of
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. D&E believes that the disclosures made are adequate to
make the information presented not misleading. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the D&E Annual Report on Form 10-K for the fiscal year
ended December 31, 1997 and the Form 10-Q's for March 31, 1998 and June 30,
1998.
(2) NON-CASH FINANCING AND INVESTING ACTIVITIES
-------------------------------------------
D&E recorded non-cash transactions for shares of common stock issued in
connection with an acquisition and a merger. D&E issued 21,408 shares of
D&E common stock in January 1997 as the deferred portion of the price in
connection with the acquisition of Com Tech
4
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 1. Notes to Consolidated Financial Statements
----------------------------------------------------
(Dollar amounts are in thousands)
(Unaudited)
Technical Services, now doing business as D&E Computer Networking Services
("Computer Networking "). Separately, $7,307 of the cost incurred in the
merger with PCS One, Inc. was paid by the issuance of 317,667 shares of D&E
common stock in March 1997. D&E assumed a long-term note payable to the
Federal Communications Commission ("FCC") for $11,879 as part of the PCS
One, Inc. merger during the first quarter of 1997.
On June 8, 1998, the FCC debt of $11,879 was extinguished along with its
$1,178 accrued interest by acceptance of the FCC's Amnesty Option. Under
the terms of the Amnesty Option, the full license spectrum for the
Lancaster, PA Basic Trading Area ("BTA") C-Block license with a book value
of $21,417 was returned to the FCC. D&E did not choose the Disaggregation
Option, which allowed a return of a portion of the spectrum and partial
reduction of FCC debt, because the Amnesty Option provided the potential
for a greater long term cash savings. D&E has additional spectrum with
other licenses available to continue development of the wireless business
through its D&E/Omnipoint Wireless Joint Venture, L.P. ("PCS ONE"). See
Note 3.
(3) ACQUISITIONS AND JOINT VENTURES WITH AFFILIATED COMPANIES
---------------------------------------------------------
On March 21, 1997 D&E merged with PCS One, Inc., the owner of the C-
Block broadband PCS license to operate in the Lancaster, Pennsylvania
market. The merger was accounted for as a purchase with no material effect
from the merger on the consolidated net income in 1997. D&E recorded the
merger with PCS One, Inc. at a value of $21,123. D&E issued 317,667 shares
of D&E common stock to PCS One, Inc. shareholders. Long-term debt payable
to the FCC of $11,879 was assumed, and a note payable to The D and E Group
of $1,559 was assumed and eliminated in consolidation. D&E dissolved its
80% owned partnership, The D and E Group, which held a minority interest in
PCS One, Inc. D&E then formed a subsidiary corporation, Investments, to
hold the Lancaster C-Block license. D&E formed a separate subsidiary,
Wireless, in April 1997 to design, construct, and operate the PCS network.
On November 14, 1997, Wireless and Omnipoint Venture Partner I, L.L.C.
formed a limited partnership, PCS ONE. Wireless holds a 50% interest in PCS
ONE which operates a PCS communication system in the Basic Trading Areas of
Lancaster, Harrisburg, York-Hanover, and
5
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 1. Notes to Consolidated Financial Statements
----------------------------------------------------
(Dollar amounts are in thousands)
(Unaudited)
Reading, Pennsylvania. Under the terms of the agreement, the joint venture
will operate for an initial period of 10 years, with provisions for
subsequent renewals. Wireless recorded $1,703 and $5,074 as its share of
the PCS ONE loss for the three month and nine month periods ending
September 30, 1998, respectively.
(4) DISPOSITION OF BUSINESS
-----------------------
On May 14, 1998 Holdings sold its fifteen percent (15%) interest in
Berks & Reading Area Cellular Enterprises for $2,375. The gain on the sale
was $1,659. The proceeds from the sale were used by D&E to increase its
investment in PCS ONE by $1,600 and for working capital requirements. The
Holdings L.P. partnership was dissolved on June 10, 1998 because it no
longer owned any cellular investments and its business purpose was
complete.
(5) PRIVATE PLACEMENT FINANCING
---------------------------
On January 7, 1998 D&E issued 1.3 million shares of D&E Common Stock to
a subsidiary of Citizens Utilities Company ("Citizens") in consideration
for $27 million, or $20.78 per share, pursuant to an exemption from
registration under Section 4 (2) of the Securities Act of 1933, as amended.
All such shares are unregistered, but have certain registration rights.
Under the terms of the agreement, Citizens had certain restrictions, which
expired on November 3, 1998, relating to future purchases or sales of D&E
Common Stock. Additionally, in connection with this agreement, D&E issued
warrants on January 7, 1998 to acquire 65,000 shares of Common Stock at
$20.78 per share. The warrants are exercisable immediately and at any time
within five years from the date of grant. All such warrants are
unregistered, but have certain registration rights for the underlying
common stock.
(6) COMPREHENSIVE INCOME
--------------------
During 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"), which the Company adopted as of January 1, 1998.
Comprehensive income consists of net income and other gains and losses
affecting shareholders' equity that, under generally accepted accounting
principles, are excluded from net income. For D&E, such items have included
only reductions of the
6
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 1. Notes to Consolidated Financial Statements
----------------------------------------------------
(Dollar amounts are in thousands)
(Unaudited)
ESOP trust loan. Since its adoption by the Company, there have been no
transactions reportable under SFAS 130.
(7) RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use," (SOP 98-1). SOP
98-1 provides, among other things, guidance for determining whether
computer software is for internal use and when the cost related to such
software should be expensed as incurred or capitalized and amortized. SOP
98-1 is required to be adopted no later than January 1, 1999.
D&E subsidiaries currently capitalize central office initial operating
system and initial application software costs. For noncentral office
equipment, only the initial operating system software is capitalized.
Subsequent additions, modifications, or upgrades of initial software
programs, whether operating or application packages, are expensed as
incurred. D&E is currently evaluating the provisions of SOP 98-1 and has
not yet quantified the effect at this time. The adoption of SOP 98-1 is
expected to result in an increase in earnings in the year of adoption due
to the prospective capitalization of costs which previously were expensed.
(8) SUBSEQUENT EVENTS
-----------------
On October 22, 1998, D&E announced that its Board of Directors
authorized the repurchase of up to $2 million worth of its shares of Common
Stock. The shares reacquired may be used for its incentive compensation
programs, Employee Stock Purchase Plan, Dividend Reinvestment Plan, and for
other corporate purposes.
7
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Monetary amounts presented in the following discussion are rounded to
the nearest thousand dollars. Certain items in the financial statements for
the three months and nine months ended September 30, 1997 have been
reclassified for comparative purposes.
RESULTS OF OPERATIONS
Summary. Operating revenues increased 5.5% for the three months and
-------
6.4% for the nine months ended September 30, 1998 compared with the same
periods of 1997. Operating expenses increased 5.9% for the three month and
12.3% for the nine month periods of 1998 compared to 1997. The result was
an operating profit of approximately 16% for the third quarter of 1998 and
1997. Year-to-date operating income decreased to 13.8% in 1998 from 18.3%
in the preceding year. This decrease is partially related to D&E Telephone
cost increases and to the TDS decline in system sales. Equity in income of
affiliates decreased as a result of the sales in September 1997 and May
1998 of cellular partnership interests which were generating income.
Additionally, Eurotel's development of a new phone system in Poland and PCS
ONE's development of a Personal Communication System (PCS) network in south
central Pennsylvania, created substantial losses in 1998. These losses are
expected to continue as these businesses develop. The return of the C-Block
PCS license for the Lancaster, PA BTA, in June 1998, and the related FCC
debt extinguishment, resulted in the year-to-date extraordinary loss (net
of tax) of $7,901. This loss did not result in the use of cash and was
intended to reduce future cash requirements for principal and interest
payments. Ongoing amortization and interest expenses will decrease
approximately $340 per quarter as a result of the license return without
interruption in the development of the PCS network. Earnings per share were
also negatively affected by an increase in excess of 20% of common shares
outstanding, primarily from the issuance of 1.3 million shares to Citizens
in January 1998.
Operating Revenues. Total operating revenues for the three months ended
------------------
September 30, 1998 were $13,240, up 5.5% from the $12,549 recorded for the
third quarter in 1997. For the nine months ended September 30, 1998,
operating revenues were $38,678, up 6.4% from $36,349 for the first nine
months of 1997. Operating revenues are derived primarily from local network
services revenues, network access services revenues, long distance network
services revenues, and other communication services revenues. The quarter
and year-to-
8
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
date growth resulted primarily from communication service revenue for
services provided to affiliated companies, notably PCS ONE. Communication
products sold decreased primarily as a result of lower telephone system
sales and the completion of a major data communication network during 1997.
Local network services revenues are generated from providing local
exchange and local private line services. Local network services revenues
for the three months ended September 30, 1998 were $2,579, up 5.4% from
$2,448 in 1997. For the nine months ended September 30, 1998, local network
services revenues were $7,642, up 8.9% from $7,019 in 1997. The increase
was primarily due to a revenue neutral rate adjustment made in May of 1997
which increased the basic area rate while decreasing some other service
rates. Additionally, an increase of approximately 5% in the number of
access lines contributed to the quarter and year-to-date increases.
Network access services revenues are received from D&E Telephone's
subscribers, from local exchange carriers, interexchange carriers, and
wireless companies. They use D&E Telephone's local exchange facilities in
providing interstate and intrastate long distance services to their
customers and from settlement pools administered by the National Exchange
Carrier Association, Inc. ("NECA"). Revenues in this category were $4,203
for the three months ended September 30, 1998, versus $3,978 in 1997. For
the nine months ended September 30, 1998 these revenues were $12,523 versus
$12,290 in the same period of the prior year.
Long distance network services revenues are received from long distance
calls made by D&E Telephone customers within the Capital (south central)
Region of Pennsylvania and world-wide long distance calls made by D&E Long
Distance customers. Revenues in this category for the three months ended
September 30, 1998 were $1,557, up 4.7% from $1,487 in 1997. For the nine
months ended September 30, 1998, these revenues were $4,574, up 3.0% from
$4,441 in 1997. The increase in the quarterly revenue resulted primarily
from increases in the minutes of use. Revenue increases were moderated by a
rate decrease which was one of the provisions within the revenue neutral
rate adjustment made in May of 1997. The same factors affected the nine-
month comparison.
Other communication services revenues include equipment rentals,
repairs, paging, billing and collection services, and consulting
9
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
services provided to affiliated companies, primarily PCS ONE. Revenues in
this category for the three months ended September 30, 1998 were $1,921, up
from $709 in 1997. For the nine months ended September 30, 1998, these
revenues were $5,354 up from $2,064 in 1997. The increases were primarily
attributable to the revenue for services provided to PCS ONE and the two
European joint ventures.
Communication products sold revenues are derived primarily from sale and
installation of telephone and computer network systems. Revenues in this
category for the three months ended September 30, 1998 were $1,921, down
32.2% from $2,833 in 1997. For the nine months ended September 30, 1998,
these revenues were $5,405, down 26.1% from $7,318 in 1997. The quarter and
year-to-date amounts were down in 1998 as a result of the completion of
several major installations in 1997 with no similar work in 1998.
Operating Expenses. Total operating expenses for the three-month
------------------
period ended September 30, 1998 were $11,125, up 5.9% from $10,508 recorded
during the same quarter in 1997. For the nine months ended September 30,
1998, operating expenses were $33,327, up 12.3% from $29,687 in the first
nine months of 1997. The primary reason for the increases was the costs
associated with providing services to affiliated companies, notably PCS
ONE.
Communication service expenses, including network operations, network
access, directory advertising, and other communication service costs, were
$4,109, up 46.0% from $2,814 for the same quarter of 1997. For the nine
months ended September 30, 1998, expenses in this category were $12,213, up
53.5% from $7,956 in 1997. The increase was primarily related to additional
network operations and other communication service costs described below.
Network operations expenses are incurred in maintaining D&E Telephone's
switching and transmission facilities, including digital central office
switching equipment and outside plant cable and trunk facilities. Network
operations include related employee costs, engineering expense, maintenance
of land and buildings, testing, general purpose computers, office
equipment, video conferencing and other materials and supplies. Expenses in
this category for the three months ended September 30, 1998 were $1,556,
down 1.9% from $1,586 during the same quarter in 1997. For the nine months
ended September 30, 1998, these expenses were $4,883, up 15.0% from $4,245
in the first nine months of 1997. Expenses for the current quarter
10
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
reflected a decline in software expenditures compared to the third quarter
of 1997. For the nine months these expenses were up primarily due to an
increase in the number of employees and the expansion of office space and
equipment purchases to accommodate them. Computer software and equipment
purchases also contributed to the increase in network operations expense.
Other communication service costs include the cost of equipment rentals,
pageboy service, service maintenance agreements, and, primarily, the costs
incurred to provide consulting services to affiliates. Expenses in this
category for the three months ended September 30, 1998 were $1,312 up from
$128 in the same quarter of 1997. For the nine months ended September 30,
1998, these expenses were $3,529, up from $338 in the first nine months of
1997. These costs were primarily for services to D&E affiliates including,
PCS ONE, the two European operations, and D&E SuperNet.
The cost of communication products sold for the three months ended
September 30, 1998 was $1,334, down 26.4% from $1,812 in the same quarter
of 1997. For the nine months ended September 30, 1998, this cost was
$3,717, down 25.3% from $4,976 in the first nine months of 1997. The
decreases were primarily related to a lower number of telephone system
sales in 1998.
Depreciation expense for the three months ended September 30, 1998 was
$2,355, up 13.4% from $2,077 in 1997. For the nine months ended September
30, 1998, depreciation was $7,108, up 15.3% from $6,167 in 1997. The
majority of the increases were attributable to an increase in telephone
plant-in-service including primarily, general purpose computers and digital
electronic switching equipment placed in service late in 1997.
Additionally, amortization of the PCS licenses acquired during 1997 began
when they were placed into service in November 1997. PCS license
amortization decreased after the return of the C-Block license in June
1998.
General and administrative services expenses for the three months ended
September 30, 1998 were $2,446, down 17.7% from $2,972 in 1997. For the
nine months ended September 30, 1998 these expenses were $7,714, down 4.3%
from $8,062 in the first nine months of 1997. The decreases in both periods
were primarily attributable to decreases in planning and development labor
related to the PCS business. Increased capital stock tax and other
operating taxes partially offset these reductions.
11
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Other Income (Expense). Other income (expense) for the three months
----------------------
ended September 30, 1998 was a net expense of $3,074, compared with a net
income of $11,603 in the same quarter of 1997. For the nine months ended
September 30, 1998, these accounts were a net expense of $6,368 compared
with a net income of $10,705 in the first nine months of 1997. These
changes were primarily related to reduced equity in the income of
affiliates due to the sale of cellular interests in September 1997 and May
1998. The third quarter of 1997 included a gain of $11,971 on the sale of
two cellular partnership interests. Also, D&E's share in the losses of PCS
ONE totaled $1,703 for the quarter and $5,074 for the first nine months of
1998 with no similar losses in 1997. Future losses are anticipated to
continue while the PCS ONE business develops. Offsetting these decreases in
year-to-date earnings was a gain recorded by D&E on the sale of its last
cellular partnership investment of $1,659 during the second quarter of
1998.
D&E's share of losses from its investment in Monor Communications Group
("MCG") was $351 for the quarter ended September 30, 1998, up $137 from a
$214 loss in the third quarter 1997. For the nine months ended September
30, 1998, D&E's share of MCG's loss was $656, which was $270 less than the
loss in the first nine months of 1997. MCG's loss was primarily from its
investment in Monor Telephone ("MTT") in Hungary. These changes resulted
primarily from fluctuations in the foreign exchange rates between 1998 and
1997.
Start-up loss activities of Eurotel's Pilicka Telephone ("PT") in Poland
was $958 for the quarter ended September 30, 1998, up $925 from a $33 loss
in the third quarter of 1997. For the nine months ended September 30, 1998,
D&E's share of Eurotel's loss was $2,011, or $1,928 more than in the first
nine months of 1997. Third quarter 1998 expenses included an increase in
interest expense related to an additional $20 million of financing obtained
by Eurotel during the third quarter of 1998. Losses related to PT are
anticipated to continue while construction of the telephone system in
Poland is under way.
Interest expense for the three months ended September 30, 1998 was $524,
up $81 from $443 in 1997. For the nine months ended September 30, 1998,
interest was $1,889, up $257 from $1,632 for the first nine months of 1997.
For the nine months ended September 30, 1998, interest expense included
$346 on the PCS license loan from the FCC. In 1997, the license was not in
use, therefore the
12
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
interest on the loan was capitalized. Since the return of the C-Block
license, that interest expense has been eliminated. Interest expense
accrued but unpaid when the license was returned, was recorded as a
reduction in the extraordinary loss on debt extinguishment. Other interest
decreased as a result of the reduction of debt after the sale of cellular
interests in the third quarter of 1997, the principal repayment of long-
term senior debt which began in 1997, and the infusion of cash from the
sale of shares to Citizens in January 1998 which was used, in part, to
further reduce debt.
Income taxes. Income taxes were $332 for the three months ended
------------
September 30, 1998, down from $5,935 in 1997. For the nine months ended
September 30, 1998, income taxes were $923, down from $7,434 in the same
period of 1997. The reduction in income taxes was primarily the result of
the losses associated with PCS ONE in 1998 which did not exist in 1997.
Partially offsetting these tax decreases was a tax increase from D&E's
September 1997 decision to increase its valuation allowance on deferred tax
assets related to the equity loss in European investments. The valuation
allowance was provided because realization of tax loss carryforwards is not
likely.
FINANCIAL CONDITION
Liquidity and Capital Resources. D&E believes that it has adequate
-------------------------------
internal and external resources available to meet ongoing operating
requirements, including expansion and modernization of the network and
business development. D&E expects that foreseeable capital requirements for
its existing businesses will be financed primarily through internally
generated funds, use of its existing cash or temporary investments, and
additional debt. Additional short or long-term debt or equity financing may
be needed to fund growth of the PCS ONE network, other new business
development activities, and to enhance D&E's capital structure.
D&E's primary source of funds for the nine months ended September 30,
1998 was from the issuance on January 7, 1998 of 1.3 million shares of
Common Stock to Citizens in a private placement for $20.78 per share. The
$26 million received (net of expenses) was used, in
13
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
part, to repay $6 million of bank debt and to increase investments in or
advances to affiliates. At September 30, 1998, $15 million was invested in
commercial paper, and $5.9 million was held in cash balances. These cash
and investment reserves are intended to be used for additional investment
in PCS ONE and for other general working capital purposes.
Other cash changes included cash provided by operating activities of
$8,672. Major changes in funds provided by operating activities include
funds provided by a decrease in prepaid expenses of $1,889, offset by a use
of funds from a decrease in accounts payable and advance billings of
$4,062. A total of $5,829 for capital expenditures was used primarily for
$3,128 of computers and switching equipment and $1,342 for outside plant
including poles and cable improvements.
The cash and cash equivalents balance at September 30, 1998 was $5,862,
plus $18,000 was available on short-term lines of credit. In addition to
this cash, $15,000 was invested in high quality short-term commercial
paper.
D&E's ratio of total debt to total debt plus capital decreased to 26.6%
at September 30, 1998 from 44.0% at December 31, 1997. This change resulted
primarily from the increase in equity from the Citizens investment which
was partially used to reduce bank debt.
OTHER
The investment by Citizens represented 17.5% of the shares of D&E Common
Stock outstanding. Under the agreement between the parties, Citizens agreed
for one year, until November 3, 1998, not to acquire additional shares of
D&E's Common Stock without D&E's consent. If Citizens proposes to sell any
shares of D&E Common Stock that it owns, then Citizens must first give D&E
the opportunity to repurchase them. Citizens has the right to require D&E
to register the Common Stock it acquired for public resale.
On October 13, 1998, the Pennsylvania Public Utility Commission ("PA
PUC") launched a Global Telecommunications Settlement Conference ("GTSC")
aimed at resolving multiple regulatory
14
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
proceedings. Proceedings, relating to access charge reform, funding for
universal service, and interconnection charges and agreements, are stayed
until conclusion of the GTSC, slated for January 29, 1999. Meanwhile, D&E
has entered a settlement petition with the PA PUC to withdraw its revenue
neutral rate rebalancing request.
In compliance with state statutes, D&E petitioned on July 31, 1998, for
an alternative form of regulation pursuant to Chapter 30 of the Public
Utility Code. The proceeding, which usually carries a mandatory nine month
statutory deadline for the PA PUC, was extended for an additional sixty
days to permit voluntary mediation. Regulatory litigation costs for this
proceeding are shared with eighteen other incumbent local exchange carriers
(the "Petitioners"). Upon conclusion of this case in June 1999, the
Petitioners expect to embark on an accelerated network modernization plan
in exchange for relaxed regulatory oversight.
During a period of reconsideration and waiver of the C-Block license
interest, the FCC reviewed the repayment terms for C-Block license note
agreements. The FCC offered C-Block holders several options as alternatives
to the original payment terms. Under the terms of the Amnesty Option
selected, D&E returned the full license spectrum, reducing license cost by
$21,417. In return, the FCC canceled the principal and accrued interest
payable on the financed portion of the license cost, reducing liabilities
by $13,296. The resulting loss is reported as an extraordinary transaction
of $7,901 net of the related income tax benefit.
The Year 2000 issue is the result of computer programs written to use
two digits rather than four to identify the applicable year. Some of D&E's
programs that have date-sensitive software might recognize a date entry
using "00" as the year 1900 rather than 2000. D&E has addressed the issue
by identifying the programs that need to be modified and has completed the
modifications to essential programs, including the billing system software
and the accounting data base system. Operating systems in the Company's
personal computers have been updated, and Year 2000 compliance has been
confirmed by vendors whose services are critical to D&E's compliance. Other
software program modifications and testing are nearing completion, and the
entire program should be finished in the second quarter of 1999. The cost
of completing the modifications has been immaterial to the current
operations, and management believes the changes will be completed without
material impact on its financial condition or interruption to ongoing
business
15
<PAGE>
Form 10-Q
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of
-------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
activities.
PCS ONE completed a $40 million loan agreement with Northern Telecom
Inc. ("Nortel") to provide additional funds for continued development of
the PCS network. As an inducement to Nortel to provide the financing, D&E
became a party to a Capital Contribution Agreement whereby it became
jointly and severally liable to Nortel to contribute up to a total of $50
million of equity to PCS ONE in the event of a default. Omnipoint
Corporation, D&E's joint venture partner in the development of the PCS ONE
system is also a signatory to the Capital Contribution Agreement with joint
and several liability.
On October 22, 1998, D&E announced that its Board of Directors
authorized the repurchase of up to $2 million worth of its shares of Common
Stock. The shares reacquired may be used for its incentive compensation
programs, Employee Stock Purchase Plan, Dividend Reinvestment Plan, and for
other corporate purposes. Based on this authorization, D&E acquired 30,000
shares of its Common Stock in a privately negotiated transaction with a
member of the Voting Trust on October 27, 1998.
FORWARD-LOOKING STATEMENTS
This quarterly report contains certain forward-looking statements as to
Year 2000 remediation and the future performance of D&E and its various
domestic and international joint venture investments. Actual results may
differ as a result of factors over which D&E has no control, including, but
not limited to, regulatory factors, uncertainties and economic fluctuations
in the domestic and foreign markets in which the companies compete,
foreign-currency risks and increased competition in domestic markets due in
large part to continued deregulation of the telecommunications industry.
Item 3. Quantitative and Qualitative Disclosure
------------------------------------------------
About Market Risks
------------------
D&E does not invest excess funds in derivative financial instruments or
other market risk sensitive instruments for the purpose of managing its
foreign currency exchange rate risk or for any other purpose.
16
<PAGE>
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Part II - Other Information
Item 2. Changes in Securities
------------------------------
See Part I, Item 1, Notes to Consolidated Financial Statements Note 4
and Part I, Item 2, - Management's Discussion and Analysis and Results of
Operations, regarding a Stock Acquisition Agreement between D&E and
Citizens.
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
<TABLE>
<CAPTION>
(a) Exhibits:
Exhibit Identification
No. of Exhibit Reference
------- -------------- ---------
<S> <C> <C>
10.1 Loan Agreement between D&E/Omnipoint Filed herewith.*
Wireless Joint Venture, L.P. and
Northern Telecom Inc. dated
September 18, 1998.
10.2 Capital Contribution Agreement Filed herewith.
between Omnipoint Corporation and
D&E Communications, Inc. in favor of
D&E/Omnipoint Wireless Joint Venture,
L.P. and Northern Telecom Inc. dated
as of September 18, 1998.
27 Financial Data Schedule. Filed herewith.
</TABLE>
(b) Reports on Form 8-K:
None.
_________________
* Confidential treatment requested with respect to portions thereof.
17
<PAGE>
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D & E Communications, Inc.
(Registrant)
Date: November 12, 1998
By: /s/ Thomas E. Morell
--------------------------------
Thomas E. Morell
Vice President, Chief Financial Officer
and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF
NOVEMBER 12, 1998.
18
<PAGE>
D & E COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Identification
No. of Exhibit Reference
------- -------------- ---------
<S> <C> <C>
10.1 Loan Agreement between D&E/Omnipoint Filed herewith.*
Wireless Joint Venture, L.P. and
Northern Telecom Inc. dated
September 18, 1998.
10.2 Capital Contribution Agreement Filed herewith.
between Omnipoint Corporation and
D&E Communications, Inc. in favor of
D&E/Omnipoint Wireless Joint Venture,
L.P. and Northern Telecom Inc. dated
as of September 18, 1998.
27 Financial Data Schedule. Filed herewith.
</TABLE>
_________________
* Confidential treatment requested with respect to portions thereof.
19
<PAGE>
EXHIBIT 10.1
LOAN AGREEMENT
dated as of September 18, 1998
among
D&E/OMNIPOINT WIRELESS JOINT VENTURE, L.P.
Borrower,
--------
NORTHERN TELECOM INC.
As ADMINISTRATIVE AGENT,
-----------------------
and
THE LENDERS NAMED HEREIN
- --------------------------------------------------------------------------------
Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as *****. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION....................................... 1
Section 1.01 Definitions............................................. 1
Section 1.02 Rules of Interpretation................................ 25
Section 1.03 Accounting Terms....................................... 26
ARTICLE II
THE LOANS..................................................................... 27
Section 2.01 The Advances............................................ 27
Section 2.02 Making the Advances.................................... 27
Section 2.03 Fees.................................................... 30
Section 2.04 Interest................................................ 30
Section 2.05 Interest Rate Determination............................. 31
Section 2.06 Conversion of Advances.................................. 32
Section 2.07 Payments and Computations............................... 33
Section 2.08 Sharing of Payments, Etc................................ 35
Section 2.09 Use of Proceeds......................................... 35
Section 2.10 The Notes............................................... 36
Section 2.11 Reduction or Termination of the Commitments............. 37
ARTICLE III
REPAYMENT AND PREPAYMENT OF THE LOANS......................................... 37
Section 3.01 Repayment............................................... 37
Section 3.02 Mandatory Prepayments of Loans.......................... 38
Section 3.03 Optional Prepayments of Loans........................... 40
Section 3.04 Certain Matters Relating to
Repayments and Prepayments........................................... 41
ARTICLE IV
ILLEGALITY, INCREASED COSTS, CAPITAL ADEQUACY AND
INDEMNITIES................................................................... 41
Section 4.01 Illegality............................................. 41
Section 4.02 Additional Costs and Capital Adequacy.................. 42
Section 4.03 Taxes.................................................. 43
Section 4.04 Survival............................................... 45
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES................................................ 45
Section 5.01 Corporate Authority; Partnership Authority; Limited
Liability Company Authority........................................ 46
Section 5.02 Governmental and Third Party Approvals................. 48
Section 5.03 Title to Properties.................................... 48
Section 5.04 Financial Statements................................... 48
Section 5.05 No Material Adverse Effect, Etc........................ 49
Section 5.06 Franchises, Patents, Copyrights, Etc................... 49
Section 5.07 FCC Licenses, Etc...................................... 49
Section 5.08 Litigation............................................. 49
Section 5.09 No Materially Adverse Contracts, Etc................... 50
Section 5.10 Compliance with Other Instruments, Laws, Etc........... 50
Section 5.11 Tax Status............................................. 50
Section 5.12 No Default............................................. 50
Section 5.13 Holding Company and Investment Company Acts............ 50
Section 5.14 Absence of Financing Statements, Etc................... 51
Section 5.15 FCC Matters............................................ 51
Section 5.16 Tariffs................................................ 51
Section 5.17 Disclosure............................................. 51
Section 5.18 Burdensome Obligations................................. 51
Section 5.19 Solvency............................................... 52
Section 5.20 Security Interests..................................... 52
Section 5.21 Certain Transactions................................... 52
Section 5.22 Business Plans......................................... 52
Section 5.23 Employee Benefit Plans................................. 52
Section 5.24 Regulations G,U and X.................................. 54
Section 5.25 Environmental Compliance............................... 54
Section 5.26 Joint Ventures, Etc.................................... 55
Section 5.27 Material Contracts..................................... 55
Section 5.28 Representations in Other Loan Documents................ 55
Section 5.29 Licenses............................................... 55
Section 5.30 Ownership of Borrower.................................. 55
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER......................................... 56
Section 6.01 Maintenance of Office.................................. 56
Section 6.02 Records and Accounts................................... 56
Section 6.03 Corporate, Partnership and Limited Liability
Company Existence; Maintenance of Licenses; Assignment or
Transfer of Licenses............................................... 56
Section 6.04 Maintenance of Properties.............................. 58
</TABLE>
(iii)
<PAGE>
<TABLE>
<S> <C>
Section 6.05 Insurance.............................................. 58
Section 6.06 Taxes.................................................. 59
Section 6.07 Inspection of Properties and Books..................... 59
Section 6.08 Compliance with Laws, Contracts, FCC Licenses
and Permits........................................ 60
Section 6.09 Further Assurances..................................... 60
Section 6.10 Attornment and Recognition Agreements; Consents
to Collateral Assignments.......................... 61
Section 6.11 Maintenance of Rights and Privileges................... 61
Section 6.12 Maintenance of Subsidiary.............................. 61
Section 6.13 Reporting Requirements; Notices........................ 62
Section 6.14 Financial Covenants of the Borrower.................... 69
Section 6.15 Mortgage Liens......................................... 72
Section 6.16 After-Acquired Collateral.............................. 73
Section 6.17 Subordinated Debt Rate Hedging Arrangements............ 73
Section 6.18 Syndication............................................ 73
Section 6.19 Capital Contribution Agreement......................... 73
Section 6.20 New Subsidiaries...................................... 74
ARTICLE VII
CERTAIN NEGATIVE COVENANTS OF THE BORROWER.................................... 75
Section 7.01 Restrictions on Indebtedness........................... 75
Section 7.02 Restrictions on Liens.................................. 76
Section 7.03 No Contingent Obligations.............................. 77
Section 7.04 Restrictions on Investments............................ 78
Section 7.05 Distributions.......................................... 79
Section 7.06 Merger, Consolidation, Disposition of Assets, Etc...... 80
Section 7.07 Compliance with Environmental Laws..................... 82
Section 7.08 Employee Benefit Plans................................. 83
Section 7.09 New Subsidiaries....................................... 84
Section 7.10 Transactions with Affiliates........................... 84
Section 7.11 Permitted Business..................................... 85
Section 7.12 Charter Amendments..................................... 85
Section 7.13 Accounting Changes..................................... 85
Section 7.14 Prepayments, Etc., of Indebtedness..................... 85
Section 7.15 Amendment, Etc., of Material Contracts................. 86
Section 7.16 Restrictions on Subsidiaries........................... 86
Section 7.17 Partnerships........................................... 86
Section 7.18 Default Under the Volume Purchase Agreement............ 86
Section 7.19 Collections of Receivables............................. 86
Section 7.20 Management Fees........................................ 86
Section 7.21 Operating Leases....................................... 86
Section 7.22 Restrictions Regarding License Subsidiaries............ 87
</TABLE>
(iv)
<PAGE>
<TABLE>
<S> <C>
Section 7.23 Sale and Leaseback...................................... 87
ARTICLE VIII
CONDITIONS TO THE CLOSING..................................................... 87
Section 8.01 Terms and Conditions of Transaction..................... 87
Section 8.02 Due Diligence........................................... 88
Section 8.03 Validity of Liens....................................... 88
Section 8.04 Search Reports and Related Documents.................... 88
Section 8.05 Certificates of Insurance............................... 89
Section 8.06 Solvency Certificate.................................... 89
Section 8.07 Opinions of Counsel to the Borrower and its Subsidiaries 89
Section 8.08 Opinion of Counsel to the Partners, DEC and OC.......... 90
Section 8.09 Opinion of FCC Counsel.................................. 90
Section 8.10 Payment of Fees......................................... 90
Section 8.11 Approvals, Permits; FCC Licenses........................ 90
Section 8.12 Delivery of Full-Term Operating Business Plan........... 91
Section 8.13 Security Agreements..................................... 91
Section 8.14 Guaranties.............................................. 93
Section 8.15 Mortgages, Etc......................................... 94
Section 8.16 Landlord Waivers, Attornment and Recognition
Agreements, Consents to Collateral Assignments...... 94
Section 8.17 Material Agreements..................................... 94
Section 8.18 Litigation.............................................. 95
Section 8.19 Administrative Agent Letter............................. 95
Section 8.20 No Default.............................................. 95
Section 8.21 No Material Adverse Effect.............................. 95
Section 8.22 Corporate, Partnership or Limited Liability
Company Documents................................... 95
Section 8.23 Outstanding Interest.................................... 97
Section 8.24 Capital Contribution Agreement.......................... 98
Section 8.25 Amendment to Volume Purchase Agreement.................. 98
Section 8.26 Master Services Agreements and Other Agreements;
Acknowledgement of Assignment....................... 98
Section 8.27 No Misrepresentations................................... 98
Section 8.28 Compliance Certificate.................................. 99
Section 8.29 FCC Debt................................................ 99
Section 8.30 Other Information....................................... 99
ARTICLE IX
CONDITIONS TO ADVANCES........................................................ 99
</TABLE>
(v)
<PAGE>
<TABLE>
<S> <C>
Section 9.01 Conditions Precedent to an Initial Advance.............. 99
Section 9.02 Conditions to All Advances.............................. 100
ARTICLE X
EVENTS OF DEFAULT; ACCELERATION; ETC.......................................... 102
Section 10.01 Events of Default and Acceleration.................... 102
ARTICLE XI
THE ADMINISTRATIVE AGENT...................................................... 108
Section 11.01 Authorization and Action.............................. 108
Section 11.02 Administrative Agent's Reliance, Etc.................. 108
Section 11.03 Nortel and Affiliates................................. 109
Section 11.04 Lender Credit Decision................................ 110
Section 11.05 Indemnification....................................... 110
Section 11.06 Successor Administrative Agents....................... 110
ARTICLE XII
MISCELLANEOUS................................................................ 111
Section 12.01 Amendments, Etc....................................... 111
Section 12.02 Notices, Etc.......................................... 112
Section 12.03 No Waiver; Remedies................................... 117
Section 12.04 Costs, Expenses....................................... 118
Section 12.05 Right of Set-off...................................... 120
Section 12.06 Binding Effect........................................ 120
Section 12.07 Assignments and Participations........................ 120
Section 12.08 Governing Law......................................... 125
Section 12.09 Execution in Counterparts............................. 125
Section 12.10 Confidentiality....................................... 125
Section 12.11 Consent to Jurisdiction............................... 126
Section 12.12 Limitation of Liability............................... 126
Section 12.13 No Duty............................................... 127
Section 12.14 No Fiduciary Relationship; No Agency Relationship..... 127
Section 12.15 Waiver of Jury Trial.................................. 127
</TABLE>
(vi)
<PAGE>
Exhibits
<TABLE>
<CAPTION>
<S> <C>
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Intentionally Omitted
Exhibit C-1 - Form of Subordination Agreement (Interest Only/Temporary Advance)
Exhibit C-2 - Form of Subordination Agreement (No-Pay)
Exhibit D-1 - Form of Master Services Agreement, Amendment thereto and Agreement and Form of Assignment
and Consent
Exhibit D-2 - Form of PCS System Design, Construction and Management Form of Assignment and Consent
Exhibit D-3 - Form of Operating Agreement and Form of Assignment and Consent
Exhibit E-1 - Form of Note (Tranche 1)
Exhibit E-2 - Form of Note (Tranche 2)
Exhibit F - Form of Draw Request
Exhibit G - Form of Real Estate Mortgage Option
Exhibit H-1 - Form of Borrower Security Agreement
Exhibit H-2 - Form of Partner Pledge Agreement
Exhibit H-3 - Form of Subsidiary Pledge and Security Agreement
Exhibit H-4 - Form of Omnipoint C-Block Subsidiary Parent Pledge Agreement
Exhibit H-5 - Form of Omnipoint E-Block Subsidiary Parent Pledge Agreement
Exhibit H-6 - Form of D&E Pledge Agreement
Exhibit I-1 - Form of Omnipoint C-Block Subsidiary Parent Limited Guaranty Recourse
Exhibit I-2 - Form of Omnipoint E-Block Subsidiary Parent Limited Guaranty Recourse
Exhibit I-3 - Form of D&E Limited Recourse Guaranty
Exhibit I-4 - Form of Limited Recourse Partner Guaranty
Exhibit I-5 - Form of Subsidiary Guaranty
Exhibit J - Form of Capital Contribution Agreement
Exhibit K - Form of Compliance Certificate
Exhibit L-1 - Form of Opinion Letter of Counsel to Borrower
Exhibit L-2 - Form of Opinion Letter of Counsel to Partner (Omnipoint Venture)
Exhibit L-3 - Form of Opinion Letter of Counsel to Partner (Omnipoint Holdings)
Exhibit L-4 - Form of Opinion Letter of Counsel to DEC, D&E Wireless and PCS Licenses, Inc.
Exhibit L-5 - Form of Opinion Letter of Counsel to OC
Exhibit L-6 - Form of Opinion Letter of Counsel to C-Block Subsidiary Parent
Exhibit L-7 - Form of Opinion Letter of Counsel to E-Block Subsidiary Parent
Exhibit L-8 - Form of Opinion Letter of Counsel to License Subsidiaries
Exhibit L-9 - Form of Opinion Letter of Special New York Counsel
</TABLE>
(vii)
<PAGE>
<TABLE>
<S> <C>
Exhibit L-10 - Form of Opinion Letter of FCC Counsel to Borrower, Partners and License Subsidiaries
Exhibit L-11 - Form of Opinion Letter of Local Counsel to PCS Licenses, Inc.
Exhibit L-12 - Form of Opinion Letter of FCC Counsel to Borrower, DEC and PCS Licenses, Inc.
</TABLE>
(viii)
<PAGE>
Schedules
---------
<TABLE>
<CAPTION>
<S> <C>
Schedule 1.01 - Designated BTAs
Schedule 5.01(b) - Subsidiaries
Schedule 5.06 - Intellectual Property
Schedule 5.07 - FCC Licenses
Schedule 5.08 - Litigation
Schedule 5.25 - Environmental Matters
Schedule 5.27 - Material Contracts
Schedule 7.04 - Investments
Schedule 8.15 - Mortgaged Property
</TABLE>
(ix)
<PAGE>
LOAN AGREEMENT
--------------
This Loan Agreement (the "Agreement") is made as of September 18, 1998, by
---------
and among (a) D & E/OMNIPOINT WIRELESS JOINT VENTURE, L.P., a Delaware limited
partnership (the "Borrower"), (b) the lenders listed on the signature pages
--------
hereof and (c) NORTHERN TELECOM INC., a Delaware corporation ("Nortel"), as
------
administrative agent for the Lenders (together with any successor thereto
appointed pursuant to (S) 11.06, the "Administrative Agent").
--------- --------------------
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
---------------------------------------
Section 1.01 Definitions.
------------ -----------
Adjusted Debt. As of any date of determination, Total Debt less that
-------------
portion of Subordinated Debt for which current interest is not payable in cash
prior to the final repayment of the Credit Facility.
Adjusted Net Income. For any period, Consolidated Net Income less (without
------------------- ----
duplication) to the extent that any of the following shall have been included in
Consolidated Net Income for such period (i) any net gain or loss arising from
the sale of capital assets, (ii) any net gain or loss arising from any write-up
or write-down of assets, (iii) earnings or losses of any other Person,
substantially all of the assets of which have been acquired by the Borrower or a
Consolidated Subsidiary of the Borrower in any manner, to the extent that such
earnings or losses were realized by such other Person prior to the date of such
acquisition, (iv) earnings or losses of any Person (other than a Consolidated
Subsidiary of the Borrower) in which the Borrower or a Consolidated Subsidiary
has an ownership interest, unless such earnings have actually been received by
the Borrower or such Consolidated Subsidiaries in the form of cash
Distributions, and (v) any net gain or loss arising from the acquisition of any
securities of the Borrower or a Consolidated Subsidiaries.
Adjusted OCF. For any period, the sum of (i) OCF for such period plus
------------ ----
(ii)the aggregate amount of Marketing Expenses deducted in determining
Consolidated Net Income for such period.
Administrative Agent. Nortel or a financial institution acceptable to
--------------------
Nortel as administrative agent, together with its successors or assigns.
Administrative Agent's Account. The account of the Administrative Agent
------------------------------
maintained by the Administrative Agent with The First National Bank of Chicago
at its office at One First National Plaza, Chicago, Illinois 60670, for the
account of Northern
-1-
<PAGE>
<PAGE>
Telecom, Account No. ***** (or such other account as the Administrative Agent
from time to time may specify).
Administrative Agent's Letter. That certain letter agreement dated the
-----------------------------
date hereof between the Administrative Agent and the Borrower.
Administrative Agent's Office. The Administrative Agent's office set forth
-----------------------------
in (S) 12.02 and, upon the appointment of a successor Administrative Agent
---------
pursuant to (S) 11.06, such address as shall be provided by such successor
---------
Administrative Agent, or in either case such office as the Administrative Agent
from time to time may designate.
Advances. An advance by a Lender to the Borrower pursuant to Article II
--------
and refers to a Base Rate Advance or a LIBOR Advance.
Affiliate. As to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall include
the power, direct or indirect, (a) to vote 25% or more of the securities or
other interests having ordinary voting power for the election of directors or
other managing Persons of such Person or (b) to direct or cause direction of the
management and policies of such Person whether by contract or otherwise.
Annualized EBITDA. As of June 30, 2001, EBITDA for the two most recently
-----------------
completed fiscal quarters multiplied by two. As of September 30, 2001, EBITDA
for the three most recently completed fiscal quarters multiplied by a fraction,
the numerator of which is 4 and the denominator of which is 3. As of any other
date of determination, EBITDA for the four most recently completed fiscal
quarters.
Applicable Lending Office. With respect to any Lender, for Base Rate
-------------------------
Loans, the office of such Lender specified as its domestic lending office and,
for LIBOR Loans, the office of such Lender specified as its LIBOR lending
office, in either case on the signature pages hereof or in the Assignment and
Acceptance pursuant to which it became a Lender, or such other offices of such
Lender as such Lender may from time to time specify to the Administrative Agent.
Applicable Margin. With respect to any Advance that is:
-----------------
(a) a Base Rate Advance, 3.00% per annum, and
(b) a LIBOR Advance, 4.00% per annum.
Approved Annual Operating Business Plan. With respect to each fiscal year
---------------------------------------
of the Borrower, beginning with its fiscal year ending December 31, 1998, any
annual
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-2-
<PAGE>
business operating plan delivered by the Borrower pursuant to (S) 6.13(a)
-----------
with respect to such fiscal year that shall have been approved by the Required
Lenders.
Approved Full-Term Operating Business Plan. Unless and until the Borrower
------------------------------------------
in its discretion shall have delivered to the Lenders a revised full-term
operating plan that the Required Lenders shall have approved, the full-term
operating plan delivered by the Borrower pursuant to (S) 8.12, and thereafter
--------
the most recent full-term operating plan delivered by the Borrower that the
Required Lenders shall have approved.
Assignment and Acceptance. An Assignment and Acceptance substantially in
-------------------------
the form of Exhibit A.
---------
Availability. As of any date, the amount by which (I) the lesser of
------------
(x) the Borrowing Base and (y) the Maximum Commitments exceeds (II) the
outstanding Loans.
Balance Sheet Date. July 31, 1998.
------------------
Base Rate. A fluctuating interest rate per annum in effect from time to
---------
time, which rate per annum shall at any date of determination be equal to the
higher of:
(a) the rate of interest per annum announced publicly by Citibank N.A.
as its prime or base rate in effect on such date at its principal office in
New York City; and
(b) 1/2 of 1% per annum above the Federal Funds Rate on such date.
Base Rate Advance. An Advance bearing interest calculated by reference to
-----------------
the Base Rate.
Base Rate Loans. Loans bearing interest calculated by reference to the
---------------
Base Rate.
Borrower. See the preamble hereto.
--------
Borrower Security Agreement. See (S) 8.13(a) hereof.
--------------------------- -----------
Borrowing Base. At any date:
--------------
(a) For Tranche 1, an amount equal to one hundred percent (100%) of
the dollar amount paid to Nortel for Nortel Goods and Services (including
$3,307,408 that was paid prior to the formation of the Borrower and
contributed as equity prior to the Closing Date to the Borrower, but
excluding interest which has accrued or is accruing on such purchases) for
any one or more of the Designated BTAs prior to or concurrently with any
Tranche 1 Draw Request.
-3-
<PAGE>
(b) For Tranche 2,
(i) from the Closing Date, to and including December 31, 1998, an
amount equal to fifty percent (50%) of the sum of the following items
(which shall include $3,307,408 that was paid prior to the formation
of the Borrower and contributed as equity prior to the Closing Date to
the Borrower).
(A) the dollar amount paid to Nortel for Nortel Goods and
Services (excluding interest which has accrued or is accruing on
such purchases) for any one or more of the Designated BTAs prior
to or concurrently with any Tranche 2 Draw Request, plus
(B) the dollar amount of the portion of the Initial Purchase
Order relating to Nortel Goods and Services scheduled for
delivery on site and scheduled for installation during 1998, plus
(C) the dollar amount of any other unfilled irrevocable
purchase orders (whether placed by the Borrower before or after
the Closing Date) for Nortel Goods and Services for any one or
more of the Designated BTAs accepted by Nortel for delivery on
Site and scheduled for installation in 1997 or 1998 or within one
hundred eighty (180) days of the date of the Tranche 2 Draw
Request and scheduled for installation within twenty-one (21)
days of delivery.
(ii) beginning on and after January 1, 1999, an amount equal to
fifty percent (50%) of the sum of the following items (which shall
include $3,307,408 that was paid prior to the formation of the
Borrower and contributed as equity at any time prior to the Closing
Date to the Borrower).
(A) the dollar amount paid to Nortel for Nortel Goods and
Services (excluding interest which has accrued or is accruing on
such purchases) for any one or more of the Designated BTAs prior
to or concurrently with any Tranche 2 Draw Request, plus
(B) the dollar amount of any unfilled irrevocable purchase
orders (whether placed by the Borrower before or after the
Closing Date) for Nortel Goods and Services for any one or more
of the Designated BTAs accepted by Nortel for delivery on Site
within one hundred eighty (180) days of the date of such Tranche
2 Draw Request and scheduled for installation within twenty-one
(21) days of delivery.
-4-
<PAGE>
Borrowing Base Certificate. A certificate, in form and substance
--------------------------
satisfactory to the Administrative Agent, duly certified by the chief or
principal financial or accounting officer of the Borrower, stating the amount of
the Borrowing Base as of the date of such certificate and setting forth in
reasonable detail the calculation of the amount thereof.
Breakage Costs. Any loss, cost or expense (including loss of anticipated
--------------
profit) that any Lender or the Administrative Agent may sustain or incur as a
consequence of (a) a default by the Borrower in payment of the principal amount
of any LIBOR Loans as and when due and payable, including such loss or expense
arising from interest or fees payable by such Lender or the Administrative Agent
to lenders of funds obtained by it in order to make its LIBOR Loans or (b) the
making of any payment of a LIBOR Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by such Lender or Administrative Agent to lenders of funds obtained by
it in order to maintain any such Loans.
BTA. Any "basic trading area" as on the Rand McNally 1992 Commercial Atlas
---
& Marketing Guide, 123rd Edition, and utilized by the FCC in dividing the 50
states, the District of Columbia and the United States territories into 493 BTAs
for the purpose of licensing PCS Systems.
Business Day. Any day other than a Saturday, a Sunday or a day on which
------------
commercial banks located in New York City are authorized or required by law or
other governmental action to close and, if the applicable Business Day relates
to any LIBOR Advance, a day on which dealings in Dollars are not carried on in
the London interbank market.
Capital Contribution Agreement. See (S) 8.24 hereof.
------------------------------ --------
Capital Expenditures. Amounts paid or Indebtedness incurred by the
--------------------
Borrower in connection with the purchase or lease by the Borrower of assets that
would be required to be capitalized and shown on the balance sheet of such
Person in accordance with GAAP.
Capital Lease Obligations. As to any Person, all outstanding Indebtedness,
-------------------------
obligations and liabilities of such Person incurred under Capitalized Leases.
Capitalized Leases. Leases, the discounted future rental-payment
------------------
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
Cash Equivalents. As to any Person, any Investments of such Person of the
----------------
types permitted under clauses (b), (c), (d) and (e) of (S) 7.04 having a
--------
maturity of not greater than 270 days from the date of acquisition thereof.
-5-
<PAGE>
CERCLA. The Comprehensive Environmental Response, Compensation and
------
Liability Act, as amended, 42 USCA (S) 9601 et seq.
-------- -- ---
Change in Control. (I) With respect to the Borrower, any change in
-----------------
ownership of the Borrower resulting in (x) less than twenty-five percent (25%)
of the voting control or Stock (excluding for this purpose debt securities or
debt instruments) of the Borrower being owned, directly or indirectly, by each
of OC and DEC, or (y) less than an aggregate of ninety percent (90%) of the
voting control or Stock (excluding for this purpose debt securities or debt
instruments) of the Borrower being owned, directly or indirectly, by OC and DEC,
and (II) with respect to any License Subsidiary, any change in ownership
resulting in less than one hundred percent (100%) of the voting control or Stock
(excluding for this purpose debt securities or debt instruments) of such
Subsidiary being owned by the Borrower.
Closing Date. The meaning specified in the introductory clause of
------------
Article VIII.
- ------- ----
Collateral. All "Collateral" and "Pledged Collateral" referred to in the
----------
Collateral Documents and all other property that is or is intended to be subject
to any Lien in favor of the Administrative Agent for the benefit of the Secured
Parties.
Collateral Documents. The Security Agreements, the Mortgages, the Partner
--------------------
Pledge Agreements and any other agreement that purports to create a Lien in
favor of the Administrative Agent for the benefit of the Secured Parties.
Commitment. For any Lender at any date, the Maximum Commitments as of such
----------
date, multiplied by such Lender's Commitment Percentage as of such date, as the
same may be reduced from time to time pursuant to (S) 2.11, (S) 3.02 (S) 3.03 or
-------- -------- --------
(S) 10.01 or any other applicable section of this Agreement.
- ---------
Commitment Fee. See (S) 2.03 hereof.
-------------- --------
Commitment Percentage. For any Lender, the percentage next to the heading
---------------------
"Commitment Percentage" opposite its name on the signature pages hereof or on
the Assignment and Acceptance, if such Lender has entered into an Assignment and
Acceptance pursuant to (S) 12.07.
---------
Commitment Termination Date. The earliest of (i) February 1, 2001,
---------------------------
(ii) the date on which an aggregate of $40,000,000 has been advanced pursuant to
the terms hereof, (iii) the Maturity Date, or (iv) the termination of the
Commitments in their entirety pursuant to (S) 2.11, (S) 3.02, (S) 3.03 or
-------- -------- --------
(S) 10.01 or any other applicable section of this Agreement.
- ---------
Communications Act. The Communications Act of 1934, as amended, and the
------------------
rules and regulations issued thereunder, as from time to time in effect.
-6-
<PAGE>
Confidential Information. Information that the Borrower or any of its
------------------------
Affiliates furnishes to the Administrative Agent or any Lender in a writing
designated as confidential, but Confidential Information does not include any
such information that is or becomes generally available to the public or that is
or becomes available to the Administrative Agent or such Lender from a source
other than the Borrower or any of its Affiliates.
Consolidated. The consolidation of accounts in accordance with GAAP of the
------------
Borrower and its Subsidiaries.
Consolidated Interest Expense. For any period, all interest on
-----------------------------
Indebtedness of the Borrower and its Consolidated Subsidiaries paid in cash
during such period, including the interest portion of payments under Capital
Lease obligations, to the extent deducted in determining Adjusted Net Income
Consolidated Net Income. For any period, the net income (or loss) of the
-----------------------
Borrower and its Consolidated Subsidiaries for such period, determined on a
Consolidated basis in accordance with GAAP.
Contingent Obligation. As to any Person, any obligation of such Person
---------------------
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation ("primary obligations") of any other Person (the "primary
------------------- -------
obligor") in any manner, whether directly or indirectly, including without
- -------
limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any Property
constituting direct or indirect security therefor;
(b) to advance or supply funds
(i) for the purchase or payment of any such primary obligation,
or
(ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain net worth, solvency or other
financial statement condition of the primary obligor;
(c) to purchase Property, securities or services primarily for the
purpose of assuring the beneficiary or holder of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation; or
(d) otherwise to assure, protect from loss, or hold harmless the
beneficiary or holder of such primary obligation against loss in respect
thereof;
-7-
<PAGE>
provided that the term "Contingent Obligation" shall not include the indorsement
- --------
of instruments for deposit or collection in the ordinary course of business.
Contributed Capital. For any period, the sum of (i) equity contributions
-------------------
during such period (including ***** of equity contributed on or before the
Closing Date and that portion of the purchase price of the FCC Licenses for the
Designated BTAs which has theretofore been paid to the FCC (but excluding any
amounts paid or forfeited to the FCC (x) for any C-Block FCC License that has
been returned to the FCC or (y) for any portion of a (disaggregated) FCC License
which is no longer owned by the Borrower or its License Subsidiaries) in cash by
or on behalf of the respective License Subsidiaries as an equity contribution in
such License Subsidiary), plus (ii) the amount of cash proceeds of Subordinated
----
Debt received during such period, minus (iii) any Distributions made during such
-----
period minus (iv) all cash interest paid on Subordinated Debt during such
-----
period.
Convert, Conversion and Converted. A conversion of Advances of one Type
------- ---------- ---------
into Advances of the other Type pursuant to (S) 2.05 or (S) 2.06.
-------- --------
Credit Facility. A term facility that provides for Loans to the Borrower
---------------
on the terms and conditions herein.
Currency Hedge Agreement. Any currency hedge or exchange agreement, option
------------------------
or futures contract or other agreement intended to protect against or manage a
Person's exposure to fluctuations in currency exchange rates.
D&E. D&E Wireless, Inc., a Pennsylvania corporation, which owns a (a) 1%
---
general partnership interest and a 49% limited partnership interest in the
Borrower, and (b) owns 100% of the issued and outstanding Capital Stock of the
D&E License Subsidiary.
D&E License Subsidiary. The directly-held, Wholly Owned Subsidiary of D&E
----------------------
that, at the date hereof, holds the FCC Licenses listed on Part IV of
-------
Schedule 5.07.
- -------- ----
D&E Limited Recourse Guaranty. See (S) 8.14(c) hereof.
----------------------------- -----------
D&E Pledge Agreement. See (S) 8.13(f) hereof.
-------------------- -----------
DEC. D&E Communications, Inc., a Pennsylvania corporation.
---
DEC Debt Default. With respect to any Indebtedness of DEC in principal
----------------
amount of ***** constitutes (i) a default (other than a monetary default
(a "DEC Unmatured Default")) which is not cured or waived within 180 days,
---------------------
(ii) a monetary default, or (iii) acceleration of such Indebtedness.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-8-
<PAGE>
D&E Limited Recourse Guaranty. See (S) 8.14(c) hereof.
----------------------------- -----------
D&E Pledge Agreement. See (S) 8.13(f) hereof.
-------------------- -----------
DEC Unmatured Default. As defined in the definition of DEC Debt Default.
---------------------
Default. Any Event of Default and any event or condition that, with the
-------
giving of notice, the lapse of time, or both, would become an Event of Default.
Designated BTA. The BTAs the FCC Licenses for which are listed in
--------------
Schedule 1.01.
- -------------
Distribution. Any of the following with respect to any Person:
------------
(a) the declaration or payment of any cash dividend, dividend in kind
or cash equity distributions on or in respect of any shares of any class of
Stock of such Person, other than dividends payable solely in shares of
common Stock (or equivalent interests) of such Person;
(b) the purchase, redemption, or other retirement of any shares of any
class of Stock of such Person;
(c) the return of capital by such Person to its shareholders (or
holders of interests equivalent to shares) as such;
(d) any other distribution on or in respect of any shares or
equivalent interests of any class or series of Stock of such Person; or
(e) any payment of principal, premium or interest, or any other
amount, in respect of Subordinated Debt, excluding such payments made to
the Borrower by any of its Subsidiaries.
Dollars or $. Dollars in lawful currency of the United States of America.
------------
Draw Request. See (S) 2.02(a) hereof.
------------ -----------
EBITDA. For any period, without duplication, the sum of the following for
------
the Borrower and its Consolidated Subsidiaries for such period determined on a
Consolidated basis in accordance with GAAP: (a) Adjusted Net Income, plus
----
(b) Consolidated Interest Expense, plus (c) income and franchise taxes to the
----
extent deducted in determining Adjusted Net Income, plus (d) depreciation and
----
amortization expense and other non-cash, non-tax items to the extent deducted in
determining Adjusted Net Income, minus (e) non-cash income (or losses) to the
-----
extent included in determining Adjusted Net Income.
-9-
<PAGE>
E. Lancaster BTA. BTA No. 240.
----------------
Employee Benefit Plan. Any employee benefit plan within the meaning of
---------------------
(S) 3(3) of ERISA maintained or contributed to by any Loan Party or any ERISA
- --------
Affiliate, other than a Multiemployer Plan.
Environmental Laws. Any federal, state or local law, statute, rule or
------------------
regulation or common law relating to the environment or occupational health and
safety, including any statute, regulation or order pertaining to
(a) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous substances or solid or hazardous waste;
(b) air, water or noise pollution;
(c) groundwater and soil contamination;
(d) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals;
(e) the protection of wildlife, marine sanctuaries and wetlands,
including without limitation all endangered and threatened species;
(f) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles;
(g) health and safety of employees and other persons; and
(h) manufacture, processing, use, distribution, treatment, storage,
disposal, transportation or handling of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or oil or petroleum products,
by-products or breakdown products or solid or hazardous waste,
including (i) CERCLA; (ii) RCRA; (iii) the Toxic Substance Control Act, as
amended, 15 USCA (S) 2601 et seq.; (iv) the Water Pollution Control Act, as
-----------------
amended, 33 USCA (S) 1251 et seq.; (v) the Clean Air Act, as amended, 42 USCA
---------------
(S) 7401 et seq.; (vi) the Hazardous Material Transportation Act, as amended, 49
- -----------------
USCA (S) 1801 et seq.; (vii) the Superfund Amendments and Reauthorization Act of
-----------------
1986; and (viii) all rules, regulations, judgments, decrees, injunctions and
restrictions thereunder and any analogous state law. As used above, the terms
"release", "threatened release", "hazardous substance" and "environment" shall
have the meaning contained in CERCLA, and the terms "solid waste" and "dispose"
(or "disposal") shall have the meaning contained in the RCRA.
-10-
<PAGE>
Environmental Permits. See (S) 5.25(d) hereof.
--------------------- -----------
Equipment. As defined in the Volume Purchase Agreement.
---------
ERISA. The Employee Retirement Income Security Act of 1974, as amended,
-----
and the rules and regulations issued thereunder as from time to time in effect.
ERISA Affiliate. Any Person that is treated as a single employer with the
---------------
Borrower under (S) 414 of the IRC.
-------
ERISA Event. With respect to any Loan Party or any ERISA Affiliate,
-----------
(a) a Reportable Event,
(b) the withdrawal of any Loan Party or any ERISA Affiliate from a
Plan during a plan year in which it was a "substantial employer" as defined
in (S) 4001(a)(2) of ERISA,
--------------
(c) the filing of a notice of intent to terminate a Plan under a
distress termination of the Plan under (S) 4041(c) of ERISA, or the
-----------
treatment of a Plan amendment as a termination under (S) 4041 of ERISA,
--------
(d) the institution of proceedings to terminate a Plan by the PBGC
under (S) 4042 of ERISA, or
--------
(e) the occurrence of any other event or condition which might
reasonably be expected to constitute grounds under (S) 4042 of ERISA for
--------
the termination of, or the appointment of a trustee to administer, any Plan
or to cause the imposition of any liability (other than PBGC premiums due
but not delinquent under (S) 4007 of ERISA) in excess of ***** under
--------
Title IV of ERISA.
Event of Default. Any of the events specified in (S) 10.01.
---------------- ---------
Excess Cash Flow. For any fiscal year, EBITDA for such fiscal year minus
---------------- -----
(i) taxes payable in cash for such fiscal year, (ii) all principal and cash
interest payments on Indebtedness made during such fiscal year whether optional,
mandatory or scheduled payments, and (iii) Capital Expenditures (but only to the
extent paid in cash and not financed) made during such fiscal year.
FASB. The Financial Accounting Standards Board and its predecessors.
----
FCC. The Federal Communications Commission or any Governmental Body
---
succeeding to the functions thereof.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-11-
<PAGE>
FCC Debt. Amounts owing to the FCC with respect to the deferred purchase
--------
price for FCC Licenses.
FCC License(s). Licenses issued by the FCC for the provision of PCS
--------------
services.
FCC License Transfer. Any sale, assignment or other transfer of any FCC
--------------------
License in its entirety or any Stock of a License Subsidiary, each as permitted
in (S) 7.06(b).
-----------
FCC Transfer Application Date. See (S) 6.12 hereof.
----------------------------- --------
Federal Funds Rate. The fluctuating interest rate per annum equal for each
------------------
day during such period to the weighted average of the rates on overnight
federal-funds transactions with members of the Federal Reserve System arranged
by federal-funds brokers, as published for such day (or, if such day is not a
Business Day, for the next-preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Administrative Agent from three federal-funds brokers of recognized standing
selected by it.
Final FCC Transfer Application Date. See (S) 6.12 hereof.
----------------------------------- --------
Fiscal Quarter. A fiscal quarter of the Borrower and its Consolidated
--------------
Subsidiaries.
GAAP. See (S) 1.03 hereof.
---- --------
Governmental Body. Any nation or government, any state or other political
-----------------
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
court or arbitrator.
Grandparent Debt Default. Either an OC Debt Default or a DEC Debt Default
------------------------
or both.
Grandparent Unmatured Default. Either an OC Unmatured Default or a DEC
-----------------------------
Unmatured Default or both.
Grandparents. OC and DEC.
------------
Gross Revenues. For any period, gross revenues, determined on a
--------------
Consolidated basis, of the Borrower and its Subsidiaries determined in
accordance with GAAP for such period.
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S) 3(2) of ERISA that is maintained or contributed to by any Loan
--------
Party or any ERISA Affiliate or that was so maintained or contributed to and in
respect of which
-12-
<PAGE>
the Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event that such plan has been or were to be
terminated the benefits of which are guaranteed on termination in full or in
part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.
Guaranties. At any date, the D&E Limited Recourse Guaranty, the Omnipoint
----------
C-Block Subsidiary Parent Limited Recourse Guaranty, the Omnipoint E-Block
Subsidiary Parent Limited Recourse Guaranty, the Limited Recourse Partner
Guaranty and any Subsidiary Guaranty theretofore delivered by any Person that
shall not have been terminated or released in accordance with its terms.
Guarantors. At any date, any Person that shall have delivered a Guaranty
----------
that shall not have been terminated and released in accordance with its terms.
Harrisburg BTA. BTA No. 181.
--------------
Indebtedness. As to any Person at any time (without duplication): (a) all
------------
indebtedness, liabilities and obligations of such Person for borrowed money,
(b) all indebtedness, liabilities and obligations of such Person evidenced by
bonds, notes, debentures, or other similar instruments, (c) all indebtedness,
liabilities and obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than 90 days,
(d) all Capital Lease Obligations of such Person, (e) all Indebtedness of others
guaranteed by such Person, (f) all indebtedness, liabilities and obligations
secured by a Lien existing on property owned by such Person, whether or not the
indebtedness, liabilities or obligations secured thereby have been assumed by
such Person or are non-recourse to such Person (other than carriers',
warehousemen's, mechanics', repairmen's or other like non-consensual liens
arising in the ordinary course of business), (g) all reimbursement obligations
of such Person (whether contingent or otherwise) in respect of letters of
credit, bankers' acceptances, surety or other bonds and similar instruments,
(h) all indebtedness, liabilities and obligations of such Person to redeem or
retire shares of capital Stock of such Person, (i) all indebtedness, liabilities
and obligations of such Person under Interest Rate Protection Agreements or
Currency Hedge Agreements, and (j) all indebtedness, liabilities and obligations
of such Person in respect of unfunded vested benefits under any pension plan.
Initial Purchase Order. The irrevocable purchase order for Nortel Goods
----------------------
and Services placed by the Borrower on or prior to the Closing Date in an amount
of at least ***** (or such larger amount as may be agreed) accepted by Nortel of
which (i) at least ***** (or such larger amount as may be agreed) is scheduled
for delivery on Site and scheduled for installation during ***** within the
Designated BTAs, and (ii) the remaining portion of such ***** is scheduled for
delivery on site and scheduled for installation during ***** within the
Designated BTAs.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Interest Only/Temporary Advance Subordinated Debt. Indebtedness of a
-------------------------------------------------
Loan Party to a Person as to which the holder thereof has executed a
subordination agreement substantially in the form of the Subordination Agreement
(Interest Only/Temporary Advance) attached hereto as Exhibit C-1.
-----------
Interest Period. For each LIBOR Advance comprising part of the same Loan,
---------------
the period commencing on the date of such LIBOR Advance or the date of the
Conversion of any Base Rate Advance into such LIBOR Advance and ending on the
last day of such period, determined as provided below, and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of such period, determined as
provided below. At the election of the Borrower, the duration of each such
Interest Period shall be one month, two months, three months or six months;
provided that:
- --------
(a) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next-succeeding Business Day; provided
--------
that, if such extension would cause the last day of such Interest Period to
occur in the next-following calendar month, the last day of such Interest
Period shall occur on the next-preceding Business Day,
(b) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding
day in the calendar month for the appropriate following calendar month
(one, two, three or six months later), such Interest Period shall end on
the last Business Day of such appropriate following calendar month, and
(c) the Borrower may not have more than three Interest Periods in
effect at any one time.
Interest Rate Protection Agreements. With respect to the Borrower, an
-----------------------------------
interest rate swap, cap or collar agreement or similar arrangement between the
Borrower and one or more Lenders or a Permitted Counterparty providing for the
transfer or mitigation of interest rate risks either generally or under
specified contingencies.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of capital Stock or Indebtedness
of, or for loans, advances, capital contributions or transfers of property to,
or in respect of any guaranties (or other commitments as described under
Contingent Obligations), or obligations of, any Person. In determining the
aggregate amount of Investments outstanding at any particular time:
(a) the amount on any date of determination of any Investment
represented by a Contingent Obligation shall be taken at not less than the
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<PAGE>
principal amount of the obligations as to which such Contingent Obligation
exists and that are still outstanding on such date of determination;
(b) there shall be included as an Investment all interest accrued with
respect to Indebtedness constituting an Investment unless and until such
interest is paid;
(c) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution);
(d) there shall not be deducted in respect of any Investment any
amounts received as earnings on such Investment, whether as dividends,
interest or otherwise, except that accrued interest included as provided in
the foregoing clause (b) may be deducted when paid;
(e) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof; and
(f) there shall be included as an Investment (i) each receivable
(other than with respect to sales of handsets and accessories thereto) that
is payable more than three months following the date of the sale giving
rise thereto and (ii) each receivable with respect to sales of handsets and
accessories thereto that is payable more than six months following the date
of the sale giving rise thereto.
IRC. The Internal Revenue Code of 1986, as amended from time to time, and
---
the rules and regulations issued thereunder as from time to time in effect.
Lender. Nortel, and each of the banks or other lending institutions which
------
is a party hereto (as evidenced by the signature pages of this Agreement) or
which may from time to time become a party hereto or any successor assignee
thereof by reason of an Assignment and Acceptance in accordance with (S) 12.07
---------
hereof.
LIBOR. For any applicable Interest Period, a simple per annum interest
-----
rate (rounded upward, if necessary, to the nearest 1/100th of one percent) equal
to
(a) (i) the rate per annum that appears on Page 3750 of the Dow
Jones & Company Telerate screen or any successor page as the composite
offered rate for London interbank deposits, in an amount approximately
equal to the amount of the requested Loan for the time period corresponding
to the requested Interest Period relating to such requested Loan, as shown
under the heading "USD" as of 11:00 a.m. (London time), two Business Days
before the first day of such Interest Period, or
-15-
<PAGE>
(ii) if the rate specified in clause (i) cannot be determined,
the rate per annum equal to the arithmetic mean of the rates shown on the
LIBOR page of Reuters Money Service at approximately 11:00 a.m. (London
time), two Business Days before the first day of such Interest Period in an
amount approximately equal to the amount of the requested Loan, divided by
(b) one, minus the LIBOR Reserve Rate, stated as a decimal.
LIBOR Advance. An Advance bearing interest calculated by reference to
-------------
LIBOR.
LIBOR Business Day. Any Business Day on which commercial banks are open
------------------
for international business (including dealings in Dollar deposits) in London.
LIBOR Loans. Loans bearing interest calculated by reference to LIBOR.
-----------
LIBOR Reserve Rate. For any Interest Period for all LIBOR Advances
------------------
comprising part of the same Loan, the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference to which
the interest rate on LIBOR Advances is determined) having a term equal to such
Interest Period.
License Subsidiary. At any date, each Wholly Owned Subsidiary of the
------------------
Borrower, the Omnipoint C-Block Subsidiary, the Omnipoint E-Block Subsidiary and
the D&E License Subsidiary which holds an FCC License for any of the Designated
BTAs, other than any Omnipoint C-Block Subsidiary, the Omnipoint E-Block
Subsidiary or the D&E License Subsidiary the pledge of the shares or units of
Stock of which shall have been released pursuant to the applicable Security
Agreement.
Lien. Any mortgage, pledge, hypothecation, assignment, deposit or
----
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including any conditional sale or other title retention agreement and any
Capitalized Lease or other financing lease having substantially the same
economic effect as any of the foregoing.
Limited Recourse Partner Guaranty. See (S) 8.14(d) hereof.
--------------------------------- -----------
Loans. The Advances made by the Lenders to the Borrower under the Credit
-----
Facility.
-16-
<PAGE>
Loan Documents. This Agreement, the Notes, the Collateral Documents, the
--------------
Guaranties, the Subordination Agreements, the Capital Contribution Agreement,
the Administrative Agent's Letter, any mortgage or deed of trust entered into
pursuant to (S) 6.15 and any other agreements or documents contemplated hereby
--------
or thereby and all schedules, exhibits and annexes thereto.
Loan Parties. Collectively, the Borrower, each of the Partners, OC, DEC,
------------
and each other Guarantor.
Master Services Agreements. The Master Services Agreements, as amended,
--------------------------
substantially in the form of Exhibit D-1 between (a) Omnipoint Venture and the
-----------
Borrower and (b) D&E and the Borrower.
Marketing Expenses. With respect to any period, the sales and marketing
------------------
expenses of the Borrower and its Subsidiaries for such period, including,
without limitation, any such expenses incurred during such period in respect of
sales literature and advertising; promotions; subscriber acquisition services;
amounts allocable during such period to marketing expenses in respect of travel,
entertainment, sales training, office expenses and research, and compensation
and commissions in connection with the foregoing activities, if any; the
difference (if negative) between revenues from sales of handsets during such
period and the cost of such handsets; fulfillment costs; and smart cards; each
as determined on a basis consistent with the Borrower's accounting methods that
are consistent with GAAP.
Material Adverse Effect. An effect resulting from any circumstance,
-----------------------
event, or development of whatever nature (including any adverse determination in
any litigation) that has had or could reasonably be expected to have a material
adverse effect on (i) the business, assets, financial condition, results of
operations or prospects of the Borrower and its Subsidiaries taken as a whole,
(ii) the validity or enforceability of any of the Loan Documents or the rights
and remedies of the Administrative Agent and the Lenders thereunder, (iii) the
ability of any Loan Party to perform its obligations under any Loan Document to
which it is a party, or (iv) the value of Collateral available to the
Administrative Agent and the Lenders after giving effect to Liens in favor of
other parties.
Material Contract. With respect to any Person, each contract to which such
-----------------
Person is a party involving aggregate consideration payable to or by such Person
of $2,000,000 or more in any 12-month period or otherwise material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person. In addition, with respect to the
Borrower, each contract listed on Schedule 5.27 hereto.
Materials of Environmental Concern. Any chemicals, pollutants or
----------------------------------
contaminants, hazardous substances (as such term is defined under CERCLA), solid
wastes and
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<PAGE>
hazardous wastes (as such terms are defined under the RCRA), toxic
materials, oil or petroleum and petroleum products, by-products or breakdown
products or any other material subject to regulation under any Environmental
Laws.
Maturity Date. The earliest of:
-------------
(a) February 1, 2006; and
(b) the date of the acceleration of the Advances pursuant to (S)10.01.
--------
Maximum Amount. As defined in Section 1 of the Capital Contribution
-------------- ---------
Agreement.
Maximum Commitments. At any date, an amount that is equal to:
-------------------
(a) for Tranche 1,
(i) $40,000,000, minus
(ii) the aggregate principal amount of the Advances under Tranche
2 at any time outstanding, minus
(iii) the aggregate amount by which the Maximum Commitments for
Tranche 1 shall have been permanently reduced pursuant to (S) 2.11,
--------
(S) 3.02, (S) 3.03 or (S) 10.01 or any other applicable section of
-------- -------- ---------
this Agreement on or prior to such date.
(b) for Tranche 2,
(i) $13,300,000, minus
(ii) the aggregate amount by which the Maximum Commitments for
Tranche 2 shall have been permanently reduced pursuant to (S) 2.11,
---------
(S) 3.02, (S) 3.03 or (S) 10.01 or any other applicable section of
-------------------------------
this Agreement on or prior to such date.
Maximum Lawful Rate. As to any Lender, the maximum rate of interest, if
-------------------
any, that at any time or from time to time may be contracted for, taken, charged
or received by such Lender on the Notes held thereby, as the case may be,
pursuant to this Agreement and the other Loan Documents under the laws
applicable to such Lender and the transactions contemplated by this Agreement.
Maximum Ratio. See (S) 3.02(e) hereof.
------------- -----------
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<PAGE>
Mortgages. See (S) 8.15 hereof.
--------- --------
MTA. Any "major trading area" as on the Rand McNally 1992 Commercial
---
Atlas & Marketing Guide, 123rd Edition, at pages 38-39 and utilized by the FCC
in dividing the 50 states, the District of Columbia and United States
territories into 51 MTAs for the purpose of licensing PCS Systems.
Multiemployer Plan. A "multiemployer plan" as defined in Sections
------------------
4001(a)(3) and 3(37) of ERISA, and to which any Loan Party or any ERISA
Affiliate is making, or is obligated to make, contributions or has made, or been
obligated to make, contributions.
Necessary Authorizations. All approvals and licenses from, and all filings
------------------------
and registrations with, any governmental or other regulatory authority,
including each FCC License held by a License Subsidiary and all grants,
approvals, licenses, filings and registrations under the Communications Act,
necessary in order to enable the Borrower and its Subsidiaries to own,
construct, maintain and operate PCS Systems.
Net Cash Proceeds. With respect to any transaction by any Person, the
-----------------
aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction, after deducting therefrom only
(a) reasonable and customary brokerage commissions, underwriting fees
and discounts, legal fees, finder's fees and other similar fees and
commissions, and
(b) the amount of taxes payable in connection with or as a result of
such transaction,
in each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid to a Person that is not
an Affiliate of the Borrower and are properly attributable to such transaction
or to the asset that is the subject thereof.
Net Income. For any period, net income (or loss), determined on a
----------
Consolidated basis, of the Borrower and its Subsidiaries determined in
accordance with GAAP for such period.
Network. The PCS Systems being constructed in all of the Designated BTAs.
-------
No-Pay Subordinated Debt. Indebtedness of a Loan Party to a Person as to
------------------------
which the holder thereof has executed a subordination agreement substantially in
the form of the Subordination Agreement (No-Pay) attached hereto as Exhibit C-2.
-----------
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<PAGE>
Nortel. As defined in the preamble hereof.
------
Nortel Goods and Services. Sales, installation and commissioning of Nortel
-------------------------
PCS Equipment and related software, and RF or site engineering, project
management, network design, and services performed by Nortel personnel. Nortel
Goods and Services includes OEM products which are verified by (and effectuated
by purchase orders accepted by) Nortel, but excludes pass-through services (as
indicated on acceptance notices from Nortel) and handsets.
Notes. The Notes substantially in the forms of Exhibits E-1 and E-2 issued
----- ------------ ---
by the Borrower hereunder.
Obligations. All Indebtedness, obligations and liabilities of the Borrower
-----------
to the Administrative Agent and the Lenders, arising or incurred under this
Agreement or any of the other Loan Documents or in respect of any of the Loans
made or any of the Notes or other instruments at any time evidencing any
thereof, or under Permitted Hedging Arrangements to the extent that the
counterparty thereof is a Lender, existing on the date of this Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
OC. Omnipoint Corporation, a Delaware corporation, together with its
--
successors.
OC Debt Default. With respect to any Indebtedness of OC in a principal
---------------
amount of ***** million or more, an event or circumstance which occurs that
constitutes (i) a default (other than a monetary default (an "OC Unmatured
------------
Default")) which is not cured or waived within ***** days, (ii) a monetary
- -------
default, or (iii) acceleration of such Indebtedness.
OC Unmatured Default. As defined in the definition of OC Debt Default.
--------------------
OCF. For any period, the sum of (a) Adjusted Net Income for such period,
---
plus (b) all amounts in respect of depreciation and amortization for such
- ----
period, plus (c) Consolidated Interest Expense for such period, plus (d) the
---- ----
amount of any taxes deducted in determining the Consolidated Net Income for such
period.
Omnipoint C-Block Subsidiary. The directly held, wholly owned Subsidiary
----------------------------
of the C-Block Subsidiary Parent that, as of the date hereof, holds a C-Block
FCC License listed in Part II of Schedule 5.07.
------- -------------
Omnipoint C-Block Subsidiary Parent. OPCS, LLC, a Delaware limited
-----------------------------------
liability company, together with its successors.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Omnipoint C-Block Subsidiary Parent Limited Recourse Guaranty. See
-------------------------------------------------------------
(S) 8.14(a) hereof.
- -----------
Omnipoint C-Block Subsidiary Parent Pledge Agreement. See (S) 8.13(d)
---------------------------------------------------- -----------
hereof.
Omnipoint E-Block Subsidiary. The directly-held, Wholly-Owned Subsidiary
----------------------------
of the Omnipoint E-Block Subsidiary Parent that, at the date hereof, holds an
FCC License listed in Part III of Schedule 5.07.
-------------
Omnipoint E-Block Subsidiary Parent. Omnipoint PCS Entrepreneurs Two LLC,
-----------------------------------
a Delaware limited liability company, together with its successors.
Omnipoint E-Block Subsidiary Parent Limited Recourse Guaranty. See
-------------------------------------------------------------
(S) 8.14(b) hereof.
- -----------
Omnipoint E-Block Subsidiary Parent Pledge Agreement. See (S) 8.13(e)
---------------------------------------------------- -----------
hereof.
Omnipoint Holdings. Omnipoint Holdings II, LLC, a Delaware limited
------------------
liability company, which owns a 49% limited partnership interest in the
Borrower.
Omnipoint Venture. Omnipoint Venture Partners, LLC, a Delaware limited
-----------------
liability company, which owns a 1% general partnership interest in the Borrower.
Operating Lease Obligations. As to any Person, the outstanding
---------------------------
Indebtedness, obligations and liabilities of such Person incurred under leases
that are not Capitalized Leases.
Other Taxes. See (S) 4.03(b) hereof.
----------- -----------
Partner. Each of Omnipoint Holdings, Omnipoint Venture and D&E, the
-------
partners of the Borrower, collectively the "Partners."
--------
Partner Pledge Agreement. See (S) 8.13(b) hereof.
------------------------ ------------------
PBGC. The Pension Benefit Guaranty Corporation created by (S) 4002 of
---- --------
ERISA, or any Governmental Body succeeding to the functions thereof.
PCS. The business of providing mobile communications services through the
---
use of microcells on microwave broadband frequencies with numerous low-power
transmitters, each serving a small area, but excluding cellular telephone
services.
PCS System. A PCS radio-telephone system constructed and operated pursuant
----------
to an FCC License therefor held by a License Subsidiary.
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<PAGE>
Permitted Counterparty. A Person that is rated in one of the three highest
----------------------
rating categories of Standard and Poors Corporation or Moody's Investors
Service, Inc.
Permitted Hedging Arrangements. Interest Rate Protection Agreements and
------------------------------
Currency Hedge Agreements, provided that each counterparty shall be a Lender or
a Permitted Counterparty, and provided that the maximum amount for which
interest may be fixed or capped under all such Interest Rate Protection
Agreements may not exceed ***** of the floating rate Indebtedness of the
Borrower and its Subsidiaries, and provided further, that the maximum amount of
currency for which risk may be hedged under a Currency Hedge Agreement may not
exceed ***** of the foreign currency at risk in the transactions in which the
Borrower and its Subsidiaries are engaged.
Permitted Liens. See (S) 7.02 hereof.
--------------- --------
Permitted Third-Party Expenses. With respect to the Designated BTAs, (i)
------------------------------
amounts paid to vendors of equipment for the construction of the Network,
including Nortel, (ii) Network site acquisition costs, including without
limitation, engineering services, legal fees, permits, construction costs and
zoning, but excluding any lease costs, and (iii) microwave relocation costs
associated with construction of the Network, whether paid directly or reimbursed
to third parties who previously performed the relocation, not to exceed *****
in the aggregate.
Person. Any natural person, corporation, firm, joint venture, limited
------
liability company, partnership, association, enterprise, trust or other entity
or organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
Plan. With respect to any Loan Party or any ERISA Affiliate, at any time,
----
an employee pension benefit plan as defined in (S) 3(2) of ERISA (other than a
--------
Multiemployer Plan) that is covered by Title IV of ERISA or subject to the
minimum funding standards under (S) 412 of the IRC and
-------
(a) is maintained for the employees of the Borrower or any ERISA
Affiliate, or
(b) was so maintained and in respect of which the Borrower or any
ERISA Affiliate could have liability under (S) 4064 or 4069 of ERISA in the
----------------
event that such plan has been or were to be terminated.
POPs. As of any date and with respect to any particular BTA or MTA or any
----
geographic area included therein, the population of such BTA or MTA according to
the 1990 census of the United States conducted by the United States Census
Bureau.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Property. All types of real, personal, tangible, intangible or mixed
--------
property, including each FCC License held by a License Subsidiary.
RCRA. The Resource Conservation and Recovery Act of 1976, as amended, 42
----
USCA (S) 6901 et seq.
----------------
Reading BTA. BTA No. 370.
-----------
Real Estate. Any parcel of real property or any facility currently (or for
-----------
purposes of compliance with Environmental Laws, formerly) owned, operated or
controlled by the Borrower or any of its Subsidiaries.
Register. See (S) 12.07(c).
-------- ------------
Registered Note Register. See (S) 12.07(h) hereof.
------------------------ ------------
Registered Notes. See (S) 2.10(b) hereof.
---------------- -----------
Remaining Amount. At any date, that portion of the Maximum Amount that
----------------
remains unpaid by OC and DEC pursuant to the Capital Contribution Agreement.
Reportable Event. The occurrence of any of the events in (S) 4043(c) of
---------------- -----------
ERISA or the regulations thereunder with respect to a Plan.
Required Lenders. At any date, the Lenders holding two-thirds in dollar
----------------
amount of the outstanding Loans, or if no Loans are outstanding, two-thirds in
dollar amount of the Commitments (whether or not such Commitments have been
terminated or cancelled).
Secured Parties. Collectively, the Administrative Agent and the Lenders.
---------------
Security Agreement. At any date, any Subsidiary Security Agreement,
------------------
Borrower Security Agreement, D&E Pledge Agreement, Omnipoint C-Block Subsidiary
Parent Pledge Agreement, Omnipoint E-Block Subsidiary Parent Pledge Agreement
and Partner Pledge Agreement theretofore delivered that shall not have been
terminated and released in accordance with its terms.
Senior Debt. At any particular time, Total Debt less Subordinated Debt.
-----------
Site. The physical premises owned or controlled pursuant to written
----
agreement by the Borrower or the License Subsidiary for any Designated BTA.
Solvent. With respect to any Person on a particular date, the condition
-------
that on such date, (a) the fair value of the Property of such Person (both at
fair valuation and
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<PAGE>
at present fair saleable value) is greater than the total liabilities,
including, without limitation, Contingent Obligations, of such Person, (b) the
present fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person is paying its debts
generally as and when they become due, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of Contingent Obligations at any time, such obligations
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount (net of contribution rights) that
can reasonably be expected to become an actual or matured liability.
Stock. With respect to any Person, any and all shares of capital stock,
-----
partnership or other interests or units, membership interests or other units in
limited liability companies, participations or equivalent rights of or in such
Person and interests, participations, warrants, convertible securities or other
equivalents (however designated) therein or with respect thereto, including,
without limitation, Financial Assets as that term is defined in Article 8 of the
UCC.
Subordination Agreement. A Subordination Agreement in substantially the
-----------------------
form of Exhibit C-1 (for Interest Only/Temporary Advance Subordinated Debt) or
-----------
Exhibit C-2 (for No-Pay Subordinated Debt).
- -----------
Subordinated Debt. Interest Only/Temporary Advance Subordinated Debt and
-----------------
No-Pay Subordinated Debt.
Subsidiaries. As to any Person, any corporation, association, partnership,
------------
joint venture or other business entity of which such Person and/or any
Subsidiaries of such Person, directly or indirectly, either
(a) in respect of a corporation, owns or controls more than 50% of the
outstanding capital Stock having ordinary voting power to elect a majority
of the board of directors or similar managing body, irrespective of whether
a class or classes shall or might have voting power by reason of the
happening of any contingency, or
(b) in respect of an association, partnership, joint venture or other
business entity, is entitled to share in more than 50% of the profits and
losses, however determined.
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<PAGE>
Subsidiary Guaranty. See (S) 8.14(e) hereof.
------------------- -----------
Subsidiary Security Agreement. See (S) 8.13(c) hereof.
----------------------------- -----------
Taxes. See (S) 4.03(a) hereof.
----- -----------
Total Debt. As of any date, the aggregate principal amount of all
----------
Indebtedness of the Borrower and its Subsidiaries outstanding, determined on a
Consolidated basis.
Total POPs. As of any date the aggregate number of POPs in the BTAs and
----------
MTAs for which the Borrower or the License Subsidiaries hold FCC Licenses.
Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Loan.
----
Volume Purchase Agreement. That certain Volume Purchase Agreement, dated
-------------------------
as of September 22, 1994 by and among OC, its Subsidiaries party thereto and
Nortel, as amended, supplemented or restated from time to time, including
without limitation that certain amendment dated as of June 29, 1998.
Voting Stock. Stock or similar interests, of any class or classes (however
------------
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by reason of the
happening of a contingency.
Wholly Owned. As applied to any Subsidiary of a Person, a Subsidiary all
------------
the outstanding shares (other than directors' qualifying shares, if required by
law) of every class of Stock of which are at the time owned by such Person.
York-Hanover BTA. BTA No. 483.
----------------
Section 1.02 Rules of Interpretation.
------------ -----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
-25-
<PAGE>
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting
entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the State of New
York, have the meanings assigned to them therein.
(h) Reference to a particular "(S)" or Exhibit refers to that section
---
or that exhibit to this Agreement, unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section
or subdivision of this Agreement.
Section 1.03 Accounting Terms. Except as otherwise expressly provided
------------ ----------------
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to be
delivered to the Administrative Agent shall be prepared in accordance with the
following ("GAAP"):
----
(a) principles that are consistent with the principles promulgated or
adopted by FASB in effect at December 31, 1997, and
(b) to the extent consistent with such principles, the accounting
practice of the Borrower reflected in its financial statements for the year
ended at the date referred to in clause (a) above;
provided that, if FASB after the date hereof shall promulgate or adopt
- --------
principles that are materially different from those in effect at December 31,
1997, the Borrower and the Lenders will endeavor in good faith to amend this
Agreement in order to amend (i) the definition of GAAP to include such different
principles, and (ii) the other provisions of this Agreement so as to reflect in
substance the same limitations and restrictions as in effect prior to such
amendment to the definition of GAAP. Prior to the effective date, if any, of
any such amendment, GAAP shall, however, continue to include only the principles
specified in clause (a) of the preceding sentence.
-26-
<PAGE>
ARTICLE II
THE LOANS
---------
Section 2.01 The Advances.
------------ ------------
Each Lender severally agrees, on the terms and conditions hereinafter , to
make advances (the "Advances") to the Borrower of up to an aggregate principal
--------
amount not to exceed such Lender's Commitment on any Business Day from the date
hereof until the Commitment Termination Date.
Each Loan shall be in an amount equal to at least $1,000,000 (or, if less,
the aggregate remaining unused amounts of all Lenders' Commitments) (unless such
Loan is made in order to pay Nortel any amount owing to Nortel or any Affiliate
thereof, in which case there shall be no minimum amount for such Advance) and
shall consist of Advances of the same Type made on the same day by the Lenders
ratably according to their respective Commitments.
In no event shall the aggregate principal amount of all Advances
outstanding on any date exceed the lesser of:
(i) the Maximum Commitments as of such date, and
(ii) the Borrowing Base as of such date.
Section 2.02 Making the Advances.
------------ -------------------
(a) Except as otherwise provided in (S) 2.02(b), each Loan shall be
-----------
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed Loan in the case of a
Loan consisting of LIBOR Advances or the first Business Day prior to the
date of the proposed Loan in the case of a Loan consisting of Base Rate
Advances by the Borrower to the Administrative Agent. The Administrative
Agent shall give to each Lender prompt written notice thereof. Each such
notice of a Loan (a "Draw Request") shall be delivered in writing by
------------
telecopy, overnight or regular mail substantially in the form of Exhibit F
---------
hereto, specifying therein:
(i) the requested date of such Loan (which shall be a Business
Day);
(ii) from which tranche of the Credit Facility such Loan is
requested;
-27-
<PAGE>
(iii) the requested Type of Advances comprising such Loan;
provided that the Borrower may not request that Advances be LIBOR
Advances if, after giving effect to such Advances, there would be more
than three different Interest Periods then in effect;
(iv) the requested aggregate principal amount of such Loan; and
(v) the account to which the proceeds of such Loan shall be
paid.
Each Draw Request shall be accompanied by:
(A) a Borrowing Base Certificate that, among other things,
shows the Borrowing Base as of the date of such Draw Request;
(B) a certificate that shows the Maximum Commitment as of
the date of such Draw Request and sets forth in reasonable detail
the calculation of the amount thereof; and
(C) such additional documents as may be required by Article
IX or the Draw Request.
Each Lender shall, before 12:00 noon (New York City time) on the date of a
scheduled Loan, make available for the account of its Applicable Lending Office
to the Administrative Agent at the Administrative Agent's Account in same-day
funds, such Lender's ratable portion of such Loan. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions
in Articles VIII and IX, the Administrative Agent will wire transfer same-day
funds in the aggregate principal amount of such Loan to such account as the
Borrower shall have specified in its Draw Request. If the Administrative Agent
shall receive such funds and if such applicable conditions shall be fulfilled
prior to 12:00 A.M. (New York City time) on the date of any proposed Loan, the
Administrative Agent shall commence the wire transfer (or direct its bank to
commence the wire transfer) of such funds to such account by 2:00 P.M. (New York
City time).
(b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select LIBOR Advances for any Loan or if the
aggregate amount of such Loan is less than $5,000,000 or if the obligation
of the Lenders to make LIBOR Advances shall then be suspended pursuant to
(S) 2.05 or 4.01 and (ii) there shall be no more than three Interest
----------------
Periods for LIBOR Advances at any one time in effect.
(c) Each Draw Request shall be irrevocable and binding on the
Borrower. In the case of any Loan that the related Draw Request specifies
is to be comprised of LIBOR Advances, the Borrower shall indemnify each
Lender
-28-
<PAGE>
against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in such Draw Request
for such Loan the applicable conditions in Articles VIII and IX, including
any loss (including loss of anticipated profits), cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as
part of such Loan when such Advance, as a result of such failure, is not
made on such date.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Loan that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Loan, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Loan in
accordance with subsection (a) of this (S) 2.02 and the Administrative
--------
Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Lender
shall not have so made such ratable portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Advances comprising such Loan and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Loan for purposes of
this Agreement.
(e) The failure of any Lender to make the Advance to be made by it as
part of any Loan shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Loan, but no Lender
shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Loan.
(f) During the period following the occurrence of a Grandparent
Unmatured Default until such default is either cured, waived, or becomes a
Grandparent Debt Default, no Advances shall be made under the Credit
Facility. If Nortel holds more than ***** of the Commitments at such time,
Advances up to ***** may be made to pay amounts owing Nortel on outstanding
purchase orders.
(g) Notwithstanding anything to the contrary contained in this
Agreement, if and to the extent that Nortel is a Lender under this
Agreement and all or a portion of the proceeds of an Advance is to be paid
to Nortel, the Borrower hereby irrevocably agrees that the portion of each
Loan to be advanced
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-29-
<PAGE>
by Nortel to the Borrower in accordance with this Agreement may in the
discretion of Nortel be effectively disbursed on the date in the Draw
Request for such disbursement to the Borrower by virtue of a credit in the
amount of such Loan given to the Borrower under the Volume Purchase
Agreement.
Section 2.03 Fees.
------------ ----
The Borrower shall pay to the Administrative Agent for the ratable benefit
of the Lenders ***** a commitment fee (the "Commitment Fee") of ***** per annum
--------------
on the average undrawn balance of the Credit Facility, which accrual will
commence January 1, 1999. The Commitment Fee shall be due quarterly in arrears
commencing March 31, 1999, and continuing on the last day of each June,
September, December and March thereafter through the Commitment Termination
Date. *****
The Borrower shall also pay the fees set forth in the Administrative
Agent's Letter on the terms and conditions contained therein.
Section 2.04 Interest.
------------ --------
(a) Except as provided in subsection (b) below, the Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each
Lender from and including the date of such Advance through but excluding
the date on which such principal amount shall be paid in full, at the
following rates per annum:
(i) During such periods as such Advance is a Base Rate Advance,
a rate per annum equal at all times to the sum of (A) the Base Rate in
effect from time to time, plus (B) the Applicable Margin in effect
from time to time and applicable to such Advance, payable in arrears
quarterly on (x) the last day of each March, June, September and
December and (y) the Maturity Date with respect to such Advance.
(ii) During such periods as such Advance is a LIBOR Advance, a
rate per annum equal at all times during each Interest Period for such
Advance to the sum of (A) LIBOR for such Interest Period for such
Advance, plus (B) the Applicable Margin in effect from time to time
and applicable to such Advance, payable in arrears on (x) the last day
of such Interest Period if the applicable Interest Period is one, two
or three months, or the date which is three months after the first day
of the Interest Period and the last date of the Interest Period if the
applicable Interest Period is six months, (y) the date on which such
Advance shall be Converted or
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-30-
<PAGE>
repaid or prepaid, in whole or in part
(together with applicable Breakage Costs), and (z) the Maturity Date
with respect to such Advance.
(iii) If the Credit Facility is repaid by the Borrower in full
prior to the first anniversary of the Closing Date and the Commitments
of the Lenders are terminated, then so long as Nortel is the only
Lender at the time, Nortel will refund to the Borrower the difference
between the aggregate interest which would have accrued on the Credit
Facility, from the Closing Date if the Applicable Margin had been
(A) three percent (3%) above LIBOR for LIBOR Loans and (B) two percent
(2%) over the Base Rate for Base Rate Loans, as applicable.
(b) Upon occurrence and during the continuance of a Default, the
Borrower shall pay interest on
(i) the unpaid principal amount of each Advance owing to each
Lender, payable in arrears on the dates referred to in clause
(a) above, at a rate per annum equal at all times to the lesser of
(I) 4.00% per annum above the rate per annum then required to be paid
on such Advance pursuant to clause (a) above, and (II) the Maximum
Lawful Rate, and
(ii) the amount of any interest, fee or other amount payable
hereunder that is not paid when due, from the date such amount shall
be due until such amount shall be paid in full, payable in arrears on
the date such amount shall be paid in full and on demand, at a rate
per annum equal at all times to the lesser of (I) 4.00% per annum
above the rate per annum then required to be paid on Base Rate
Advances pursuant to clause (a)(i) above and (II) the Maximum Lawful
Rate.
Section 2.05 Interest Rate Determination.
------------ ---------------------------
(a) If, with respect to any LIBOR Advances, the Required Lenders
notify the Administrative Agent that LIBOR for any Interest Period for such
Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective LIBOR Advances for such
Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon:
(i) each LIBOR Advance will automatically, on the last day of
the then-existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert
Advances into, LIBOR Advances shall be suspended immediately,
-31-
<PAGE>
until such time as the Administrative Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist.
(b) On the date on which the aggregate unpaid principal amount of all
LIBOR Advances shall be reduced, by payment or prepayment or otherwise, to
less than $5,000,000, such Advances shall automatically Convert into Base
Rate Advances.
(c) Upon the occurrence and during the continuance of any Default:
(i) each LIBOR Advance will automatically, on the last day of
the then-existing Interest Period therefor, Convert into a Base Rate
Advance, and
(ii) the obligation of the Lenders to make, or to Convert
Advances into, LIBOR Advances shall be suspended immediately.
(d) If the Administrative Agent cannot determine LIBOR for any LIBOR
Advances:
(i) the Administrative Agent shall forthwith notify the
Borrower and the Lenders that the interest rate cannot be determined
for such LIBOR Advances,
(ii) each such Advance will automatically, on the last day of
the then-existing Interest Period therefor, Convert into a Base Rate
Advance, and
(iii) the obligation of the Lenders to make, or to Convert
Advances into, LIBOR Advances shall be suspended immediately, until
the Administrative Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
Section 2.06 Conversion of Advances. The Borrower may on any Business
------------ ----------------------
Day,upon notice given to the Administrative Agent not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of (S)(S) 2.07 and 2.09, Convert all
--------------------
Advances of one Type comprising the same Loan into Advances of the other Type;
provided that,
- --------
(a) any Conversion of LIBOR Advances into Base Rate Advances shall be
made only on the last day of an Interest Period for such LIBOR Advances,
and
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<PAGE>
(b) the Borrower may not Convert Base Rate Advances into LIBOR
Advances if, (A) after giving effect to such Conversion, there would be
more than three Interest Periods in effect or (B) the Advances to be
Converted would be less than the minimum amount specified in (S) 2.02(b).
-----------
Each such notice of a Conversion shall, within the restrictions specified
above, specify (x) the date of such Conversion, and (y) the Advances to be
Converted. Each notice of Conversion shall be irrevocable and binding on the
Borrower.
Section 2.07 Payments and Computations.
------------ -------------------------
(a) Except as provided in subsection (b) below, the Borrower shall
make each payment hereunder and under the Notes not later than 11:00 A.M.
(New York City time) on the day when due in U.S. dollars to the
Administrative Agent at the Administrative Agent's Account in same-day
funds.
(b) The Administrative Agent will, promptly after its receipt of such
payments, cause to be distributed funds of the kind received relating to
the payment of principal or interest or usage fees and other amounts
ratably (other than amounts payable pursuant to (S)(S) 4.02, 4.03 or
--------------------
12.04(c)) to the Lenders for the account of their respective Applicable
--------
Lending Offices, and funds of the kind received relating to the payment of
any other amount payable to any Lender to such Lender for the account of
its Applicable Lending Office, in each case to be applied in accordance
with the terms of this Agreement.
Upon the Administrative Agent's acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
(S) 12.07(d), from and after the effective date specified in such Assignment and
- ------------
Acceptance, the Administrative Agent shall make all payments hereunder and under
the Notes, in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(c) All computations of interest and fees shall be made by the
Administrative Agent on the basis of a year of 360 days, for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on
the next-succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or usage fee, as
the
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<PAGE>
case may be; provided that, if such extension would cause payment of
--------
interest on or principal of LIBOR Advances to be made in the next-following
calendar month, such payment shall be made on the next-preceding Business
Day.
(e) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due and owing to the
Lenders hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due such Lender.
If and to the extent the Borrower shall not have so made such payment in
full to the Administrative Agent, each Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate.
(f) To the extent permitted by law, all payments by the Borrower
hereunder and under any of the other Loan Documents shall be made without
setoff or counterclaim. Without limitation of the preceding sentence, to
the extent permitted by law, the Borrower's obligation to pay all amounts
due under the Loans shall not be affected by any circumstance whatsoever,
including:
(i) any set-off, counterclaim, recoupment, deduction, abatement,
suspension, diminution, reduction, defense or other right which the
Borrower may have for any reason whatsoever, including any failure of
the Collateral or any assets making up the Network, or any part
thereof, or any representation or service of any supplier,
manufacturer, installer or distributor, including Nortel;
(ii) any defect in the condition, design, operation or fitness
for use of, or any damage to or loss or destruction of, any equipment
or material provided by Nortel or any other Person;
(iii) any actual or alleged default by Nortel or any other Person
under the Volume Purchase Agreement; or
(iv) any other fact or circumstance relating to the Volume
Purchase Agreement.
No payment hereunder shall affect any rights of the Borrower under any other
agreement with Nortel or any Affiliate of Nortel.
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<PAGE>
Section 2.08 Sharing of Payments, Etc. If any Lender shall obtain any
------------ ------------------------
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances owing to it (other than
pursuant to (S) 4.02, 4.03 or 12.04(c)) in excess of its ratable share of
--------------------------
payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the
Advances owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided that, if all or any
--------
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's ratable share (according to the
proportion of (a) the amount of such Lender's required repayment to (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this (S) 2.08 may, to the fullest extent
--------
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Section 2.09 Use of Proceeds.
------------ ---------------
(a) Tranche 1.
---------
(i) Subject to the limitations in this Agreement, the proceeds
of Advances for Tranche 1 shall be available (and the Borrower shall
use such proceeds) (x) to pay when due Nortel invoices for Nortel
Goods and Services for use by the Borrower in the Designated BTAs, or
(y) to reimburse the Borrower for amounts previously paid by or on
behalf of the Borrower (including amounts that were paid prior to the
formation of the Borrower and contributed as equity prior to the
Closing Date to the Borrower) on account of Nortel invoices for
Nortel Goods and Services for use by the Borrower in the Designated
BTAs.
(ii) All Advances under Tranche 1 shall be made either (A) by
credit against the Volume Purchase Agreement, (B) directly to Nortel
to pay amounts due under the Volume Purchase Agreement or (C) to the
Borrower to reimburse the Borrower for Nortel Goods and Services for
the Designated BTAs which have previously been paid by or on behalf of
the Borrower, provided that, the Administrative Agent shall have
-------------
received satisfactory evidence of such payment.
(b) Tranche 2.
---------
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<PAGE>
(i) Subject to the limitations in this Agreement, the proceeds
of Advances for Tranche 2 shall be available (and the Borrower shall
use such proceeds):
(A) (x) to pay when due certain invoices for Permitted
Third-Party Expenses for equipment and services for use in the
Designated BTAs, or (y) to reimburse the Borrower for amounts
previously paid by or on behalf of the Borrower (including
amounts that were paid prior to the formation of the Borrower and
contributed as equity prior to the Closing Date to the Borrower)
on account of certain invoices for Permitted Third-Party Expenses
for equipment and services for use in the Designated BTAs; and
(B) (x) to pay when due up to an aggregate of ***** to
finance up to ***** of the purchase price of Nortel handsets, or
(y) to reimburse the Borrower for amounts previously paid to
Nortel by or on behalf of the Borrower (including amounts that
were paid prior to the formation of the Borrower and contributed
as equity prior to the Closing Date to the Borrower), on account
of up to an aggregate of ***** to finance up to ***** of the
purchase price of Nortel handsets.
(ii) All Advances under Tranche 2 shall be made either (A)
directly to the third party to whom the Permitted Third-Party Expense
is owing, (B) directly to Nortel to pay a portion of the invoices for
the handsets, or (C) to the Borrower to reimburse the Borrower for
Permitted Third-Party Expenses paid by or on behalf of the Borrower,
provided that the Administrative Agent shall have received
-------------
satisfactory evidence of such payment.
Section 2.10 The Notes.
------------ ---------
(a) The Borrower irrevocably authorizes each Lender to make or cause
to be made an appropriate notation on the Schedule(s) attached to such
Lender's Note(s) of the making of Loans or the receipt of payments. The
amount of the Loans on such Schedule(s), and the applicable tranches
thereof, shall be prima facie evidence of the principal amount thereof
owing and unpaid to such Lender, but the failure to record, or any error in
so recording, any such amount on such Schedule(s) shall not limit or
otherwise affect the obligations of the Borrower hereunder or under the
Notes to make payments of principal of or interest on the Notes when due.
(b) Any Lender that is not a U.S. Person and that could become
completely exempt from withholding of U.S. taxes in respect of payment of
any
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-36-
<PAGE>
Obligations due to such Lender hereunder relating to any of its Loans
if such Loans were in registered form for U.S. federal income tax purposes
may request the Borrower (through the Administrative Agent), and the
Borrower agrees thereupon, to exchange such Lender's Notes evidencing its
Loans for a promissory note or notes registered as provided in (S) 12.07(h)
------------
hereof (a "Registered Note"). Registered Notes may not be exchanged for
---------------
Notes that are not in registered form.
Section 2.11 Reduction or Termination of the Commitments.
------------ -------------------------------------------
(a) The Borrower may, upon at least three Business Days' notice to the
Administrative Agent, permanently terminate in whole or reduce in part the
unused portions of any Commitments with respect to any tranche of the
Loans; provided that, each such partial reduction:
-------- ----
(i) shall be in an aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof (or, if less, the aggregate
remaining unused amounts of all Lenders' Commitments in respect of
such tranche within the Credit Facility), and
(ii) shall be made ratably among the Lenders in accordance with
their respective Commitments in respect of such tranche within the
Credit Facility.
(b) The Maximum Commitments shall be automatically and permanently
reduced as of any date on which Advances are prepaid pursuant to (S) 3.02
--------
(except to the extent provided in (S) 3.02(d)) or (S) 3.03, by the
----------- --------
aggregate principal amount of the Advances so prepaid.
Each such reduction shall be made ratably among the Lenders in accordance with
their respective Commitments.
(c) Termination. On the Commitment Termination Date, the then-
-----------
remaining undrawn Commitments of the Lenders shall be automatically
terminated.
ARTICLE III
REPAYMENT AND PREPAYMENT OF THE LOANS
-------------------------------------
Section 3.01 Repayment.
------------ ---------
(a) On the last day of each quarter commencing on the last day of the
calendar quarter following the calendar quarter in which the Commitment
Termination Date occurs, and continuing on the last day of each March,
June,
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<PAGE>
September and December for nineteen consecutive calendar quarters
thereafter (or, if such day is not a Business Day, on the next-preceding
Business Day), the Borrower shall repay a portion of the aggregate
principal amount of the Advances equal to the percentage specified in the
table below opposite such periods of the greatest aggregate principal
amount of Advances outstanding on any date prior to the date of such
repayment.
<TABLE>
<CAPTION>
Payment Date Percentage
- ------------------------------------- ----------
<S> <C>
Last Day of Calendar Quarters 1-8 3.75
Last Day of Calendar Quarters 9-12 5.00
Last Day of Calendar Quarters 13-20 6.25
</TABLE>
(b) On the Maturity Date, the Borrower shall repay the aggregate then-
outstanding principal amount of all Advances, together with any and all
accrued and unpaid interest thereon and all other amounts due and owing
hereunder, under the Notes and under the other Loan Documents.
(c) Interest due with respect to Advances shall be paid at the times
and at the rates specified in (S) 2.04 of this Agreement.
--------
Section 3.02 Mandatory Prepayments of Loans.
------------ ------------------------------
(a) Sales of Assets. No later than three Business Days after its
----------------
receipt of any Net Cash Proceeds (after deducting the amount of any other
mandatory prepayment (x) arising in connection with the transaction
otherwise triggering a mandatory prepayment under this subsection (a), and
(y) required to be made pursuant to (S)3.02(e) hereof) referred to in this
subsection (a), the Borrower shall prepay Advances in an aggregate
principal amount equal to:
the Net Cash Proceeds from insurance recoveries, condemnation awards
and the direct or indirect sale of any assets of the Borrower and/or
any of its Subsidiaries (other than any sale of inventory and other
goods in the ordinary course of business) that is otherwise permitted
under this Agreement during any calendar year, to the extent,
individually or in the aggregate, such Net Cash Proceeds received
during such calendar year shall exceed ***** and are not reinvested in
the Network within 60 days, or if deposited with the Administrative
Agent, 365 days after receipt.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-38-
<PAGE>
Any prepayment pursuant to this subsection (a) shall be applied to the
prepayment of the remaining principal installments of the Credit Facility in
inverse order of maturity. No amounts prepaid pursuant to this subsection
(a) shall be available for reborrowing whether before or after the Commitment
Termination Date.
Each prepayment hereunder shall be allocated among the Lenders on a pro
---
rata basis. The Borrower shall pay such additional amounts as are sufficient to
- ----
pay the Lenders' Breakage Costs associated with such prepayments in accordance
with (S) 3.04(b). All Net Cash Proceeds relating to sales of assets, insurance
-----------
recoveries and condemnation awards not reinvested in the Network within sixty
(60) days after receipt shall be deposited into a cash collateral account held
by the Administrative Agent until such time as they are either reinvested or
required to be applied to the Loans hereunder.
(b) Excess Cash Flow. By April 30 of each calendar year beginning on
-----------------
the first April 30 following the Commitment Termination Date, the Borrower
shall prepay outstanding Advances in an aggregate principal amount equal to
fifty percent (50%) of any Excess Cash Flow in respect of the immediately
preceding fiscal year.
Any prepayment pursuant to this subsection (b) shall be applied to the
prepayment of the remaining principal installments of each Tranche of the Credit
Facility in inverse order of maturity. No amounts prepaid pursuant to this
subsection (b) shall be available for reborrowing whether before or after the
Commitment Termination Date.
Each prepayment hereunder shall be allocated among the Lenders on a pro
---
rata basis. The Borrower shall pay such additional amounts as are sufficient to
- ----
pay the Lenders' Breakage Costs associated with such prepayments in accordance
with (S) 3.04(b).
-----------
(c) Excess Borrowings. If on any date the aggregate principal amount
------------------
of outstanding Advances shall exceed the Maximum Commitments or the
Borrowing Base, the Borrower shall immediately prepay the then-outstanding
balance of Advances by an amount equal to such excess together with all
accrued but unpaid interest relating thereto.
No amounts prepaid pursuant to this subsection (c) shall be available for
reborrowing whether before or after the Commitment Termination Date. Any such
prepayment shall be applied to the prepayment of a ratable aggregate principal
amount of the applicable Advances. Each prepayment hereunder shall be allocated
among the Lenders on a pro rata basis. The Borrower shall pay such additional
--- ----
amounts as are sufficient to pay the Lenders' Breakage Costs associated with
such prepayment in accordance with (S) 3.04(b).
-----------
(d) Termination of Volume Purchase Agreement. The Borrower shall
----------------------------------------
prepay all outstanding Advances, along with accrued but unpaid interest,
-39-
<PAGE>
applicable Breakage Costs and all other Obligations, and the Lenders'
Commitments hereunder shall terminate, upon the termination of the Volume
Purchase Agreement as a result of a default thereunder by the Borrower
beyond applicable grace and cure periods.
(e) Adjusted Debt to Total POPs. If at the end of any fiscal quarter
---------------------------
during the term of this Agreement, the ratio of (i) Adjusted Debt
outstanding at the end of such fiscal quarter to (ii) Total POPs on the
last day of such fiscal quarter exceeds ***** (the "Maximum Ratio"), the
-------------
Borrower shall prepay within ten (10) Business Days after the end of such
fiscal quarter the dollar amount in cash which would cause the Borrower not
to exceed the Maximum Ratio for such fiscal quarter (including accrued and
unpaid interest thereon).
Any prepayment pursuant to this subsection (e) shall be applied to the
remaining principal installments of the Credit Facility in inverse order of
maturity and pro rata between Tranche 1 and Tranche 2. Amounts prepaid pursuant
to subsection (e) hereof will not be available for reborrowing.
A prepayment hereunder shall be allocated among the Lenders on a pro rata
basis. The Borrower will pay such additional amounts as are sufficient to pay
the Lender's Breakage Costs associated with such prepayment in accordance with
(S) 3.04(b).
- -----------
Section 3.03 Optional Prepayments of Loans.
------------ -----------------------------
The Borrower shall have the right, at its election, to prepay the principal
amount outstanding under either tranche, as a whole or in part, at any time
without penalty or premium, provided that any full or partial prepayment of the
--------
principal amount of any LIBOR Advances pursuant to this (S) 3.03 may be made
--------
only on the last day of the Interest Period relating thereto unless such
prepayments are accompanied by such additional amounts as are sufficient to pay
the Lenders' Breakage Costs associated with such prepayments. The Borrower
shall give the Administrative Agent, no later than 10:00 a.m., New York time, at
least three (3) Business Days' prior written notice of any proposed prepayment
pursuant to this (S) 3.03 of Base Rate Advances, and four (4) (or such shorter
--------
period as the Lenders may agree from time to time) LIBOR Business Days' notice
of any proposed prepayment pursuant to this (S) 3.03 of LIBOR Advances, in each
--------
case specifying the proposed date of prepayment of Loans and the principal
amount to be prepaid. Each such partial prepayment of the Loans (i) shall be in
a minimum amount of $1,000,000 and in integral multiples of $100,000 (or, if
less, the aggregate outstanding principal balance of all Advances), (ii) shall
be accompanied by the payment of accrued interest on the principal prepaid to
the date of prepayment, (iii) shall require the payment of appropriate Breakage
Costs, if any, in accordance with (S) 3.04(b), and (iv) shall be applied ratably
-----------
to Tranche 1 and Tranche 2 and pro rata against the remaining installment
--- ----
payments of principal on the applicable tranche. Each partial prepayment shall
be allocated among the Lenders on a pro rata basis.
--- ----
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-40-
<PAGE>
No amounts so prepaid, whether before or after the Commitment Termination
Date, shall be available for reborrowing.
Section 3.04 Certain Matters Relating to Repayments and Prepayments.
------------ ------------------------------------------------------
(a) On the date on which Advances are to be repaid or prepaid, and if
less than all Loans are to be repaid or prepaid, if both Base Rate Loans
and LIBOR Loans are outstanding, the Borrower will specify whether the Loan
to be repaid or prepaid shall be a Base Rate Loan or a LIBOR Loan and, if a
LIBOR Loan is to be repaid or prepaid and more than one LIBOR Loan is
outstanding, which such LIBOR Loan shall be prepaid.
(b) All prepayments and repayments pursuant to this Article III shall
-----------
be accompanied by such additional amounts as are sufficient to pay
applicable Breakage Costs and accrued and unpaid interest on the principal
amount of the Advances then being prepaid or repaid. A certificate of any
Lender setting forth the amount of any Breakage Costs which such Lender is
entitled to receive shall be furnished to the Borrower relating to any
prepayment for which the Administrative Agent has received notice in
accordance with the terms hereof, and shall be presumptively correct absent
manifest error. The Borrower shall pay all Breakage Costs to the
Administrative Agent as in the Lender's certificate pursuant to this
Article III within one (1) Business Day after delivery of such certificate.
-----------
ARTICLE IV
ILLEGALITY, INCREASED COSTS, CAPITAL ADEQUACY AND INDEMNITIES
-------------------------------------------------------------
Section 4.01 Illegality. Notwithstanding any other provisions herein, if
------------ ----------
any present or future law, regulation, treaty or directive or the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
LIBOR Loans, such Lender shall forthwith give notice of such circumstances to
the Borrower, the Administrative Agent and the other Lenders and thereupon
(a) the Commitments of such Lender to make LIBOR Loans shall forthwith
be suspended until such notifying Lender shall have notified the
Administrative Agent and the Borrower that the circumstance giving rise to
such determination no longer exists (and if such notifying Lender shall
determine that such circumstance no longer exists it shall so notify the
Administrative Agent and the Borrower promptly after determining the same),
and
(b) the aggregate principal amount of such Lender's LIBOR Loans, if
any, shall be Converted automatically to Base Rate Loans on the last day of
each
-41-
<PAGE>
Interest Period applicable to such LIBOR Loans or within such earlier
period as may be required by applicable law.
Such Lender will designate a different Applicable Lending Office if such
designation will avoid the need for any suspension or Conversions described in
the preceding sentence and will not, in the judgment of such Lender, be
otherwise disadvantageous to such Lender.
Section 4.02 Additional Costs and Capital Adequacy.
------------ -------------------------------------
(a) If any present or future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any competent court having jurisdiction with
respect thereto or by any governmental or other regulatory body or official
charged with the administration or the interpretation thereof and requests,
directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender or the Administrative
Agent by any central bank or other fiscal, monetary or other authority
(whether or not having the force of law), shall
(i) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special-deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of an office of any Lender, or
(ii) impose on any Lender or the Administrative Agent any other
conditions or requirements with respect to this Agreement, the other
Loan Documents, such Lender's Commitments, or any class of loans, or
commitments of which any of the Loans or such Lender's Commitments
form a part,
and the result of any of the foregoing is to increase the cost to such Lender of
making, funding, issuing, renewing, extending or maintaining any of the Advances
or such Lender's Commitments (taking into account such Lender's then-existing
policies with respect to maintaining capital), then the Borrower shall pay to
the Administrative Agent for the account of such Lender, within 15 days after
demand from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, for such increased costs.
(b) If any law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or the interpretation
thereof by a court or governmental authority with appropriate jurisdiction,
that in any case becomes effective after the date hereof, affects the
amount of capital required or
-42-
<PAGE>
expected to be maintained by any Lender or any corporation controlling such
Lender and such Lender determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of such
Lender's commitment with respect to any Advances, the Borrower will pay to
such Lender, within 15 days after demand from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender or
such corporation in the light of such circumstances, to the extent that
such Lender reasonably determines such increase in capital to be allocable
to the existence of such Lender's commitment to lend hereunder.
(c) Each demand by a Lender pursuant to this (S) 4.02 shall be
--------
accompanied by a statement setting forth in reasonable detail the basis for
such demand and the computation of such amount, including any method by
which such cost was allocated to the Borrower. In determining the amount
of any compensation, such Lender may use any reasonable averaging or
attribution methods in such demand, and any such methods so used shall be
binding on the Borrower. The amount specified in any such demand shall be
conclusive evidence of the amount owing, absent manifest error. Such
Lender will designate a different Applicable Lending Office if such
designation will avoid the need for or reduce the amount of any
compensation under this (S) 4.02 and will not, in the judgment of such
--------
Lender, be otherwise disadvantageous to such Lender. By making any payment
under this (S) 4.02, the Borrower is not waiving its right to contest that
--------
the amounts in the certificates are based on manifest error.
Section 4.03 Taxes.
------------ -----
(a) Any and all payments by the Borrower hereunder or under the Notes
shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
---------
case of each Lender and the Administrative Agent, taxes imposed on its
income, and franchise taxes imposed on it in lieu of income taxes, by the
jurisdiction under the laws of which such Lender or the Administrative
Agent (as the case may be) is organized or any political subdivision
thereof and, in the case of each Lender, taxes imposed on its income, and
franchise taxes imposed on it in lieu of income taxes, by the jurisdiction
of such Lender's Applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
-----
the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under any Note to any Lender or the
Administrative Agent,
(i) the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions
applicable
-43-
<PAGE>
to additional sums payable under this (S) 4.03) such Lender
--------
or the Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been
made,
(ii) the Borrower shall make such deductions, and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or under the
Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
-----
Taxes").
-----
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
(S) 4.03) paid by such Lender or the Administrative Agent (as the case
---------
may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be
made within 15 days from the date such Lender or such Agent (as the case
may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred
to in (S) 12.02, the original or a certified copy of a receipt evidencing
---------
payment thereof. In the case of any payment hereunder or under the Notes
by or on behalf of the Borrower through an account or branch outside the
United States or on behalf of the Borrower by a payor that is not a United
States person, if the Borrower determines that no Taxes are payable in
respect thereof, the Borrower shall furnish, or shall cause such payor to
furnish, to the Administrative Agent, at such address, an opinion of
counsel acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e)
below, the terms "United States" and "United States person" shall have the
------------- --------------------
meanings specified in (S) 7701 of the Internal Revenue Code.
--------
(e) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of
this Agreement in the case of each initial Lender and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender in the case
of each other Lender, and from time to time thereafter if requested in
writing by the Borrower (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrower with Internal Revenue Service
Form 1001 or 4224, as appropriate,
-44-
<PAGE>
or any successor or other form prescribed by the Internal Revenue Service,
certifying that such Lender is exempt from or entitled to a reduced rate of
United States withholding tax on payments of interest pursuant to this
Agreement or the Notes. If the form provided by a Lender at the time such
Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such
rate shall be considered excluded from "Taxes" as defined in (S) 4.03(a).
----- -----------
If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the
tax payable and information required on the date hereof by Internal Revenue
Service form 1001 or 4224, that the Lender reasonably considers to be
confidential, the Lender shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in (S) 4.03(e)
-----------
(other than if such failure is due to a change in law occurring subsequent
------ ----
to the date on which a form originally was required to be provided, or if
such form otherwise is not required under the first sentence of subsection
(e) above), such Lender shall not be entitled to indemnification under
(S)4.03(a) or (c) only with respect to those Taxes which would not have
---------- ---
been imposed by the United States; provided that should a Lender become
--------
subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall
reasonably request and at such Lender's expense to assist such Lender to
recover such Taxes.
(g) If the Borrower is required to pay any amounts to or for the
account of any Lender pursuant to this (S) 4.03, such Lender will designate
--------
a different Applicable Lending Office if such designation will avoid the
need for or reduce the amount of any such payment and will not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.
Section 4.04 Survival. Without prejudice to the survival of any other
------------ --------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Article IV shall survive the payment in full of
principal and interest hereunder and under the Notes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lenders and the Administrative
Agent as follows:
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<PAGE>
Section 5.01 Corporate Authority; Partnership Authority; Limited Liability
------------ -------------------------------------------------------------
Company Authority.
- -----------------
(a) Each Loan Party in existence on the date hereof (or on any date on
which these representations and warranties are deemed repeated):
(i) is a corporation, a limited partnership, or a limited
liability company duly organized, validly existing and in good
standing under the laws of its state of incorporation or state of
formation,
(ii) has all requisite corporate power or has taken all
requisite partner, member and/or management action required to own its
Property and conduct its business) as now conducted and as presently
contemplated, and
(iii) is in good standing as a foreign corporation, foreign
limited partnership or foreign limited liability company and is duly
authorized to do business in each jurisdiction where such
qualification is necessary in order to conduct its business as now
conducted except where a failure to be so qualified would not have a
Material Adverse Effect.
(b) on Schedule 5.01(b) hereto (as updated pursuant to (S) 6.13(q)) is
---------------- -----------
a complete and accurate list of all Subsidiaries of the Borrower, showing
(as to each such Subsidiary) the jurisdiction of its incorporation or
formation, the number of shares of each class or units of Stock authorized,
and the number outstanding, on the date hereof and the percentage of the
outstanding shares or units of each such class owned (directly or
indirectly) by the Borrower, the number of shares or units covered by all
outstanding options, warrants, rights of conversion or purchase and similar
rights at the date hereof. All of the outstanding Stock of each such
Subsidiary has been validly issued, is fully paid and non-assessable and is
owned by the Borrower or one or more of its Subsidiaries free and clear of
all Liens, except those created or permitted under the Loan Documents or as
disclosed in such Schedule (as so updated). Each such Subsidiary:
(i) is a corporation, partnership or a limited liability company
duly organized, validly existing and in good standing under the laws
of its state of incorporation or state of formation,
(ii) has all requisite corporate power or has taken all
requisite partner, member and/or management action required to own its
Property and conduct its business as now conducted and as presently
contemplated and
-46-
<PAGE>
(iii) is in good standing as a foreign corporation, foreign
limited partnership or foreign limited liability company and is duly
authorized to do business in each jurisdiction where such
qualification is necessary in order to conduct its business as now
conducted except where a failure to be so qualified would not have a
Material Adverse Effect.
(c) The execution, delivery and performance by each Loan Party of this
Agreement and the other Loan Documents to which it is or is to become a
party, and the consummation of the transactions contemplated hereby and
thereby:
(i) are within the partnership, corporate or limited liability
company authority of such Loan Party,
(ii) have been duly authorized by all necessary corporate (in the
case of a corporation), partnership (in the case of a partnership) or
member and/or management (in the case of a limited liability company)
actions or proceedings,
(iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which such Loan Party is subject or any judgment, order, writ,
injunction, license or permit applicable to such Loan Party or its
Property and
(iv) do not conflict with any provision of the partnership
agreement, charter or bylaws of, or any agreement or other instrument
binding upon, the Loan Party or its Property, and
(v) will not result in the creation, or imposition of, or
obligation to create, any Lien upon the Property of any Loan Party,
other than Liens granted pursuant to the Collateral Documents.
(d) This Agreement has been, and each of the Notes and each other Loan
Document when delivered hereunder will have been, duly executed and
delivered by each Loan Party thereto. This Agreement is, and each of the
Notes and each other Loan Document when delivered hereunder will be, the
legal, valid and binding obligation of each Loan Party thereto, enforceable
against such Loan Party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement
of creditors' rights and except to the extent that availability of the
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be
brought.
-47-
<PAGE>
Section 5.02 Governmental and Third Party Approvals. The execution,
------------ --------------------------------------
delivery and performance by each Loan Party of this Agreement and the other Loan
Documents to which such Loan Party is or is to become a party and the
transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any Person, other than those already obtained and
for any subsequent informational filing with the Securities and Exchange
Commission or approval contemplated by (S) 5.07.
--------
Section 5.03 Title to Properties. The Borrower and each of its
------------ -------------------
Subsidiaries own all of the assets reflected in the balance sheet of such
parties as at the Balance Sheet Date or acquired since that date (except FCC
Licenses owned by an Omnipoint C-Block Subsidiary, the Omnipoint E-Block
Subsidiary and the D&E License Subsidiary and property and assets sold or
otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title-retention agreements, liens or other encumbrances except
Permitted Liens. The License Subsidiaries existing on the date hereof, own all
of the FCC Licenses listed on Schedule 5.07 hereto.
-------------
Section 5.04 Financial Statements.
------------ --------------------
(a) Historical Balance Sheet. There has been furnished to the
------------------------
Administrative Agent a consolidated balance sheet (the "Historical Balance
Sheet") of the Borrower and its Subsidiaries as of the Balance Sheet Date.
Such Historical Balance Sheet has been prepared in accordance with GAAP and
fairly presents the assets and liabilities of the Borrower and each of its
Subsidiaries as at the close of business on the date thereof. There are no
Contingent Obligations of the Borrower or its Subsidiaries as of such date
involving material amounts, known to the officers of the Borrower, which
were not disclosed in such Historical Balance Sheet.
(b) Pro Forma Balance Sheet. There has been furnished to the
-----------------------
Administrative Agent a pro forma consolidated balance sheet of the Borrower
and its Subsidiaries as of July 31, 1998 (the "Pro Forma Balance Sheet").
The Pro Forma Balance Sheet has been prepared in accordance with GAAP and
fairly presents the assets and liabilities of the Borrower and each of its
Subsidiaries as of the close of business on the date thereof. There are no
Contingent Obligations of the Borrower or its Subsidiaries as of the date
of the Pro Forma Balance Sheet involving material amounts, known to
officers of the Borrower, which were not disclosed in such Pro Forma
Balance Sheet. Since the date of the Pro Forma Balance Sheet, there has
not occurred any changes that would make the Pro Forma Balance Sheet
delivered to the Administrative Agent pursuant to this (S) 5.04 untrue or
misleading in any material respect. Since the Balance Sheet Date, there
has not occurred any changes that would make the Pro Forma Balance Sheet
delivered to the Administrative Agent pursuant to this (S) 5.04 untrue or
misleading in any material respect.
-48-
<PAGE>
Section 5.05 No Material Adverse Effect, Etc. There has occurred no
------------ -------------------------------
Material Adverse Effect with respect to the Borrower or any of its Subsidiaries
(i) since the Balance Sheet Date based on the pro forma balance sheet delivered
pursuant to (S) 5.04 or (ii) since the date of the most recent audited financial
--------
statements provided to the Lenders, and all information provided by or on behalf
of the Borrower to the Lenders prior to the date of the initial Advance are true
and correct in all material respects. Except as permitted hereunder, the
Borrower has not made any Distribution.
Section 5.06 Franchises, Patents, Copyrights, Etc. The Borrower and each
------------ ------------------------------------
of its Subsidiaries own or have rights under the franchises, licenses, patents,
copyrights, trademarks, trade names, other intellectual property and rights in
respect of the foregoing which are listed on Schedule 5.06, without known
-------------
conflict with any rights of others. Except as set forth in Schedule 5.06, there
-------------
are no franchises, licenses, patents, copyrights, trademarks, trade names, or
other intellectual property, individually or in the aggregate, that are material
for the conduct of the business of the Borrower or any of its Subsidiaries, as
now conducted or as presently contemplated to be conducted.
Section 5.07 FCC Licenses, Etc.
------------ -----------------
(a) Part I of Schedule 5.07 lists all FCC Licenses held by License
------ -------------
Subsidiaries other than the Omnipoint C-Block Subsidiary, the Omnipoint E-
Block Subsidiary and the D&E License Subsidiary. Part II of Schedule 5.07
------- -------------
lists all FCC Licenses held by the License Subsidiaries of the Omnipoint C-
Block Subsidiary Parent. Part III of Schedule 5.07 lists all FCC Licenses
-------- -------------
held by the License Subsidiary of the Omnipoint E-Block Subsidiary Parent.
Part IV of Schedule 5.07 lists all FCC Licenses held by the License
------- -------------
Subsidiary of D&E. On or before the Closing Date, the Omnipoint C-Block
Subsidiary Parent, the Omnipoint E-Block Subsidiary Parent and D&E have
filed or caused to be filed applications with the FCC for the assignment or
transfer of all of the FCC Licenses listed in Parts II, III and IV of
--------------------
Schedule 5.07 to the Borrower or one or more Wholly Owned Subsidiaries of
-------------
the Borrower, and the Borrower expects that all of such assignments or
transfers shall take place within 180 days after the filing of such
applications therefor in accordance with the terms of this Agreement.
(b) Neither any FCC License nor any material Necessary Authorization
is the subject of any pending or, to the best of the Borrower's knowledge,
threatened revocation or revocation proceeding.
Section 5.08 Litigation. Except as on Schedule 5.08 attached hereto,
------------ ---------- -------------
there are no actions, suits, proceedings or investigations of any kind pending
or, to the best of the Borrower's knowledge, threatened against any Loan Party
before any court, tribunal or administrative agency or board (including the FCC)
that, if adversely determined, might, either in any case or in the aggregate,
have a Material Adverse Effect or materially
-49-
<PAGE>
impair the right of such Loan Party, to carry on business substantially as now
conducted, or result in any substantial and material liability not adequately
covered by insurance, or for which adequate reserves are not maintained on the
balance sheet of such Loan Party, or that questions the validity of this
Agreement or any of the Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
Section 5.09 No Materially Adverse Contracts, Etc. None of the Loan
------------ ------------------------------------
Parties is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future to have a Material Adverse Effect. None of the Loan Parties is a party
to any contract or agreement that has or is expected, in the judgment of such
Loan Party's officers, to have any Material Adverse Effect.
Section 5.10 Compliance with Other Instruments, Laws, Etc. None of the
------------ --------------------------------------------
Loan Parties is in violation of any provision of its charter documents, bylaws
or any agreement or instrument to which it may be subject or by which it or any
of its Properties may be bound or any decree, order, judgment, statute, license,
rule or regulation, in any of the foregoing cases in a manner that could result
in the imposition of substantial penalties or have a Material Adverse Effect.
Section 5.11 Tax Status. Each Loan Party and each of its Subsidiaries and
------------ ----------
Affiliates
(a) has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it
is subject or filed extensions therefor;
(b) has paid all taxes and other governmental assessments and charges
shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and by appropriate proceedings;
and
(c) has set aside on its books provisions reasonably adequate for the
payment of all taxes for all elapsed periods subsequent to the periods to
which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction in respect of any Loan Party or any of its
Subsidiaries or Affiliates, and the officers of the Borrower know of no basis
for any such claim.
Section 5.12 No Default. No Default has occurred and is continuing.
------------ ----------
Section 5.13 Holding Company and Investment Company Acts. Neither any
------------ -------------------------------------------
Loan Party nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are
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defined in the Public Utility Holding Company Act of 1935. Neither any Loan
Party nor any of its Subsidiaries is an "investment company", or an "affiliated
company" or a "principal underwriter" of an "investment company", or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
Section 5.14 Absence of Financing Statements, Etc. Except with respect to
------------ ------------------------------------
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or Property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
Section 5.15 FCC Matters. Except for the filing of tariffs with the FCC,
------------ -----------
each Loan Party has duly and timely filed all filings which are required to be
filed by it under the Communications Act, the failure to file which could
reasonably be expected to have a Material Adverse Effect and is in all material
respects in compliance with the Communications Act, including, without
limitation, the rules and regulations of the FCC applicable to it, the failure
to be in compliance with which could reasonably be expected to have a Material
Adverse Effect. No failure to pay any Indebtedness owing to the FCC in respect
of FCC Debt has occurred, except in accordance with the orders, rules and
regulations of the FCC.
Section 5.16 Tariffs. No action to change, alter, rescind or otherwise
------------ -------
terminate the tariffs containing service regulations or any rates and charges
for commercial mobile radio services which, if adversely determined, would have
a Material Adverse Effect, is pending or known by the Borrower to be under
consideration.
Section 5.17 Disclosure. This Agreement, the other Loan Documents and the
------------ ----------
statements and documents referred to herein or therein delivered to the
Administrative Agent and/or the Lenders by or on behalf of the Borrower or any
Loan Party pursuant hereto, taken together, contain no untrue statement of a
material fact or fail to state a material fact which would be necessary to make
the statements (taken as a whole) herein and therein not misleading at such
time.
Section 5.18 Burdensome Obligations. No Loan Party is a party to or bound
------------ ----------------------
by any franchise, agreement, deed, lease or other instrument, or subject to any
legal restriction which is so unusual or burdensome, in the context of its
business, as in the foreseeable future might materially and adversely affect or
impair the revenue or operating cash flow of such Loan Party, or the ability of
such Loan Party to perform the obligations to be performed by it under the Loan
Documents to which such Loan Party is a party. The Borrower does not presently
anticipate that future expenditures by the Borrower or any of its Subsidiaries
needed to meet the provisions of federal or state statutes, orders, rules or
regulations will be so burdensome as to affect or impair, in a
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materially adverse manner, the business or condition, financial or otherwise, of
the Borrower or any of its Subsidiaries.
Section 5.19 Solvency. Each Loan Party is, individually and together with
------------ --------
its Subsidiaries, and after giving effect to the incurrence of all Indebtedness
as and when contemplated by the Loan Documents will be, Solvent.
Section 5.20 Security Interests. The security interests granted under the
------------ ------------------
Collateral Documents constitute valid, binding and continuing duly perfected
first-priority security interests in and liens upon the Collateral (except for
Permitted Liens that have priority under applicable law or as provided herein)
in favor of the Administrative Agent, for the benefit of the Lenders.
Section 5.21 Certain Transactions. None of the officers, directors or
------------ --------------------
employees of the Borrower is presently a party to any transaction with the
Borrower (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner. The Borrower has delivered a complete and correct copy of each of the
Master Services Agreements to the Administrative Agent. The Borrower is not a
party to any management, operating, license or other agreement providing for the
payment of any amount to any of its Affiliates, except for the Master Services
Agreements or as permitted under (S) 7.11. To the extent Intellectual Property
--------
of the Partners, DEC or OC is licensed to the Borrower or its Subsidiaries, the
terms of such license(s) and the fee charged to the Borrower or its Subsidiaries
relating thereto shall be subject to the Required Lenders' reasonable approval.
Section 5.22 Business Plans. The Approved Full-Term Operating Business
------------ --------------
Plan and each Approved Annual Operating Business Plan, if any, have been
prepared in all material respects in accordance with GAAP (except for the
treatment of Indebtedness owing to the FCC, which has been reflected in such
plans at historical cost) consistently applied to projections.
Section 5.23 Employee Benefit Plans.
------------ ----------------------
(a) In General. Each Employee Benefit Plan and each Plan has been
----------
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the IRC, including, but
not limited to, the provisions thereunder respecting prohibited
transactions. The Borrower and each of its Subsidiaries has made all
required contributions to each Employee Benefit Plan and each Multiemployer
Plan. To the extent applicable,
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the Borrower has heretofore delivered to the Administrative Agent the most
recently completed annual report, Form 5500, with all required attachments,
and actuarial statement required to be submitted under (S) 103(d) of ERISA,
----------
with respect to each Guaranteed Pension Plan.
(b) Terminability of Welfare Plans. Under each Employee Benefit Plan
------------------------------
that is an employee welfare benefit plan within the meaning of (S) 3(1) or
--------
(S) 3(2)(B) of ERISA, no benefits are due unless the event giving rise to
-----------
the benefit entitlement occurs prior to plan termination (except as
required by Title I, Subtitle B, Part 6 of ERISA). The Borrower, each of
its Subsidiaries and each ERISA Affiliate may terminate each such Plan at
any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of such Loan Party or such ERISA
Affiliate without liability to any Person.
(c) Guaranteed Pension Plans. Each contribution required to be made
------------------------
to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S) 302(f) of ERISA, or otherwise, has been timely made. No
----------
waiver of minimum funding standards or extension of amortization periods
has been requested or received with respect to any Guaranteed Pension Plan.
No liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by the Borrower, any of its
Subsidiaries or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Event, or any other event or
condition that presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC. None of the Borrower, any of its Subsidiaries or
any ERISA Affiliate has instituted or intends to institute proceedings to
terminate a Guaranteed Pension Plan. No event requiring notice to the PBGC
under (S) 302(f)(4)(A) of ERISA has occurred with respect to any Guaranteed
----------------
Pension Plan and no amendment with respect to which security is required
under (S) 307 of ERISA has been made or is reasonably expected to be made
-------
to any Guaranteed Pension Plan. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within 12 months prior
to the date of this representation), and on the actuarial methods and
assumptions employed for that valuation, the aggregate benefit liabilities
of all such Guaranteed Pension Plans within the meaning of (S) 4001 of
--------
ERISA did not exceed the aggregate value of the assets of all such
Guaranteed Pension Plans, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in excess
of benefit liabilities.
(d) Multiemployer Plans. None of the Borrower, any of its
-------------------
Subsidiaries or any ERISA Affiliate has incurred or expects to incur any
material liability (including secondary liability) to any Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under (S) 4201 of ERISA or as a result of a sale of
--------
assets described in (S) 4204 of ERISA. Neither any Loan
--------
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<PAGE>
Party nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of
(S) 4241 or (S) 4245 of ERISA or that any Multiemployer Plan intends
-------- --------
to terminate or has been terminated under (S)4041A of ERISA.
--------
Section 5.24 Regulations G, U and X. No portion of any Loan shall be used
------------ ----------------------
or obtained for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations G, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224
("Regulations G, U and X.") The Borrower and each License Subsidiary are in
- ------------------------
compliance with Regulations G, U and X.
Section 5.25 Environmental Compliance. The Borrower has taken all
------------ ------------------------
necessary steps to investigate the past and present condition and usage of its
Real Estate and the operations conducted thereon and, based upon such diligent
investigation, makes the following representations:
(a) Except as disclosed in current phase 1 audit and environmental
reports and documents described in Schedule 5.25 hereto, the Borrower and
-------------
each of its Subsidiaries is in compliance with all applicable Environmental
Laws relating to the operation of its business and the use and occupancy of
any Real Estate. There is no pending or, to the best of its knowledge,
threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information
request by any governmental entity relating to any Environmental Law
involving the Borrower or any of its Subsidiaries.
(b) Except as set forth in Schedule 5.25, there have been no releases
-------------
of any Materials of Environmental Concern into the environment at any
parcel of Real Estate or any facility formerly or currently owned, operated
or controlled by the Borrower or any of its Subsidiaries. With respect to
any such releases of any Materials of Environmental Concern, the Borrower
has given all required notices to government entities. The Borrower is not
aware of any releases of Materials of Environmental Concern at parcels of
Real Estate or facilities other than those owned, operated or controlled by
the Borrower or any of its Subsidiaries that could reasonably be expected
to have an impact on the Real Estate or facilities owned, operated or
controlled by the Borrower or any of its Subsidiaries.
(c) Schedule 5.25 is a list of all environmental reports,
-------------
investigations and audits relating to premises currently or previously
owned or operated by the Borrower and its Subsidiaries (whether conducted
by or on behalf of the Borrower, any of its Subsidiaries or a third party,
and whether done at the initiative of the Borrower or any of its
Subsidiaries or directed by a governmental entity or other third party)
which the Borrower or any of its Subsidiaries has in its possession or to
which it has access, and complete and accurate copies of each
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such report, or the results of each such investigation or audit, have been
provided to the Administrative Agent.
(d) The Borrower and each of its Subsidiaries has filed all reports
and returns required to be filed by such Person under any Environmental
Laws. The Borrower and each of its Subsidiaries has obtained and is in
compliance with all licenses, permits, registrations, certificates,
consents, approvals or authorizations (collectively, "Environmental
-------------
Permits") required by all applicable Environmental Laws. No event has
occurred and is continuing that requires, or after notice or lapse of time
or both would require, any modification or termination of any Environmental
Permit. Neither the Borrower nor any of its Subsidiaries (i) has received
any notice asserting the absence of any Environmental Permit or (ii) has
knowledge of any environmental law proposed or under consideration, which,
if effective, could have a Material Adverse Effect.
(e) Except as set forth in Schedule 5.25, neither the Borrower nor any
-------------
of its Subsidiaries, nor any of the Real Estate, is subject to any
applicable Environmental Laws requiring the performance of site assessments
for Materials of Environmental Concern, or the removal or remediation of
Materials of Environmental Concern, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby, or as a condition to
the effectiveness of any transactions contemplated hereby.
Section 5.26 Joint Ventures, Etc. The Borrower is not engaged in any
------------ --------------------
joint venture or partnership with any other Person.
Section 5.27 Material Contracts. As of the date of this Agreement,
------------ ------------------
neither the Borrower nor any of its Subsidiaries is a party to any Material
Contract or any agreement with any director, officer or employee, except as
disclosed in Schedule 5.27.
-------------
Section 5.28 Representations in Other Loan Documents. Each of the
------------ ---------------------------------------
representations by any Loan Party in any of the other Loan Documents is true as
of the date hereof.
Section 5.29 Licenses. The Borrower, and each of the License Subsidiaries,
------------ --------
as applicable, own all FCC Licenses necessary to construct and operate the
Network and have maintained all Necessary Authorizations appropriate to the
level of development theretofore achieved and sufficient to avoid noncompliance
with the applicable minimum build-out requirements under the FCC Licenses for
the Designated BTAs.
Section 5.30 Ownership of Borrower. The Borrower is a Delaware limited
------------ ---------------------
partnership, of which D&E owns a 1% general partnership interest and a 49%
limited
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<PAGE>
partnership interest, Omnipoint Venture owns a 1% general partnership
interest and Omnipoint Holdings owns a 49% limited partnership interest.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
-------------------------------------
The Borrower covenants and agrees that, so long as any Loan or Note or any
fees or expenses are outstanding or any Lender has any Commitment hereunder:
Section 6.01 Maintenance of Office. The Borrower shall maintain its chief
------------ ---------------------
executive office at 250 Granite Run Drive, Lancaster, PA 17601, shall cause the
D&E License Subsidiary to maintain its chief executive office at 1325 Air Motive
Way, #130, Reno, Nevada 89502, and shall cause each of the Omnipoint C Block
Subsidiary and the Omnipoint E Block Subsidiary to maintain its chief executive
office at 3 Bethesda Metro Center, Suite 400, Bethesda, Maryland 20814, except
that the Borrower or each of the foregoing Subsidiaries may change its chief
executive office on not less than 30 days' advance written notice to the
Administrative Agent and after taking all such action as may be necessary or
appropriate or requested by the Administrative Agent to continue the perfection
of the Administrative Agent's security interest in the Collateral. Pursuant to
the foregoing sentence, Borrower hereby notifies the Administrative Agent that
each of the Omnipoint C Block Subsidiary and the Omnipoint E Block Subsidiary
intends to change its respective chief executive office to 1325 Air Motive Way,
#130, Reno, Nevada 89502 not later than 60 days after the Closing Date, and
agrees to take all actions as may be necessary or appropriate or requested by
the Administrative Agent to continue the perfection of the Administrative
Agent's security interest in the Collateral.
Section 6.02 Records and Accounts. The Borrower shall, and shall cause
------------ --------------------
each of its Subsidiaries to:
(a) keep true and accurate records and books of account in which full,
true and correct entries shall be made in accordance with GAAP, and
(b) maintain adequate accounts and reserves for all taxes (including
income taxes), depreciation, depletion, obsolescence and amortization of
its Properties, contingencies and other reserves.
Section 6.03 Corporate, Partnership and Limited Liability Company
------------ ----------------------------------------------------
Existence; Maintenance of Licenses; Assignment or Transfer of Licenses. The
- ----------------------------------------------------------------------
Borrower shall do or cause to be done, and shall cause each of its Subsidiaries
to do or cause to be done, all things necessary to:
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(a) preserve and keep in full force and effect its corporate,
partnership or limited liability company existence;
(b) maintain in full force and effect:
(i) each FCC License with respect to the BTAs specified in
Parts I, II, III and IV of Schedule 5.07 other than any such FCC
----- ----------------- -------------
License that has been previously sold or transferred in accordance
with this Agreement) and any other FCC Licenses from time to time held
by any License Subsidiary and cause each License Subsidiary at all
times to own each FCC License listed in Schedule 5.07 (other than any
-------------
such FCC License that has been previously sold or transferred in
accordance with this Agreement), free and clear of any Lien of any
kind, other than any Lien permitted under (S) 7.02(g);
-----------
(ii) with respect to the construction, installation and
development of facilities for the Designated BTAs, all FCC Licenses
and material Necessary Authorizations appropriate to the level of
development theretofore achieved and sufficient to avoid noncompliance
with the then applicable minimum build-out requirements under the FCC
License for such BTAs; and
(iii) with respect to the operation of those portions of
Designated BTAs the development of which has theretofore been
completed, all material FCC Licenses, copyrights, patents, franchises,
Necessary Authorizations and other rights as are necessary and
sufficient to operate such completed portions.
(c) cause D&E, the Omnipoint C-Block Subsidiary Parent and the
Omnipoint E-Block Subsidiary Parent to cause the ownership of the FCC
Licenses for the BTAs listed in Parts II, III and IV of Schedule 5.07 to be
-------------------- -------------
assigned or transferred to the Borrower or one or more Wholly Owned
Subsidiaries of the Borrower within 180 days after the filing of
applications therefor in accordance with the terms of this Agreement and
shall take all further actions necessary to effectuate such transfers, free
and clear of any Lien of any kind, other than any Lien permitted under (S)
---
7.02(g).
-------
The Borrower will, and will cause its Subsidiaries to, at all times perform
and observe all covenants and conditions on its part to be performed and
observed under FCC rules and regulations or otherwise with respect thereto with
respect to the FCC Licenses held by License Subsidiaries and not cause or permit
to exist any grounds for the FCC to revoke or suspend or not to renew such
License in accordance with (S) 7.06(b).
-----------
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<PAGE>
Section 6.04 Maintenance of Properties. The Borrower shall do or cause to
------------ -------------------------
be done, and shall cause each of its Subsidiaries to do or cause to be done, all
things necessary to preserve and keep in full force and effect its material
franchises, employment contracts and permits. The Borrower shall, and shall
cause each of its Subsidiaries to:
(a) cause all of its Properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary
equipment;
(b) cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the
Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times;
(c) continue to engage primarily in the businesses now conducted by it
and in related businesses; and
(d) continue in full force and effect all authorizations and approvals
required to conduct the businesses now conducted by it as appropriate to
the then level of construction, development and operation of PCS Systems
covered by FCC Licenses held by License Subsidiaries;
provided that nothing in this (S) 6.04 shall prevent the Borrower or any of its
- -------- --------
Subsidiaries from discontinuing the operation and maintenance of any of its
Properties if such discontinuance is, in the judgment of the Borrower or such
Subsidiary, desirable in the conduct of its business and would not have a
Material Adverse Effect.
Section 6.05 Insurance. The Borrower shall obtain and maintain, and shall
------------ ---------
cause each of its Subsidiaries to obtain and maintain, insurance with respect to
its properties and business with insurers that hold an A.M. Best rating of "A"
or better. The insurance coverage shall:
(a) include, as a minimum, the types of policies and respective limits
as reflected in (S) 12 of each Security Agreement;
------
(b) with respect to all liability insurance, name the Administrative
Agent as additional insured;
(c) with respect to casualty insurance, name the Administrative Agent
as loss payee as its interest may appear;
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(d) provide that the insurer will give the Administrative Agent at
least 30 days' prior written notice of the cancellation or any material
change in the coverage, aggregate limits or any other provision of such
insurance; and
(e) contain the standard mortgagee endorsement (without contribution).
The Borrower shall deliver to the Administrative Agent, as required by (S)
---
8.05, no later than March 31 in each calendar year and otherwise promptly on
- ----
request by the Administrative Agent, certificate(s) of insurance reflecting the
requirements of this (S) 6.05, each Security Agreement and each Mortgage, and
--------
setting forth any deductibles applicable to any insurance coverage.
Section 6.06 Taxes. The Borrower shall duly pay and discharge, and cause
------------ -----
each of its Subsidiaries to duly pay and discharge, before the same shall become
overdue, all taxes, assessments and other governmental charges imposed upon it
and its Real Estate, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a Lien or charge upon any of its
Property; provided that no such tax, assessment, charge, levy or claim need be
--------
paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower or any of its Subsidiaries
has set aside on its books adequate reserves with respect thereto and such
reserves have been segregated to the extent required by GAAP; and provided
--------
further that the Borrower shall pay all such taxes, assessments, charges, levies
- -------
or claims forthwith upon the commencement of proceedings to foreclose any Lien
that may have attached as security therefor.
Section 6.07 Inspection of Properties and Books.
------------ ----------------------------------
(a) The Borrower shall permit, and shall cause each of its
Subsidiaries to permit, the Administrative Agent, the Lenders and their
other designated representatives to visit and inspect any of the Properties
of the Borrower or such Subsidiary, to examine the books of account of the
Borrower or such Subsidiary (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the
Borrower or such Subsidiary with, and to be advised as to the same by, its
officers, all at such reasonable times and intervals as the Administrative
Agent or any Lender may reasonably request; provided that the
--------
Administrative Agent and each Lender shall use reasonable commercial
efforts not to interfere with the business of the Borrower or any of its
Subsidiaries.
(b) The Borrower authorizes the Administrative Agent and each Lender
to communicate directly with the independent certified public accountants
of the Borrower or any of its Subsidiaries and authorizes such accountants
to disclose to the Administrative Agent and the Lenders any and all
financial statements and other supporting financial documents and schedules
including copies of any
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management letter with respect to the business, financial condition and
other affairs of the Borrower and its Subsidiaries. At the request of the
Administrative Agent, the Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this
(S) 6.07(b).
-----------
Section 6.08 Compliance with Laws, Contracts, FCC Licenses and Permits.
------------ ---------------------------------------------------------
The Borrower shall comply, and shall cause each of its Subsidiaries to comply,
in all material respects with:
(a) the applicable laws, rules, regulations and orders wherever its
business is conducted, including without limitation compliance with all
Environmental Laws, all Environmental Permits, ERISA, the IRC, the
Communications Act and all FCC rules and regulations (including without
limitation compliance with FCC rules and regulations relating to
maintaining the status of the License Subsidiaries as designated entities
and small businesses);
(b) the provisions of its partnership agreements, charter documents
and by-laws;
(c) all material agreements and instruments to which it or any of its
Subsidiaries is a party and by which it or any of its Subsidiaries or any
of its or their Properties may be bound;
(d) all obligations with respect to any Employee Benefit Plan or
Multiemployer Plan; and
(e) all applicable decrees, orders, and judgments.
If any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Borrower or any of its Subsidiaries may fulfill any
of the Borrower's or such Subsidiary's obligations hereunder or any of the other
Loan Documents to which the Borrower or any of its Subsidiaries is a party, the
Borrower shall immediately take, or shall cause such Subsidiary immediately to
take, all reasonable steps within the power of the Borrower or such Subsidiary
to obtain such authorization, consent, approval, permit or license and furnish
the Administrative Agent evidence thereof.
Section 6.09 Further Assurances. The Borrower shall cooperate, and shall
------------ ------------------
cause each of its Subsidiaries to cooperate, with the Lenders and the
Administrative Agent, and shall execute and pay, and shall cause each of its
Subsidiaries to execute and pay, as applicable, for the filing of all such
further instruments and documents, including, without limitation, such Uniform
Commercial Code financing statements and other security documents as the
Required Lenders or the Administrative Agent shall reasonably deem appropriate
at any time in order to effectuate the security interests in
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favor of the Administrative Agent and to carry out to their satisfaction the
transactions contemplated by the Loan Documents. Specifically, the Borrower
shall deliver to the Administrative Agent all certificates representing the
Borrower's ownership interests in each of the License Subsidiaries, along with
stock powers executed in blank.
Section 6.10 Attornment and Recognition Agreements; Consents to Collateral
------------ -------------------------------------------------------------
Assignments. The Borrower shall obtain, and shall cause each of its
- -----------
Subsidiaries to obtain, (a) all attornment and recognition agreements from any
landlord or landlord's mortgagee of Real Estate leased by the Borrower or any of
its Subsidiaries (i) upon which any equipment with a value, individually or in
the aggregate, in excess of ***** is stored or located, and (ii) as to all such
leased Real Estate, for locations where at least eighty percent (80%) in
aggregate value of all equipment (taking into account the value of all equipment
at locations owned by the Borrower and its Subsidiaries) of such the Borrower or
its Subsidiaries is located, as well as (b) consents to collateral assignments
as the Administrative Agent may reasonably require from all parties to Material
Contracts with the Borrower or its Subsidiaries, each in form and substance
satisfactory to the Administrative Agent. The Borrower shall use its best
efforts to obtain all attornment and recognition agreements from any landlord or
landlord's mortgagee of Real Estate leased by the Borrower or any of its
Subsidiaries upon which all other Collateral not covered by the immediately
preceding sentence is stored or located, in form and substance reasonably
satisfactory to the Required Lenders. The Borrower shall collaterally assign
each of the Master Services Agreements to the Administrative Agent for the
ratable benefit of the Lenders. If and to the extent that the Borrower is unable
to obtain attornment and recognition agreements on a best efforts basis in
accordance with the second sentence of this (S) 6.10, then the Borrower shall
---------
and shall cause its Subsidiaries to request that any landlord, mortgagee and
easement grantor of the Borrower or any of its Subsidiaries agree to give the
Administrative Agent and the Administrative Agent, on a best efforts basis,
notice of any default by the Borrower or such Subsidiary under the terms or
conditions of any agreement between the Borrower and/or such Subsidiary and any
landlord, mortgagee of any such landlord or easement grantor, and allow the
Administrative Agent to inspect or remove Collateral after the occurrence and
continuance of an Event of Default.
Section 6.11 Maintenance of Rights and Privileges. The Borrower shall,
------------ ------------------------------------
and shall cause each License Subsidiary, to maintain in full force and effect
each of such entity's material rights and privileges.
Section 6.12 Maintenance of Subsidiary. The Borrower shall cause each
------------ -------------------------
License Subsidiary of the Borrower which is a Wholly Owned Subsidiary of the
Borrower as of the date hereof to remain a Wholly Owned Subsidiary of the
Borrower at all times during which this Agreement is in force and effect. The
Borrower shall cause each License Subsidiary which is not Wholly Owned by the
Borrower as of the date hereof (i) to become a Wholly Owned Subsidiary of the
Borrower within 180 days of the earlier of (x) the date hereof and (y) the date
of the filing of applications for the transfer or
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
assignment of the FCC Licenses listed on Parts II, III and IV of Schedule 5.07
-------------------- -------------
to the Borrower or one or more Wholly Owned Subsidiaries of the Borrower in
accordance with the terms of this Agreement (each such date is referred herein
to as an "FCC Transfer Application Date" and the latest of such date is referred
to herein as the "Final FCC Transfer Application Date") and (ii) to remain a
Wholly Owned Subsidiary of the Borrower at all times thereafter during which
this Agreement is in full force and effect.
Section 6.13 Reporting Requirements; Notices. The Borrower shall deliver
------------ -------------------------------
or cause to be delivered to the Administrative Agent on behalf of the Lenders
the following (in a sufficient number of copies to permit distribution to each
Lender):
(a) Approved Annual Operating Business Plan. No later than 15 days
---------------------------------------
prior to the end of each fiscal year of the Borrower a proposed annual
operating business plan containing the statements listed in items
(i) through (vi) in this paragraph and the exhibits contained in the annual
operating business plan delivered pursuant to (S) 8.12 for the next-
--------
succeeding fiscal year. The proposed annual operating business plan shall
contain:
(i) internally prepared statements of income and expense of the
Borrower and its Subsidiaries in reasonable detail for the applicable
period prepared in all material aspects in accordance with GAAP
(except for the absence of footnotes),
(ii) a schedule of all Capital Expenditures estimated to be made
during the period,
(iii) a statement of the amounts and times by which the Borrower
and its Subsidiaries need to raise additional capital to meet their
obligations when due during the period,
(iv) projected balance sheets of the Borrower and its
Subsidiaries,
(v) projected cash flow statements of the Borrower and its
Subsidiaries, and
(vi) a statement listing material assumptions which formed the
basis for (i) through (v),
each together with supporting schedules in sufficient detail as needed and
in all material aspects in accordance with the Approved Annual Operating
Business Plan delivered pursuant to (S) 8.12 and on a consistent basis.
--------
(b) Variance Report. No later than August 14 of each fiscal year of
---------------
the Borrower, beginning with its 1999 fiscal year, a report, certified as
true and correct
-62-
<PAGE>
by the chief or principal financial or accounting officer of the Borrower,
that shows in reasonable detail, variances, if any, between the actual
operating performance of the Borrower and its Subsidiaries and what was
estimated for the first six months of such fiscal year in the Approved
Annual Operating Business Plan for such fiscal year (or the Approved Full
Term Operating Business Plan if the Required Lenders have not approved a
plan delivered pursuant to (S) 6.13(a) with respect to such fiscal year)
-----------
and explains in reasonable detail in form satisfactory to the
Required Lenders the reasons for the discrepancies between them, if any.
(c) Quarterly Financial Statements. As soon as practicable, but in
------------------------------
any event not later than 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, copies of the
internally prepared unaudited Consolidated balance sheets of the Borrower
and its Subsidiaries as of the end of such quarter and Consolidated and
consolidating statements of income and a Consolidated statement of cash
flows of the Borrower and its Subsidiaries for the period commencing at the
end of the previous fiscal quarter and ending with the end of such fiscal
quarter, and Consolidated and consolidating statements of income and a
Consolidated statement of cash flows of the Borrower and its Subsidiaries
for the period commencing at the end of the previous fiscal year of the
Borrower and ending with the end of such quarter, all in reasonable detail
and each setting forth in comparative form:
(i) the figures for the prior year's corresponding fiscal
quarter, and
(ii) any variances from the Approved Annual Operating Business
Plan (or the Approved Full Term Operating Business Plan, if the
Required Lenders have not approved a plan delivered pursuant to
(S)6.13(a) with respect to such fiscal year),
----------
if any, prepared in all material aspects in accordance with GAAP, together with
a certification by the principal or chief financial or accounting officer of the
Borrower that the information contained in such financial statements fairly
presents the financial position of the Borrower and its Subsidiaries on the date
thereof (subject to year-end adjustments).
(d) Annual Financial Statements. As soon as practicable, but in any
---------------------------
event no later than 90 days after the end of each fiscal year of the
Borrower, the audited Consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such year, and the related audited
Consolidated statements of income and the audited Consolidated statement of
cash flows of the Borrower and its Subsidiaries for such year prepared in
accordance with GAAP, and a separate variance analysis setting forth in
comparative form the figures for the previous
-63-
<PAGE>
fiscal year and any variances from the applicable period of the Approved
Annual Operating Business Plan (or the Approved Full Term Operating
Business Plan, if the Required Lenders have not approved a plan delivered
pursuant to (S) 6.13(a) with respect to such fiscal year) in reasonable
-----------
detail. Such balance sheets, statements of income and statement of cash
flows shall contain a certified audit report of a nationally recognized
independent certified public accounting firm satisfactory to the
Administrative Agent, which report shall contain an unqualified opinion of
such accounting firm. The annual financial statements shall also be
accompanied by a management letter of the Borrower's accountants (to the
extent one is prepared for the Borrower).
(e) Compliance Certificate. Simultaneously with the delivery of the
----------------------
financial statements referred to in subsections (c) and (d) above,
(i) a statement certified by the principal financial or
accounting officer of the Borrower, in form and substance satisfactory
to the Administrative Agent, setting forth in reasonable detail
computations evidencing compliance with the covenants contained in
(S)(S) 6.14 and 7.05, and
--------------------
(ii) a Borrowing Base Certificate showing the Borrowing Base as
of the last day of such fiscal quarter or fiscal year, as the case may
be.
(f) Quarterly Key Barometer Report. Within 45 days after the end of
------------------------------
each fiscal quarter of the Borrower, a report on
(i) with respect to the Borrower:
(A) the number of cell sites constructed and cell sites
where equipment with an aggregate purchase price in excess of
***** is located,
(B) the total number of customers,
(C) the number of new customers acquired,
(D) the number of customers who terminated their service,
(E) the average net monthly revenue per user, and
(F) aggregate roaming revenue.
(ii) payments by the Borrower or any of its Subsidiaries to OC,
DEC or any of the Partners or any of their respective Affiliates
(other than
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-64-
<PAGE>
payments by the Borrower or any of its Subsidiaries to one another),
or to any Subsidiary of the Borrower, whether as dividends, payments
under any management, service or tax-allocation agreement or
otherwise; and
(iii) equity contributions to the Borrower, the Persons providing
the same and any issuance or sale of shares of Stock or other equity
interests in the Borrower or any of its Subsidiaries,
during such fiscal quarter, together with a report showing variances from
the estimates previously provided to Administrative Agent and each Lender
in the Annual Approved Operating Business Plan (or the Approved Full Term
Operating Business Plan, if the Required Lenders have not approved a plan
delivered pursuant to (S) 6.13(a) with respect to such fiscal year), along
-----------
with an explanation of discrepancies between the actual numbers and the
estimated numbers.
(g) Securities and Exchange Commission Reports. Within three Business
------------------------------------------
Days after the filing or mailing thereof, copies of all
(i) materials filed with the Securities and Exchange Commission
by the Borrower, any of the Partners, OC, DE, or any of their
respective Subsidiaries;
(ii) information sent to lenders to the Borrower (exclusive of
proprietary information); or
(iii) information and reports directly and materially related to
the Borrower and its Subsidiaries or the Network that any of the
Partners, OC or DEC would be required to file with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934,
if any of the Partners, OC or DEC were public companies subject to the
reporting requirements of such Act; provided that, if the information
--------
or reports covered by this clause (iii) contain proprietary
information, the Borrower shall not be obligated to provide the
proprietary information hereunder unless
(A) the Person that is the source of the information or
reports is a public company, and
(B) such Person would then be required to file such
proprietary information with the Securities and Exchange
Commission.
-65-
<PAGE>
(h) Accounts Receivable Aging Report. Within 45 days after the end of
--------------------------------
each fiscal quarter of the Borrower, an accounts-receivable-aging report in
respect of the Borrower.
(i) Defaults. Within three Business Days after the Borrower shall
--------
have knowledge of occurrence and continuance thereof, written notice of
occurrence and continuance of a Default, together with a statement of what
action the Borrower is taking or proposes to take with respect thereto. If
any Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting a Default) under this
Agreement or any other note, evidence of Indebtedness, indenture or other
obligation to which or with respect to which the Borrower, any of the
Partners, OC, DEC or any of their Subsidiaries is a party or obligor,
whether as principal, guarantor, surety or otherwise, which could result in
the party to whom such Indebtedness is owed having the right under its
governing documents to accelerate such Indebtedness, and such acceleration
would have a Material Adverse Effect, the Borrower shall forthwith give
written notice thereof to the Administrative Agent, describing the notice
or action and the nature of the claimed default.
(j) Environmental Events. As soon as possible, and in any event
--------------------
within 10 Business Days
(i) after making any such report, written notice of any
violation of any Environmental Law that the Borrower reports in
writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any
federal, state or local environmental agency, and
(ii) after the Borrower shall become aware thereof, written
notice of any inquiry, proceeding, investigation, or other action,
including a notice from any agency of potential environmental
liability, or any federal, state or local environmental agency or
board, that has the potential to materially affect the assets,
liabilities, financial conditions or operations of the Borrower or any
of its Subsidiaries or the security interests for the benefit of the
Secured Parties pursuant to any of the Collateral Documents.
(k) ERISA Events. As soon as possible, and in any event within 10
------------
days after the Borrower or any ERISA Affiliate knows or has reason to know
or believes that any ERISA Affiliate knows or has reason to know or
believes that any ERISA Event has occurred, a statement of the principal or
chief financial or accounting officer of the Borrower or such ERISA
Affiliate describing such ERISA Event, together with any correspondence
with, or filings made with, the PBGC or Department of Labor, and the
action, if any, which the Borrower or such ERISA Affiliate proposes to take
with respect thereto.
-66-
<PAGE>
(l) Employee Benefit Plans. Promptly after
----------------------
(i) filing the same with the Department of Labor or Internal
Revenue Service, (A) a copy of its initial actuarial statement
required to be submitted under (S) 103(d) of ERISA and Annual Report,
----------
Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan, and (B) a notice of all subsequent filings
(with copies to be provided upon request of the Administrative Agent),
(ii) receipt or dispatch thereof, a copy of any notice, report
or demand sent or received in respect of a Guaranteed Pension Plan
under
(S)(S) 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or
-------------------------------------------------------
in respect of a Multiemployer Plan, under (S) 4041A, 4202, 4219, 4242
---------------------------
or 4245 of ERISA, and
-------
(iii) becoming aware of occurrence thereof, notice of (A) any
transaction that could result in the imposition of a penalty under
(S) 502(i) of ERISA or an excise tax under (S) 4975 against the
---------- --------
Borrower, any of its Subsidiaries or an ERISA Affiliate; (B) any
partial or complete withdrawal from a Multiemployer Plan by the
Borrower, any of its Subsidiaries or an ERISA Affiliate; (C) a failure
by the Borrower, any of its Subsidiaries or an ERISA Affiliate to make
a payment to a Plan required to avoid imposition of a lien under
(S) 302(f) of ERISA; (D) the adoption of an amendment to a
----------
Guaranteed Pension Plan requiring the provision of security under
(S) 307 of ERISA; or (E) any change in the actuarial assumptions or
-------
funding methods used for any Guaranteed Pension Plan, where the effect
of such change is to materially increase the unfunded benefit
liability or materially reduce the obligation to make periodic
contributions.
(m) Notification of Claims Against Collateral. Within three Business
-----------------------------------------
Days after becoming aware of any setoff of any claims (including, with
respect to the Real Estate, environmental claims), withholdings or other
defenses to which any of the Collateral, or the Administrative Agent's or
the Lenders' rights with respect to the Collateral, are subject, written
notice thereof.
(n) Notice of Litigation and Judgments. Within 10 days after becoming
----------------------------------
aware thereof of
(i) any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting the Borrower or any of
its Subsidiaries or to which the Borrower or any of its Subsidiaries
is or becomes a party that could reasonably be expected to have a
Material
-67-
<PAGE>
Adverse Effect (which notice shall include a statement as to
the nature and status of the proceedings), or
(ii) any judgment not covered by insurance, final or otherwise,
against the Borrower or any of its Subsidiaries in an amount in excess
of $1,000,000, written notice thereof in form and detail satisfactory
to the Administrative Agent.
(o) FCC Notices. Within three Business Days after its receipt
-----------
thereof, copies of all material notices and correspondence received from or
sent to the FCC relating to any FCC License listed on Schedule 5.07.
-------------
(p) Change in Corporate, Partnership or Limited Liability Company
-------------------------------------------------------------
Name; Location of Collateral. Not later than 30 days prior to occurrence
----------------------------
thereof, written notice to the Administrative Agent of a change in (i) the
business, corporate, partnership or limited liability company name of any
of the Loan Parties, (ii) the location of any of the Collateral (subject to
the provisions of the relevant Collateral Documents) or (iii) the chief
executive office or other locations of each Loan Party or the location
where the books and records of the Borrower or any of its Subsidiaries are
kept.
(q) Update of Schedules. As soon as available and in any event within
-------------------
30 days after the end of each fiscal year of the Borrower and when
necessary in connection with a repetition of any representation or warranty
referring thereto in connection with any Draw Request, a report
supplementing the Schedules hereto, including without limitation (i) new
Subsidiaries of the Borrower and ownership of the Stock thereof, (ii) any
change in the designation of any BTA as in, or any addition, deletion or
other change to, Schedule 1.01 and (iii) a description of such other
-------------
changes in the information included in such Schedules as may be necessary
for such Schedules to be accurate and complete in all material respects.
(r) Disaggregation. Within 10 Business Days following occurrence
--------------
thereof, written notice of any disaggregation of spectrum as permitted
under (S)7.06 hereof, setting forth in reasonable detail the terms of such
disaggregation.
(s) Other Information. Such other information concerning the business
-----------------
operations or financial condition of any Loan Party or any of its
Subsidiaries as the Administrative Agent or any Lender shall from time to
time reasonably request. The Borrower shall provide personnel of the
Borrower reasonably necessary to discuss business plans and reports with
the Administrative Agent and Lenders on request.
-68-
<PAGE>
Upon the Administrative Agent's receipt of any and all financial and other
information furnished by the Borrower pursuant to this (S) 6.13 the
--------
Administrative Agent shall promptly deliver copies thereof to each Lender.
Section 6.14 Financial Covenants of the Borrower. So long as any Loan,
------------ -----------------------------------
Note or other of the obligations of the Borrower are outstanding hereunder or
any Lender has any Commitment, the Borrower and the License Subsidiaries on a
Consolidated Basis shall:
(a) Senior Debt to Contributed Capital. Not permit the ratio of (i)
----------------------------------
Senior Debt outstanding at the end of any fiscal quarter during any period
shown below to (ii) the aggregate amount of Contributed Capital through the
last date of such fiscal quarter, to exceed the ratio below opposite such
period:
<TABLE>
<CAPTION>
======================================
Fiscal Quarter Ending Ratio
- ------------------------- -----------
<S> <C>
9/30/98 to 3/31/01: *****
- ------------------------- -----------
6/30/01 to 6/30/02: *****
- ------------------------- -----------
9/30/02 and thereafter: *****
======================================
</TABLE>
(b) Adjusted Debt to Annualized EBITDA. Not permit the ratio of (i)
----------------------------------
Adjusted Debt outstanding at the end of any fiscal quarter during any
period shown below to (ii) Annualized EBITDA at the end of each fiscal
quarter during such period to exceed the ratio below opposite such period:
<TABLE>
<CAPTION>
=====================================
Fiscal Quarter Ending Amount
- ------------------------ -----------
<C> <S>
6/30/01: *****
- ------------------------ -----------
9/30/01: *****
- ------------------------ -----------
12/31/01: *****
- ------------------------ -----------
3/31/02: *****
- ------------------------ -----------
6/30/02: *****
- ------------------------ -----------
9/30/02: *****
- ------------------------ -----------
12/31/02 and thereafter: *****
=====================================
</TABLE>
(c) Fixed Charge Coverage Ratio. Not permit the ratio, as of the end
---------------------------
of any fiscal quarter during a period shown below, of (A) the sum of
(i) EBITDA
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-69-
<PAGE>
for the last completed fiscal quarter plus (ii) cash and Cash
----
Equivalents on hand, plus (iii) Availability, plus (iv) the Remaining
----
Amount, to (B) the sum of (i) amounts due in cash with respect to principal
and interest on Indebtedness of the Borrower during the next fiscal
quarter, plus (ii) budgeted Capital Expenditures scheduled to be made
----
during the next fiscal quarter as shown on the Approved Annual Operating
Business Plan plus (iii) cash taxes due in the next fiscal quarter, to be
----
less than the ratio shown below opposite such period:
<TABLE>
<CAPTION>
======================================
Fiscal Quarter Ending Ratio
- ------------------------- -----------
<S> <C>
9/30/98 to 12/31/02: *****
- ------------------------- -----------
3/31/03 and thereafter: *****
======================================
</TABLE>
(d) Quarterly Minimum Adjusted OCF Levels. Not permit Adjusted OCF
-------------------------------------
for any fiscal quarter ending during a period shown below to be less than
the amount opposite such period:
<TABLE>
<CAPTION>
===================================
Fiscal Quarter Ending Amount
- ----------------------- ----------
<S> <C>
9/30/98: *****
- ----------------------- ----------
12/31/98: *****
- ----------------------- ----------
3/31/99: *****
- ----------------------- ----------
6/30/99: *****
- ----------------------- ----------
9/30/99: *****
- ----------------------- ----------
12/31/99: *****
- ----------------------- ----------
3/30/00: *****
- ----------------------- ----------
6/30/00: *****
- ----------------------- ----------
9/30/00: *****
- ----------------------- ----------
12/31/00: *****
- ----------------------- ----------
3/31/01: *****
- ----------------------- ----------
6/30/01: *****
- ----------------------- ----------
9/30/01: *****
- ----------------------- ----------
12/31/01: *****
- ----------------------- ----------
</TABLE>
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-70-
<PAGE>
<TABLE>
<CAPTION>
===================================
Fiscal Quarter Ending Amount
- ----------------------- ----------
<S> <C>
3/31/02: *****
- ----------------------- ----------
6/30/02: *****
- ----------------------- ----------
9/30/02: *****
- ----------------------- ----------
12/31/02: *****
- ----------------------- ----------
3/31/03: *****
- ----------------------- ----------
6/30/03: *****
- ----------------------- ----------
9/30/03: *****
- ----------------------- ----------
12/31/03: *****
- ----------------------- ----------
3/31/04 and 6/30/04: *****
- ----------------------- ----------
9/30/04: *****
- ----------------------- ----------
12/31/04: *****
- ----------------------- ----------
3/31/05: *****
- ----------------------- ----------
6/30/05 and 9/30/05: *****
- ----------------------- ----------
12/31/05 and 3/31/06: *****
===================================
</TABLE>
(e) Quarterly Minimum Revenue Levels. Not permit Gross Revenues for
--------------------------------
any fiscal quarter ending during a period shown below to be less than the
amount opposite such period:
<TABLE>
<CAPTION>
===================================
Fiscal Quarter Ending Amount
- ----------------------- ----------
<S> <C>
9/30/98: *****
- ----------------------- ----------
12/31/98: *****
- ----------------------- ----------
3/31/99: *****
- ----------------------- ----------
6/30/99: *****
- ----------------------- ----------
9/30/99: *****
- ----------------------- ----------
12/31/99: *****
- ----------------------- ----------
3/31/00: *****
- ----------------------- ----------
6/30/00: *****
- ----------------------- ----------
</TABLE>
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-71-
<PAGE>
<TABLE>
<CAPTION>
===================================
Fiscal Quarter Ending ______
- ----------------------- ----------
<S> <C>
9/30/00: *****
- ----------------------- ----------
12/31/00: *****
- ----------------------- ----------
3/31/01: *****
- ----------------------- ----------
6/30/01: *****
- ----------------------- ----------
9/30/01: *****
- ----------------------- ----------
12/31/01: *****
- ----------------------- ----------
3/31/02: *****
- ----------------------- ----------
6/30/02: *****
- ----------------------- ----------
9/30/02: *****
- ----------------------- ----------
12/31/02: *****
- ----------------------- ----------
3/31/03: *****
- ----------------------- ----------
6/30/03: *****
- ----------------------- ----------
9/30/03: *****
- ----------------------- ----------
12/31/03: *****
- ----------------------- ----------
3/31/04: *****
- ----------------------- ----------
6/30/04: *****
- ----------------------- ----------
9/30/04: *****
- ----------------------- ----------
12/31/04: *****
- ----------------------- ----------
3/31/05: *****
- ----------------------- ----------
6/30/05
and 9/30/05: *****
- ----------------------- ----------
12/31/05: *****
- ----------------------- ----------
3/31/06 *****
===================================
</TABLE>
Section 6.15 Mortgage Liens. If the Borrower or any of its Subsidiaries
------------ --------------
shall acquire any Real Estate and shall not at the time of such acquisition
incur Indebtedness with respect thereto pursuant to (S) 7.01(d)(i), the Borrower
--------------
shall grant, or cause such Subsidiary to grant, to the Administrative Agent on
behalf of the Secured Parties a first-
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
-72-
<PAGE>
mortgage Lien on such Real Estate in form and substance satisfactory to the
Required Lenders.
Section 6.16 After-Acquired Collateral. The Borrower confirms that it,
------------ -------------------------
and each License Subsidiary, has pledged to the Administrative Agent for the
benefit of the Secured Parties a first priority security interest in and lien
upon all Collateral acquired after the date hereof. The Borrower shall, and
shall cause each License Subsidiary to, execute and deliver all documentation
requested by the Administrative Agent in evidence thereof.
Section 6.17 Subordinated Debt Rate Hedging Arrangements. At any time at
------------ -------------------------------------------
which Nortel owns or holds less than fifty percent (50%) of the aggregate
Commitments under the Credit Facility, and within 60 days after a request by the
Administrative Agent, the Borrower will enter into Interest Rate Protection
Agreements or Rate Hedging Agreements satisfactory to the Lenders providing for
the hedging of its interest rate risk with respect to a portion of the notional
amount of its Senior Debt that bears interest at floating or fluctuating
interest rates, provided that the sum of such notional amount plus the notional
amount of all Senior Debt that bears interest at a fixed interest rate, if any,
is at least equal to fifty percent (50%) of the notional amount of all Senior
Debt (or such greater amount as the Borrower may purchase at its option if
evidenced by Permitted Hedging Arrangements to the extent permitted under (S)
---
7.01(e), but only so long as such amount does not exceed at such time the total
- -------
notional amount of Indebtedness of Borrower which bears interest at a floating
rate) for a period of at least three (3) years. For purposes of this (S) 6.17,
--------
Nortel shall not be deemed to hold that portion of the Commitments in which
Nortel has sold a participation.
Section 6.18 Syndication. The Borrower, the Partners, OC and DEC shall
------------ -----------
provide prompt assistance to the Administrative Agent and the Lenders in
connection with their respective efforts in syndicating the Credit Facility.
Such assistance includes making senior officers of the Borrower, the Partners,
OC and DEC available for meetings with potential Lenders, providing, in a timely
manner, such assistance as may be reasonably requested by the Administrative
Agent or its advisors, including providing information to and responding to
inquiries from prospective Lenders with respect to the business, operations,
business plan, results and other matters relating to the business of OC, DEC,
the Partners, the Borrower, and the other Guarantors, and cooperating with a
private placement of the Notes evidencing the Loans.
Section 6.19 Capital Contribution Agreement. The Borrower, OC and DEC
------------ ------------------------------
shall comply with the terms of the Capital Contribution Agreement and shall not
consent to any waiver, modification, or amendment thereto without the prior
written consent of the Required Lenders.
-73-
<PAGE>
Section 6.20 New Subsidiaries. Upon the creation of any Subsidiaries
------------ ----------------
permitted to be created under (S) 7.10 which is not in existence on the date
--------
hereof, the Borrower shall at its expense:
(a) duly execute and deliver, or cause such Subsidiary to duly execute
and deliver to the Administrative Agent a Subsidiary Guaranty in respect of
such Subsidiary (with such changes thereto as the Administrative Agent may
reasonably request);
(b) duly execute and deliver, or cause such Subsidiary to duly execute
and deliver, to the Administrative Agent a Subsidiary Security Agreement
(with such changes thereto as the Administrative Agent may reasonably
request) and such other mortgages, pledges, assignments and other security
agreements, in form and substance reasonably satisfactory to the
Administrative Agent, securing payment of all of the obligations of such
Subsidiary under its Guaranty and the obligations of the Loan Parties under
the Loan Documents and constituting Liens on all Collateral described
therein; and pledge, or cause to be pledged, to the Administrative Agent on
behalf of the Secured Parties, all authorized, issued and outstanding Stock
of such Subsidiary; and execute and/or deliver to the Administrative Agent
each other document or instrument required to be delivered in connection
with the execution and delivery of such Security Agreement pursuant to
(S) 8.13 (with such changes thereto as the Administrative Agent may
--- ----
reasonably request);
(c) take whatever action (including without limitation the recording
of mortgages, the filing of Uniform Commercial Code financing statements,
the giving of notices and the endorsement of notices on title documents)
which may be necessary or advisable in the opinion of Administrative Agent
to vest in the Administrative Agent valid and subsisting Liens on the
properties purported to be subject to the security agreements delivered
pursuant to this (S) 6.20, enforceable against all third parties in
--------
accordance with their terms;
(d) deliver to the Administrative Agent a signed copy of favorable
opinions, addressed to the Administrative Agent and the Lenders, of counsel
for the Borrower acceptable to the Administrative Agent as to such matters
relating to such Subsidiary as the Administrative Agent may reasonably
request; and
(e) at any time and from time to time, promptly execute and deliver
any and all further instruments and documents and take all such other
action as the Administrative Agent may deem desirable in obtaining the full
benefits of, or in preserving the Liens of, each security agreement
delivered pursuant to this (S) 6.20 and mortgages and other agreements and
--------
instruments entered into by such Subsidiary.
-74-
<PAGE>
ARTICLE VII
CERTAIN NEGATIVE COVENANTS OF THE BORROWER
------------------------------------------
The Borrower covenants and agrees that, so long as any Loan or Note or fees
or expenses are outstanding or any Lender has any Commitment hereunder:
Section 7.01 Restrictions on Indebtedness. Subject to the other
------------ ----------------------------
limitations of this Agreement, the Borrower shall not create, incur, assume,
guarantee or suffer to exist, or permit any of its Subsidiaries to create,
incur, assume, guarantee or suffer to exist, contingently or otherwise, any
Indebtedness other than (without duplication):
(a) the Loans;
(b) Subordinated Debt, not to exceed ***** million in the aggregate
(of which no more than ***** million shall be Interest Only/Temporary
Advance Subordinated Debt);
(c) with respect to the License Subsidiaries, FCC Debt existing on the
Closing Date;
(d)
(i) purchase-money Indebtedness (including not more than
***** for Real Estate); and
(ii) Capital Lease Obligations
but only so long as:
(A) the aggregate principal amount of Indebtedness under
clauses (i) and (ii) above at any one time outstanding does not
exceed ***** and
(B) such Indebtedness is in a principal amount that does not
exceed the fair market value of the property being acquired or
leased; and
(e) Indebtedness under Permitted Hedging Arrangements;
Indebtedness to OC or DEC or to any of their respective Subsidiaries shall only
be permitted hereunder pursuant to this Section hereof.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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Section 7.02 Restrictions on Liens. Neither the Borrower nor its
------------ ---------------------
Subsidiaries shall (A) create or incur or suffer to be created or incurred or to
exist any Lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its Property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (B) transfer any of such Property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (C) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title-retention or purchase-money security
agreement, device or arrangement; (D) suffer to exist for a period of more than
30 days after the same shall have been incurred any Indebtedness or claim or
demand against it that if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over its general creditors; or
(E) sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without recourse; and
shall not permit any of its Subsidiaries to do any of the foregoing; provided
--------
that the Borrower or any Subsidiary may create or incur or suffer to be created
or incurred or to exist the following (collectively, "Permitted Liens"):
---------------
(a) Liens to secure taxes, assessments and other government charges in
respect of obligations not overdue or Liens on Properties to secure claims
for labor, material or supplies in respect of obligations not overdue;
(b) deposits or pledges made in connection with, or to secure payment
of, worker's compensation and unemployment insurance;
(c) Liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue;
(d) encumbrances on Real Estate consisting of:
(i) easements, rights of way, zoning restrictions, restrictions
on the use of real property and defects and irregularities in the
title thereto, landlord's or lessor's liens under leases to which the
Borrower or any of its Subsidiaries is a party, and other minor liens
or encumbrances none of which interferes materially with the use of
the property affected in the ordinary conduct of the business of the
Borrower or any of its Subsidiaries, which defects do not individually
or in the aggregate have a Material Adverse Effect on the business of
the Borrower or any of its Subsidiaries, and
(ii) with respect to Real Estate mortgage (or deed of trust)
Liens (collectively, "Mortgage Liens") to secure the payment of
--------------
Indebtedness permitted to be incurred under (S) 7.01(d)(i); provided
-------------- --------
that
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(A) the amount secured by any Mortgage Lien shall not exceed
the sum of (1) the acquisition cost of the Real Estate acquired
by the Borrower or any of its Subsidiaries and (2) the cost of
any improvements constructed thereon; and
(B) the Borrower or such Subsidiary shall simultaneously
with the acquisition of the Real Estate in question either:
(1) grant to the Administrative Agent a second mortgage
(or deed of trust), in form and substance satisfactory to the
Required Lenders, subordinate only to the Mortgage Lien, and
securing the obligations of the Borrower and its Subsidiaries
owing to the Lenders, or
(2) cause the lender in whose favor the Mortgage Lien
is to be made to execute and deliver to the Administrative Agent
an option to purchase the Mortgage Lien, substantially in the
form of Exhibit G;
---------
(e) Liens in favor of the Administrative Agent for the benefit of the
Lenders;
(f) deposits to secure the performance of bids, trade contracts (other
than in respect of Indebtedness 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
(including, without limitation, letters of credit issued for the account of
the Borrower or its Subsidiaries to support any of the foregoing and the
reimbursement obligations related thereto) not to exceed in the aggregate
at any one time *****
(g) Liens on FCC Licenses and proceeds of the sale or other
disposition thereof in favor of the FCC securing FCC Debt owing by License
Subsidiaries permitted pursuant to (S) 7.01(c); and
-----------
(h) Liens securing purchase-money Indebtedness permitted under (S)
---
7.01(d)(i) or (ii); provided that such Liens cover only the property
------------------ --------
acquired with the proceeds of such Indebtedness and the proceeds of such
property to the extent the applicable Uniform Commercial Code provides for
the automatic perfection of a security interest in such proceeds.
Section 7.03 No Contingent Obligations. Subject to the other limitations
------------ -------------------------
of this Agreement, the Borrower shall not create, incur, assume, guarantee or
remain liable, or
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
permit any of its Subsidiaries to create, incur, assume, guarantee or remain
liable, on any Contingent Obligations other than:
(a) the Guaranties; and
(b) guaranties of Indebtedness permitted under (S) 7.01(d)(i) and
------------------
(ii).
----
Section 7.04 Restrictions on Investments. The Borrower shall not make or
------------ ---------------------------
permit to exist or to remain outstanding, or permit any of its Subsidiaries to
make or permit to exist or to remain outstanding, any Investment except:
(a) Investments in Permitted Hedging Arrangements in a notional
principal amount on any date reasonably related to the aggregate principal
amount of Indebtedness of the Borrower accruing interest at a floating
rate, and only so long as the purpose of such Investments shall be to hedge
such floating-rate interest and shall not be to speculate on interest
rates;
(b) Investments in commercial paper maturing in 90 days or less from
the date of issuance which, at the time of acquisition by the Borrower or
any of its Subsidiaries, is accorded a rating of "A1" or better by Standard
& Poor's Ratings Group or "P1" or better by Moody's Investors Service, Inc.
or an equivalent rating by another nationally recognized credit-rating
agency of similar standing;
(c) Investments in
(i) direct obligations of, or obligations guaranteed by, the
United States of America or any agency that constitutes a full-faith-
and-credit obligation of the United States of America, in any case
maturing in 12 months or less from the date of acquisition thereof,
and
(ii) repurchase agreements fully secured by underlying
securities of the type described in clause (i) above and issued by a
bank or trust company meeting the requirements of (S) 7.04(d);
-----------
(d) Investments in certificates of deposit maturing within six months
from the date of issuance thereof (i) issued by a bank or trust company
organized under the laws of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $500,000,000
and whose long-term certificates of deposit are, at the time of acquisition
thereof by the Borrower, rated "AA" or better by Standard & Poor's Ratings
Group or "A" or better by Moody's Investors Service, Inc., or (ii) issued
by any Lender;
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<PAGE>
(e) Investments in money-market funds (other than single-state funds)
that make investments in accordance with the regulations of the Securities
and Exchange Commission under the Investment Company Act of 1940, as
amended;
(f) the Borrower's investments as of the date hereof in its
Subsidiaries;
(g) Investments existing on the date hereof and listed on Schedule
--------
7.04; and
----
(h) Investments to the extent permitted by (S) 7.05(a).
-----------
Section 7.05 Distributions. The Borrower shall not make, or permit any of
------------ -------------
its Subsidiaries to make, any Distributions, including Distributions to any
Affiliates, officers, directors or employees of the Borrower or its Subsidiaries
(other than Distributions that constitute salaries paid in the ordinary course
of business) in respect of the Borrower's Stock or any Subordinated Debt of the
Borrower, except that the Borrower may:
(a) make loans or advances in the ordinary course of business not to
exceed ***** in the aggregate at any one time to its officers, directors
or employees for expenses (including moving expenses related to a transfer)
incidental to carrying on the business of the Borrower or any of its
Subsidiaries; and
(b) pay interest in respect of Interest Only/Temporary Advance
Subordinated Debt as and when due in accordance with the terms of any
Subordination Agreement (Interest Only/Temporary Advance) substantially in
the form attached hereto as Exhibit C-1, but only so long as, with respect
-----------
to (a) or (b) of this (S) 7.05, no event or circumstance which would
--------
constitute a Default or Event of Default exists under the Credit Facility
(including a Grandparent Debt Default) or would result from such payment or
Distribution;
(c) make Distributions with respect to any Stock of the Borrower,
which Stock is subject to the pledge by the Partners in favor of the
Administrative Agent under the Partner Pledge Agreements, out of Excess
Cash Flow that remains after all required prepayments are made hereunder,
but only so long as, with respect to (c) of this (S) 7.05, the Commitment
--------
Termination Date shall have occurred, and
(i) no event or circumstance which would constitute a Default
or Event of Default exists under the Credit Facility (including a
Grandparent Debt Default) or would result from such payment or
Distribution, and
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
(ii) the ratio of Total Debt to Adjusted OCF for the four most
recently completed fiscal quarters ending prior to the date of such
Distribution is no greater than ***** and
(d) make Distributions to Affiliates to repay that portion of
outstanding Subordinated Debt that was used by the Borrower or the
Affiliate on behalf of the Borrower for general working capital purposes of
the Borrower, provided that such Distribution (x) shall only be permitted
--------
if made to an Affiliate within ***** days of the date such advance was made
by or on behalf of the Borrower and (y) shall not exceed the lesser of
(i) the Subordinated Debt incurred by Borrower during such *****-day
period, (ii) the amount of all Advances made during such *****-day period
or (iii) ***** any time outstanding, and the Administrative Agent receives
satisfactory evidence as to the matters in clauses (x) and (y);
but only so long as, with respect to (d) of this (S) 7.05, no event or
--------
circumstance which would constitute a Default or Event of Default exists under
the Credit Facility (including a Grandparent Debt Default) or would result from
such payment or Distribution.
Section 7.06 Merger, Consolidation, Disposition of Assets, Etc.
------------ -------------------------------------------------
(a) The Borrower shall not merge into or consolidate with any Person
or permit any Person to merge into it, and shall not permit any of its
Subsidiaries to do any of the foregoing.
The Borrower shall not, and shall not permit any Subsidiary to, become a
party to or agree to or effect any disposition of assets (including without
limitation any disposition of any right to use any portion of any wavelength
covered by any FCC License or any right to provide PCS services to any POPs in
any geographic area within any Designated BTA), other than:
(i) the disposition of assets in the ordinary course of
business,
(ii) the disposition of obsolete assets or equipment no longer
necessary to the operation of the Borrower's or any Subsidiary's
business, consistent with sound and prudent practices,
(iii) so long as no Default shall have occurred and be continuing
at the time thereof any:
(A) voluntary transfer to the FCC of ***** MHz of spectrum
of any FCC License in respect of a Designated BTA or portion
thereof so long as the remaining FCC License covers at least
***** MHz of spectrum.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
(B) dispositions of the right to use spectrum in respect of
any FCC License, so long as
(1) the remaining License covers at least ***** MHz of
spectrum;
(2) the consideration received therefor shall be at
least equal to the fair-market value thereof;
(3) roaming agreements and other technology agreements
shall remain in place so as to allow the transferred BTA to
coordinate its operations with the Network;
(4) the Borrower provides the Administrative Agent with
an engineering report satisfactory to the Administrative Agent
and the Required Lenders demonstrating that there will be no
significant decrease in quality of service as a result of such
disposition; and
(5) no asset other than such FCC License is disposed of
in connection with such disposition.
(C) FCC License Transfer, provided all of the following
shall be true:
(1) the sole consideration paid in connection with the
disposition is the FCC License in respect of which the FCC
License Transfer shall have occurred;
(2) in consideration for such disposition an FCC
License is acquired for the same BTA being disposed of, and such
acquired FCC License covers at least the same amount of spectrum
as the FCC License being disposed of;
(3) no asset other than such FCC License is disposed of
in connection with such disposition;
(4) no License Subsidiary or other Loan Party shall be
liable for the payment of any FCC Debt for the FCC License being
disposed of; and
(5) no Indebtedness is incurred by the Borrower and its
Subsidiaries in connection with such disposition except FCC Debt
or other Indebtedness in an aggregate principal amount not
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
exceeding the aggregate principal amount of FCC Debt in respect
of the FCC License being disposed of; or
(iv) to the extent not otherwise subject to (i) through (iii)
and (vi) hereof, other voluntary dispositions of assets for their
fair-market value solely for cash consideration in an amount not to
exceed ***** in the aggregate during the term of this Agreement, the
proceeds of which are subject to mandatory prepayment pursuant to
(S) 3.02 hereof; and
--- ----
(v) to the extent not otherwise subject to (i) through (iv)
above, transfers of assets from the Borrower to any Wholly Owned
Subsidiary or from a Subsidiary to the Borrower or another Wholly
Owned Subsidiary, in each case to the extent that, no Default shall
have occurred and be continuing at the time and that after giving
effect to such transfer, the transferee would be in compliance with
its obligations under (S) 7.12.
--------
(b) Except with the agreement of the Required Lenders, the Borrower
shall not permit any Subsidiary to issue or sell any Stock or other equity
interest in itself, other than to the Borrower or another Subsidiary of the
Borrower and only if such Stock is pledged as security under the Collateral
Documents.
Section 7.07 Compliance with Environmental Laws. The Borrower shall not,
------------ ----------------------------------
and shall not permit any of its Subsidiaries to:
(a) use any of the Real Estate or any portion thereof for the
handling, processing, storage or disposal of Materials of Environmental
Concern, except in compliance with Environmental Laws;
(b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Materials of
Environmental Concern, except in compliance with Environmental Laws;
(c) generate any Materials of Environmental Concern on any of the Real
Estate, except in compliance with Environmental Laws;
(d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release (i.e., releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Materials of
Environmental Concern on, upon or into the Real Estate except in compliance
with Environmental Laws; or
(e) otherwise conduct any activity at any Real Estate, except in
compliance with Environmental Laws, or use any Real Estate in any manner
that
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
would violate any Environmental Law or bring such Real Estate in
violation of any Environmental Law.
Section 7.08 Employee Benefit Plans. Neither the Borrower nor any ERISA
------------ ----------------------
Affiliate shall, nor shall the Borrower permit any of its Subsidiaries to:
(a) engage in any "prohibited transaction" within the meaning of
----------------------
(S) 406 of ERISA or (S) 4975 of the IRC which could result in a material
------- --------
liability for the Borrower;
(b) permit any Guaranteed Pension Plan to incur an "accumulated
-----------
funding deficiency", as such term is defined in (S) 302 of ERISA, whether
------------------ -------
or not such deficiency is or may be waived;
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower pursuant to (S) 302(f) or (S) 4068 of ERISA;
---------- --------
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S) 4001 of ERISA) of all
--------
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities;
(e) fail to make when due any required contributions to a
Multiemployer Plan;
(f) withdraw (completely or partially) from any Multiemployer Plan
where such withdrawal is likely to result in a material liability of the
Borrower or an ERISA Affiliate;
(g) terminate or institute proceedings to terminate, any Guaranteed
Pension Plan, where such termination is likely to result in a material
liability of the Borrower or an ERISA Affiliate;
(h) make any amendment to any Guaranteed Pension Plan with respect to
which security is required under (S) 307 of ERISA; or
-------
(i) fail to give any and all notices and make all disclosures and
governmental filings required under ERISA or the IRC where such failure is
likely to result in material liability to the Borrower or an ERISA
Affiliate.
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<PAGE>
Section 7.09 New Subsidiaries. The Borrower shall not create or acquire
------------ ----------------
any Person other than Licenses Subsidiaries. The Borrower shall not permit any
of its Subsidiaries to create or acquire any Person.
Section 7.10 Transactions with Affiliates. The Borrower shall not enter
------------ ----------------------------
into, or permit any of its Subsidiaries to enter into:
(a) any agreement or arrangement providing for the payment of any
amounts to any of its Affiliates, except that:
(i) (A) the Borrower may enter into a Master Services Agreement
substantially in the form of Exhibit D-1 hereto, between the Borrower
-----------
and Omnipoint Venture and between the Borrower and D&E, and (B) the
Borrower and any License Subsidiary may enter into one or more
operating agreements substantially in the form of Exhibits D-2 through
------------
D-3 hereto, between such License Subsidiary and the Borrower,
---
provided, however, that the foregoing agreements may not be amended
-------- -------
unless such amendment is first approved in writing by the Required
Lenders;
(ii) the Borrower and its Subsidiaries may enter into a tax-
sharing agreement or arrangement pursuant to which the Borrower and
its Subsidiaries shall not make any payments or agree to make any
payments in lieu of income taxes unless the cumulative sum of such
payments does not exceed the cumulative sum of income taxes that the
Borrower and its Subsidiaries would have paid if the Borrower and its
Subsidiaries had always filed income-tax returns as separate entities;
(iii) the Borrower and its Subsidiaries may enter into a
management, consulting or other agreement, but only if such agreement
either
(A) relates to providing management, consulting or other
services to an Affiliate operating BTA markets and
(1) is on terms that are fair and reasonable and no
less favorable to the Borrower or such Subsidiary than it would
obtain in a comparable arm's-length transaction with a Person not
an Affiliate; and
(2) does not provide for the performance of services or
purchase or delivery of property by the Borrower or such
Subsidiary in a manner that, individually or together with all
other such agreements with Affiliates operating BTA markets,
would have a material adverse effect on the ability of the
Borrower or such
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<PAGE>
Subsidiary to build-out or operate any BTA or MTA for which it
owns the applicable FCC License, or
(B) is approved in writing by the Required Lenders; and
(iv) the Borrower may enter into an agreement with an Affiliate
with respect to purchases of equipment and provision of services for
the Network at the lower of fair market value or cost.
(b) any other agreement, arrangement or transaction with any of its
Affiliates (whether or not providing for the payment of any amounts to any
of its Affiliates), except in the ordinary course of business and on terms
that are fair and reasonable and no less favorable to the Borrower or such
Subsidiary than it would obtain in a comparable arm's-length transaction
with a Person not an Affiliate.
Section 7.11 Permitted Business. The Borrower shall not:
------------ ------------------
(a) engage in any business other than the development, construction
and operation of PCS Systems and related businesses, and the holding of
Stock of License Subsidiaries and Wholly Owned Subsidiaries to the extent
permitted under (S) 7.04 and (S) 7.10 of this Agreement, and the purchasing
-------- --------
of equipment used in connection with the build-out and operation of PCS
Systems for which FCC Licenses for BTAs are held by License Subsidiaries or
hold any assets other than such Stock, and
(b) permit any License Subsidiary to engage in any business other than
the holding of FCC Licenses and the licensing thereof to other Persons to
the extent permitted hereunder or to hold any assets other than FCC
Licenses.
Section 7.12 Charter Amendments. The Borrower shall not, and shall not
------------ ------------------
permit any of its Subsidiaries to, amend its charter documents, partnership
agreement or bylaws.
Section 7.13 Accounting Changes. The Borrower shall not make or permit,
------------ ------------------
or permit any of its Subsidiaries to make or permit, any change in accounting
policies or reporting practices, except as required by GAAP, or change its
fiscal year.
Section 7.14 Prepayments, Etc., of Indebtedness. The Borrower shall not
------------ ----------------------------------
and shall not permit any Subsidiary:
(a) to prepay, redeem, purchase, defease or otherwise satisfy prior to
the scheduled maturity thereof in any manner, or make any payment in
violation of any subordination terms of, any Indebtedness owing by the
Borrower or any
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<PAGE>
of its Subsidiaries, other than the prepayment of the Advances in
accordance with the terms of this Agreement, or
(b) to amend, modify or change in any manner any term or condition of
any Subordinated Debt.
Section 7.15 Amendment, Etc., of Material Contracts. The Borrower shall
------------ --------------------------------------
not, and shall not permit any Subsidiary to, cancel or terminate any Material
Contract or consent to or accept any cancellation or termination thereof, amend
or otherwise modify any Material Contract or give any consent, waiver or
approval thereunder, waive any default under or breach of any Material Contract,
agree in any manner to any other amendment, modification or change of any term
or condition of any Material Contract, or take any other action in connection
with any Material Contract, and shall not permit any of its Subsidiaries to do
any of the foregoing, that, in any such case, could, at the time thereof,
reasonably be expected to have a material adverse effect on the ability of the
Borrower or any of its Subsidiaries to perform its obligations under this
Agreement or any other Loan Document.
Section 7.16 Restrictions on Subsidiaries. The Borrower shall not enter
------------ ----------------------------
into or suffer to exist, or permit any of its Subsidiaries to enter into or
suffer to exist, any agreement prohibiting or conditioning the creation or
assumption of any Lien in favor of the Administrative Agent upon any of its
property or assets or limiting the ability of any Subsidiary to declare and pay
dividends and Distributions or make Investments in the Borrower.
Section 7.17 Partnerships. The Borrower shall not become, or permit any
------------ ------------
of its Subsidiaries to become, a general partner in any general or limited
partnership other than any Subsidiary the sole asset of which consists of its
interest in such partnership.
Section 7.18 Default Under the Volume Purchase Agreement. There shall not
------------ -------------------------------------------
occur a default under the Volume Purchase Agreement on account of a breach by
the Borrower or any of its Subsidiaries.
Section 7.19 Collections of Receivables. Except as provided in the Master
------------ --------------------------
Services Agreements, the Borrower shall not permit any of its Subsidiaries and
Affiliates to collect any receivables arising from providing PCS or other
services or sales of handsets or other assets.
Section 7.20 Management Fees. The Borrower shall not and shall not permit
------------ ---------------
its Subsidiaries to pay any management fees, except, so long as no Grandparent
Debt Default exists, pursuant to the terms of the Master Services Agreements.
Section 7.21 Operating Leases. The Borrower shall not and shall not
------------ ----------------
permit any of its Subsidiaries to incur Operating Lease Obligations (excluding
real estate expenses
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<PAGE>
such as rental and tower leasing), that individually or in the aggregate,
provide for an annual payment in excess of ***** unless with Required Lenders
prior written approval.
Section 7.22 Restrictions Regarding License Subsidiaries. The Borrower
------------ -------------------------------------------
shall not permit any License Subsidiary to, (i) acquire any assets other than
FCC Licenses, (ii) engage in any business other than as owner of FCC Licenses
for use by the Borrower or a Wholly Owned Subsidiary and take the actions
authorized and contemplated in this Agreement in connection with the Credit
Facility, or (iii) incur any Indebtedness other than as a Guarantor or as an
obligor to the FCC for FCC Debt that constitutes permitted Indebtedness
hereunder.
Section 7.23 Sale and Leaseback. The Borrower shall not enter into, or
------------ ------------------
permit any of its Subsidiaries to enter into, any arrangement, directly or
indirectly, whereby the Borrower or any of its Subsidiaries shall sell or
transfer any Property owned by it in order then or thereafter to lease such
Property or lease other property that the Borrower or such Subsidiary intends to
use for substantially the same purpose as the Property being sold or
transferred.
ARTICLE VII
CONDITIONS TO THE CLOSING
-------------------------
The obligations of each Lender to make any initial Advance shall be subject
to the satisfaction of the following conditions precedent on or prior to the
date of the initial Advance (the "Closing Date"):
------------
Section 8.01 Terms and Conditions of Transaction.
------------ -----------------------------------
(a) Each Lender shall have received one or more Notes, payable to the
order of such Lender, duly executed and delivered by the Borrower, as well
as copies of each of the other Loan Documents, which shall have been duly
executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to the
Administrative Agent, each of the Lenders and their counsel.
(b) The Lenders shall be satisfied with the final terms and conditions
of the transactions contemplated hereby and by the other Loan Documents,
including, without limitation, all legal and tax aspects thereof.
(c) The Lenders shall be satisfied with the corporate, partnership and
legal structure and capitalization of the Borrower and its Subsidiaries
(including all License Subsidiaries), including, without limitation, their
respective charters,
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
partnership agreements and bylaws and each agreement or instrument relating
thereto.
(d) The Administrative Agent and the Required Lenders shall have
completed satisfactory review and approval of the Borrower's Network build-
out plan, budget and schedule, including the Borrower's financial
statements as of December 31, 1997 and financial projections of the
Borrower and its Consolidated Subsidiaries for the ten-year period
beginning January 1, 1998, certified by the principal or chief accounting
or financial officer of the Borrower as having been prepared in accordance
with GAAP except for the absence of footnotes and the recording of FCC
licenses and related obligations on a cost basis, such projections giving
effect to the indebtedness to be incurred under the Credit Facility as well
as the other indebtedness to be incurred by the Borrower and its
Consolidated Subsidiaries during such ten-year period.
Section 8.02 Due Diligence. The Lenders shall have completed a due-
------------ -------------
diligence investigation of the Borrower and its Subsidiaries (including all
License Subsidiaries) in scope, and with results, satisfactory to the Lenders
and shall have been given such access to the management, records, books of
account, contracts and properties of the Borrower and shall have received such
financial, business and other information regarding the Borrower and its
Subsidiaries (including all License Subsidiaries) as they shall have requested.
Section 8.03 Validity of Liens. The Borrower Security Agreement, the
------------ -----------------
Partner Pledge Agreement and each other Collateral Document required to be
entered into on the date hereof shall be effective to create in favor of the
Administrative Agent a legal, valid and enforceable first-priority security
interest (except for Liens that have priority under applicable law and which are
Permitted Liens) in and Lien upon the Collateral. All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Administrative Agent to protect and preserve such security
interests shall have been duly effected, all such documents shall have been duly
executed by the applicable Loan Party and all filing and recording fees and
taxes relating to any of the foregoing shall have been duly paid. The
Administrative Agent shall have received evidence thereof in form and substance
satisfactory to the Administrative Agent.
Section 8.04 Search Reports and Related Documents. The Administrative
------------ ------------------------------------
Agent shall have received
(a) such Uniform Commercial Code, tax, patent, trademark and judgment
lien search reports with respect to such applicable public offices where
Liens are filed, as shall be acceptable to the Administrative Agent,
disclosing that there are no Liens of record (other than Permitted Liens)
in such official's office covering any Collateral or showing any Loan Party
as a debtor thereunder;
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(b) a certificate of each Loan Party signed by an authorized officer
of such Loan Party, dated the Closing Date, certifying that, as of the
Closing Date, there will exist no Liens on the Collateral other than
Permitted Liens; and
(c) acknowledgment copies or duly executed file-stamped copies of UCC-
1 and UCC-3 financing statements with respect to the Collateral filed in
each office in each jurisdiction that the Administrative Agent may deem
necessary or appropriate to perfect and protect a first-priority security
interest in the Collateral.
Section 8.05 Certificates of Insurance. The Administrative Agent shall
------------ -------------------------
have received:
(a) a certificate of insurance from an independent insurance broker,
dated as of the Closing Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing the insurance
obtained in accordance with the provisions of the Collateral Documents and
this Agreement, and
(b) copies of all policies evidencing such insurance, which shall
contain provisions naming the Administrative Agent as an additional insured
and loss payee on behalf of the Lenders as its interests may appear, with
the standard mortgage endorsement (without contribution) and providing for
30-days' prior written notice to Administrative Agent of cancellation or
diminishment.
Section 8.06 Solvency Certificate. Each of the Lenders and the
------------ --------------------
Administrative Agent shall have received an officer's certificate of the
Borrower, each of the Partners, OC and DEC in form and substance satisfactory to
the Administrative Agent and the Lenders, dated as of the Closing Date as to the
Borrower, each of the Partners, OC and DEC being Solvent after giving effect to
the consummation of the transactions contemplated herein and in the other Loan
Documents.
Section 8.07 Opinions of Counsel to the Borrower and its Subsidiaries.
------------ --------------------------------------------------------
Each of the Lenders and the Administrative Agent shall have received favorable
legal opinions addressed to the Lenders and the Administrative Agent, each dated
as of the Closing Date, in form and substance satisfactory to the Lenders and
the Administrative Agent, from (i) Piper & Marbury, L.L.P., counsel to the
Borrower, (ii) Piper & Marbury, L.L.P., counsel to the Borrower's Subsidiaries,
and (iii) local counsel to the Borrower's Subsidiaries in such jurisdictions as
the Administrative Agent may reasonably request as to, among other things, the
authorization, execution and enforceability of the Loan Documents, creation,
validity and perfection of the security interests in the Collateral, the
applicability of New York law, and the absence of any violations of, or conflict
with, credit agreements, indentures, and other material agreements, in form and
substance acceptable to the Administrative Agent and the Lenders.
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Section 8.08 Opinion of Counsel to the Partners, DEC and OC. Each of the
------------ ----------------------------------------------
Lenders and the Administrative Agent shall have received a favorable legal
opinion addressed to the Lenders and the Administrative Agent: (a) from Piper &
Marbury, L.L.P., counsel to the Partners and OC, dated as of the Closing Date,
and (b) from Buchanan Ingersoll, P.C., counsel to D&E and DEC, dated as of the
Closing Date, each in form and substance satisfactory to the Lenders and the
Administrative Agent.
Section 8.09 Opinion of FCC Counsel. Each of the Lenders and the
------------ ----------------------
Administrative Agent shall have received a favorable legal opinion addressed to
the Lenders and Administrative Agent from Piper & Marbury, L.L.P., FCC counsel
to the Borrower, the Partners and the License Subsidiaries, dated as of the
Closing Date, in form and substance satisfactory to the Lenders and the
Administrative Agent.
Section 8.10 Payment of Fees. The Borrower shall have paid all accrued
------------ ---------------
fees and expenses of the Administrative Agent, and the Lenders, to the extent
payable by the Borrower hereunder and under the other Loan Documents.
Section 8.11 Approvals, Permits; FCC Licenses.
------------ --------------------------------
(a) The Borrower and each of the License Subsidiaries shall have
obtained all federal, state and local governmental and regulatory consents,
approvals, FCC Licenses and permits, including any third-party consents, as
required or necessary for the Borrower to accept Loans and for the Borrower
and each of the License Subsidiaries to construct and operate the Network
and their businesses pursuant to the Approved Full Term Operating Business
Plan and shall maintain in effect each of the foregoing; all applicable
waiting periods shall have expired without any action being taken by any
competent authority; no law or regulation shall be applicable in the
judgment of the Lenders that restrains, prevents or imposes materially
adverse conditions upon the Loans or the operation of the businesses of the
Borrower and each of the License Subsidiaries as currently operated, and
the Administrative Agent and each of the Lenders shall receive a
certificate of an authorized officer of the Borrower to that effect dated
the Closing Date, and, to the extent requested by the Administrative Agent
or any Lender, a favorable opinion of regulatory counsel dated as of the
Closing Date.
(b) The Administrative Agent and the Lenders shall have received
satisfactory evidence that each FCC License listed in Schedule 5.07 has
-------------
been won by OC, DEC and their respective Subsidiaries in FCC PCS auctions,
has been transferred to a License Subsidiary, and that no such FCC License
is subject or likely to be subject to any revocation action commenced or
threatened by the FCC or to being purchased by any Person other than a
License Subsidiary.
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(c) The Administrative Agent and the Lenders shall have received
satisfactory evidence that the Borrower or the License Subsidiaries, as
applicable, have complied with all initial and on-going applicable
conditions of issuance of any licenses, including without limitation FCC
PCS Licenses. To the extent that the License Subsidiaries hold one or more
FCC PCS Licenses under which the Borrower will operate, the Borrower must
have the exclusive, unrestricted right to use such licenses pursuant to a
license agreement in form and substance acceptable to the Administrative
Agent and the Lenders, and the applicable License Subsidiary must agree
that the Administrative Agent, for the benefit of the Lenders, may enforce
the license agreement in its favor or in favor of a transferee.
(d) The Administrative Agent and the Lenders shall have received
satisfactory evidence that all Loan Parties have received all applicable
waivers and consents required under all credit agreements, indentures and
other material agreements to which each of them is a party to permit them
to execute, deliver and perform the obligations under the Loan Documents.
(e) The Administrative Agent and the Lenders shall have received
satisfactory evidence that the Borrower has filed or caused to be filed
applications with the FCC for the assignment or transfer of all of the FCC
Licenses listed in Parts II, III and IV of Schedule 5.07 to the Borrower or
-------------------- -------------
one or more Wholly Owned Subsidiaries of the Borrower, in accordance with
the terms of this Agreement, and has taken all further actions necessary to
effectuate such assignment or transfer free and clear of any Lien of any
kind, other than any Lien permitted under (S)7.02(g).
----------
Section 8.12 Delivery of Full-Term Operating Business Plan. The Borrower
------------ ---------------------------------------------
shall have delivered to the Administrative Agent and each Lender a full-term
operating business plan, which shall be in form and substance satisfactory to
the Administrative Agent and each Lender, together with (i) a certificate of the
chief or principal financial or accounting officer of the Borrower dated the
Closing Date certifying as to the reasonableness of the assumptions and
expectations contained therein and that there are presently no facts known to
such Person that would make such plan misleading in any material respect and
(ii) such pro-forma financial statements and projections for the Borrower and
its Subsidiaries, in form and substance satisfactory to the Lenders, as shall be
reasonably requested by the Lenders.
Section 8.13 Security Agreements. The Borrower shall have delivered to
------------ -------------------
the Administrative Agent and each Lender copies of each of the following:
(a) a pledge and security agreement (as amended from time to time, the
"Borrower Security Agreement"), in substantially the form of Exhibit H-1,
--------------------------- -----------
duly executed by the Borrower, that, among other things, grants to the
Administrative
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Agent for the benefit of the Secured Parties a Lien on such assets of the
Borrower (including without limitation all issued and outstanding Stock of
each License Subsidiary) as the Lenders may request;
(b) a pledge agreement (as amended from time to time, the "Partner
-------
Pledge Agreement"), in substantially the form of Exhibit H-2, duly executed
---------------- -----------
by each of the Partners, that, among other things, pledges to the
Administrative Agent for the benefit of the Secured Parties all issued and
outstanding Stock of the Borrower;
(c) pledge and security agreements (together with each other pledge
and security agreement delivered pursuant to (S) 6.20, in each case as
--- ----
amended from time to time, a "Subsidiary Security Agreement"),
-----------------------------
substantially in the form of Exhibit H-3 hereto, duly executed by each of
-----------
the Guarantors (other than the Partners, the Omnipoint C-Block Subsidiary
Parent, the Omnipoint E-Block Subsidiary Parent and D&E), each of which,
among other things, grants to the Administrative Agent for the benefit of
the Secured Parties a Lien on such assets of such Guarantor as the Lenders
may request.
(d) a pledge agreement (as amended from time to time, an "Omnipoint C-
-----------
Block Subsidiary Parent Pledge Agreement"), in substantially the form of
----------------------------------------
Exhibit H-4, duly executed by the Omnipoint C-Block Subsidiary Parent,
-----------
that, among other things, pledges to the Administrative Agent for the
benefit of the Secured Parties all issued and outstanding Stock of the
Omnipoint C-Block Subsidiary;
(e) a pledge agreement (as amended from time to time, the "Omnipoint
---------
E-Block Subsidiary Parent Pledge Agreement"), in substantially the form of
------------------------------------------
Exhibit H-5, duly executed by the Omnipoint E-Block Subsidiary Parent,
-----------
that, among other things, pledges to the Administrative Agent for the
benefit of the Secured Parties all issued and outstanding Stock of the
Omnipoint E-Block Subsidiary; and
(f) a pledge agreement (as amended from time to time, the "D&E Pledge
----------
Agreement"), in substantially the form of Exhibit H-6, duly executed by D&E
--------- -----------
that, among other things, pledges to the Administrative Agent for the
benefit of the Secured Parties all issued and outstanding Stock of the D&E
License Subsidiary.
Each such agreement shall be accompanied by:
(i) if applicable, certificates representing the shares or
units of Stock pledged under such Security Agreement, accompanied by
undated stock powers executed in blank,
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(ii) duly executed financing statements, in proper form for
filing under the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security interests
created under such Security Agreement covering the Collateral
described in such Security Agreement,
(iii) evidence of any insurance required by the terms of such
Security Agreement,
(iv) evidence that all other action that the Administrative
Agent may deem necessary or desirable in order to perfect and protect
the first priority liens and security interests created under such
Security Agreement has been taken.
Section 8.14 Guaranties. The Borrower shall have delivered to the
------------ ----------
Administrative Agent and each Lender copies of each of the following:
(a) from the Omnipoint C-Block Subsidiary Parent, a limited-recourse
guaranty in substantially the form of Exhibit I-1 hereto (as amended,
-----------
supplemented or otherwise modified from time to time in accordance with its
terms, the "Omnipoint C-Block Subsidiary Parent Limited Recourse
----------------------------------------------------
Guaranty"), duly executed by the Omnipoint C-Block Subsidiary Parent;
(b) from the Omnipoint E-Block Subsidiary Parent, a limited-recourse
guaranty in substantially the form of Exhibit I-2 hereto (as amended,
-----------
supplemented or otherwise modified from time to time in accordance with its
terms, the "Omnipoint E-Block Subsidiary Parent Limited Recourse
----------------------------------------------------
Guaranty"), duly executed by the Omnipoint E-Block Subsidiary Parent;
(c) from D&E, a limited-recourse guaranty in substantially the form of
Exhibit I-3 hereto (as amended, supplemented or otherwise modified from
-----------
time to time in accordance with its terms, the "D&E Limited Recourse
--------------------
Guaranty"), duly executed by D&E;
--------
(d) from the Partners, a limited-recourse guaranty in substantially
the form of Exhibit I-4 (as amended, supplemented or otherwise modified
-----------
from time to time in accordance with its terms, the "Limited Recourse
----------------
Partner Guaranty"), duly executed by each Partner; and
----------------
(e) from each License Subsidiary, a guaranty in substantially the form
of Exhibit I-5 hereto (together with each other such guaranty delivered
-----------
pursuant to (S) 6.20, in each case as amended, supplemented or otherwise
--------
modified from
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<PAGE>
time to time in accordance with its terms, a "Subsidiary Guaranty"),
--------------------
duly executed by each License Subsidiary.
Section 8.15 Mortgages, Etc. The Borrower shall have delivered to the
------------ ---------------
Administrative Agent and each Lender copies of deeds of trust, trust deeds,
mortgages, leasehold mortgages and leasehold deeds of trust in form and
substance satisfactory to the Administrative Agent and covering the properties
listed on Schedule 8.15 hereto (together with each other mortgage delivered
-------------
pursuant to (S) 6.20(b), in each case as amended, supplemented or otherwise
-----------
modified from time to time in accordance with their terms, the "Mortgages"),
---------
duly executed by each party thereto, in each case together with:
(a) evidence that counterparts of the Mortgages have been duly
recorded on or before the day of the initial Advance (or, with respect to
any such Mortgage entered into after the date of the initial Advance in
accordance with this Agreement, on or within twenty (20) days of the date
of execution and delivery of such Mortgage) in all filing or recording
offices that the Administrative Agent may deem necessary or desirable in
order to create a valid first and subsisting lien (other than Permitted
Liens) on the property described therein in favor of the Secured Parties
and that all filing and recording taxes and fees have been paid;
(b) evidence of the title insurance required by the terms of such
Mortgage, with the survey exception deleted, and a current survey certified
to the Administrative Agent and the Lenders,
(c) an appraisal (to the extent required by laws or regulations
applicable to any Lender) with respect to the realty complying with all
applicable regulatory requirements,
(d) an environmental survey in form and substance acceptable to the
Administrative Agent, and
(e) evidence that all other action that the Administrative Agent may
deem necessary or desirable in order to create valid first and subsisting
Liens on the property described in such Mortgage has been taken.
Section 8.16 Landlord Waivers, Attornment and Recognition Agreements,
------------ --------------------------------------------------------
Consents to Collateral Assignments. The Borrower shall have delivered to the
- ----------------------------------
Administrative Agent and each Lender copies of each landlord waiver, attornment
and recognition agreement and consent to collateral assignment required by
(S) 6.10.
- --------
Section 8.17 Material Agreements. Subject to confidentiality restrictions,
------------ -------------------
the Administrative Agent and each of the Lenders shall have received a complete
and correct copy, in form and substance satisfactory to the Lenders, of (a) the
Master Services
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Agreements and form of operating agreement referred to in (S) 7.10(a)(i),
--------------
in each case (if applicable) as then in effect and duly executed by
the parties thereto, and (b) each other contract on Schedule 5.27, as such
-------------
other contract is then in effect and as to which the Administrative Agent shall
have requested a copy on or before the Closing Date.
Section 8.18 Litigation. Except as disclosed on Schedule 5.08, there
------------ ---------- -------------
shall exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or governmental instrumentality
affecting any of OC, DEC, the Partners, the Borrower or any of their respective
Subsidiaries that
(i) could have a Material Adverse Effect, or
(ii) purports to affect the legality, validity or enforceability
of this Agreement, any Note, any other Loan Document or the
consummation of the transactions contemplated hereby or thereby or
challenges any of the Lenders' rights under this Agreement, any Note
or any other Loan Document.
Section 8.19 Administrative Agent Letter. The Borrower shall have
------------ ---------------------------
delivered to the Administrative Agent the Administrative Agent's Letter duly
executed by the Borrower.
Section 8.20 No Default. No default shall have occurred and be continuing
------------ ----------
under the Volume Purchase Agreement on account of a breach by the Borrower or
any of its Subsidiaries.
Section 8.21 No Material Adverse Effect. There shall have occurred no
------------ --------------------------
circumstance, event or development of whatever nature (including any adverse
determination in any litigation) that has had or could reasonably be expected to
have a Material Adverse Effect since the date of the most recent audited
financial statements provided to the Lenders, and all information provided by or
on behalf of the Borrower to the Lenders prior to the date of the initial
Advance shall be true and correct in all material aspects and the Administrative
Agent shall have received a certificate executed by the chief financial or
principal accounting officer of the Borrower, to that effect.
Section 8.22 Corporate, Partnership or Limited Liability Company Documents.
------------ -------------------------------------------------------------
The Administrative Agent shall have received on the Closing Date each of the
following, each dated such day (unless otherwise specified), in form and
substance satisfactory to each Lender (unless otherwise specified) and in
sufficient copies for each Lender:
(a) Certified copies of the resolutions of the Board of Directors, in
the case of a corporation, all requisite actions of members and/or the
management, in the case of a limited liability company, or all requisite
action of the partners, in the case of a partnership, of the Borrower and
each other Loan Party approving
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this Agreement, the Notes and each other Loan Document to which it is or is
to be a party, and of all documents evidencing other necessary corporate or
limited liability company action and governmental and other third party
approvals and consents, if any, with respect to this Agreement, the Notes
and each other Loan Document.
(b) A copy of the charter documents of the Borrower, OC, DEC and each
of the Partners and each other Loan Party and each amendment thereto,
certified (as of a date reasonably near the date of the initial Advance) by
the Secretary of State of the jurisdiction of its incorporation or
formation as being a true and correct copy thereof.
(c) A copy of a certificate of the Secretary of State of the
jurisdiction of incorporation or formation of the Borrower, OC, DEC, each
of the Partners and each other Loan Party, dated reasonably near the date
of the initial Advance, listing the charter of such Person and each
amendment thereto on file in his office and certifying that
(i) such amendments are the only amendments to such Person's
charter on file in his office,
(ii) such Person has paid all franchise taxes to the date of
such certificate, and
(iii) such Person is duly incorporated or formed and in good
standing under the laws of the state of incorporation or formation of
such Person.
(d) A copy of a certificate of the Secretary of State or other
appropriate representative of each state in which each of OC, the Partners,
DEC, the Borrower and each other Loan Party is engaged in any business,
dated reasonably near the Closing Date, stating that each of OC, the
Partners, DEC, the Borrower and each other Loan Party is duly qualified and
in good standing as a foreign corporation, foreign partnership or foreign
limited liability company in such state and has filed all annual reports
required to be filed to the date of such certificate.
(e) A certificate of the Borrower, each of the Partners and each other
Loan Party, signed on behalf of the Borrower, each of the Partners and such
other Loan Party by its President or a Vice President and its Secretary or
any Assistant Secretary (or the President or a Vice President and the
Secretary or any Assistant Secretary of its general partner, in the case of
a partnership Loan Party), dated the Closing Date (the statements made in
which certificate shall be true on and as of the date of the Closing Date),
certifying as to
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(A) the absence of any amendments to the charter,
partnership agreement or certificate of formation of the
Borrower, or each other Loan Party since the date of the
Secretary of State's certificate referred to in (S) 8.22(c),
-----------
(B) a true and correct copy of the bylaws (in the case of a
corporation) or the limited liability company agreement (in the
case of a limited liability company), the partnership agreement
(in the case of a partnership) and all amendments thereto, of the
Borrower and each other Loan Party as in effect on the Closing
Date,
(C) the due incorporation or formation and good standing of
the Borrower and such other Loan Party as a corporation,
partnership or limited liability company organized under the laws
of the jurisdiction in which such Loan Party is incorporated or
formed, and the absence of any proceeding for the dissolution or
liquidation of the Borrower, the Partners or such other Loan
Party,
(D) the truth of the representations and warranties and
compliance with the covenants of such Person contained in the
Loan Documents as though made on and as of the date of the
initial Advance, and
(E) the absence of any event occurring and continuing, or
resulting from the closing, that constitutes a Default.
(f) A certificate of the Secretary or an Assistant Secretary (or of
the Secretary or Assistant Secretary of the general partner in the case of
a partnership) of the Borrower, each of the Partners, OC, DEC and each
other Loan Party certifying as to the names and true signatures of the
officers of the Borrower, each of the Partners, OC, DEC and such other Loan
Party authorized to sign this Agreement, the Notes and each other Loan
Document to which they are or are to be parties and the other documents to
be delivered hereunder and thereunder.
(g) All other documents, instruments, financial information and
opinions from the Borrower, OC, DEC, the Partners or any of the Borrower's
Subsidiaries (including opinions of counsel for the Borrower, OC, DEC, the
Partners or any such Subsidiary) as the Administrative Agent and each
Lender may reasonably request, in form and substance satisfactory to the
Administrative Agent and each Lender and their counsel, and which shall be
in full force and effect on the date of the initial Advance.
Section 8.23 Outstanding Interest. Through a separate agreement between
------------ --------------------
Borrower and Nortel executed on or before the Closing Date, Borrower shall have
paid
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or otherwise satisfied the full amount of all interest due on Nortel Goods
and Services delivered prior to the Closing Date (as provided in such separate
agreement).
Section 8.24 Capital Contribution Agreement. The Borrower shall have
------------ ------------------------------
delivered to the Administrative Agent a Capital Contribution Agreement
substantially in the form of Exhibit J, duly executed by each of the
---------
Grandparents and the Borrower (as the same may be amended from time to time, the
"Capital Contribution Agreement").
------------------------------
Section 8.25 Amendment to Volume Purchase Agreement. The Administrative
------------ --------------------------------------
Agent shall have received evidence satisfactory to it that the Volume Purchase
Agreement has been amended and has been executed by each of Nortel, the Borrower
and OC and such amendment shall contain terms and conditions satisfactory to the
Administrative Agent.
Section 8.26 Master Services Agreements and Other Agreements;
------------ ------------------------------------------------
Acknowledgement of Assignment. The Administrative Agent and the Lenders shall
- -----------------------------
have reviewed and approved each of the Master Services Agreements under which
Omnipoint Venture and D&E will provide billing, customer care and other services
to the Borrower. The Administrative Agent shall have received from the Borrower
a written statement to it in which each of D&E and Omnipont Venture (a) consents
to the assignment by the Borrower of all of its right, title and interest in and
to each of the Master Services Agreements (including, without limitation, the
right to receive any monies due thereunder) to the Administrative Agent pursuant
to the Collateral Documents, (b) agrees not to cancel or terminate either of the
Master Services Agreements except upon at least 90 days' written notice to the
Administrative Agent and (c) agrees that the Administrative Agent shall be
entitled to make any payment or otherwise perform any obligation or cure any
default of the Borrower or any of its Subsidiaries under the Master Services
Agreements.
The Administrative Agent and the Lenders shall have reviewed and approved
the form of Operating Agreements attached hereto as Exhibits D-2 and D-3 under
------------ ---
which the Borrower will provide certain services to the License Subsidiaries.
The Administrative Agent shall have received from each of the License
Subsidiaries executed Operating Agreements and written consents in the form of
Exhibits D-2 and D-3.
- ------------ ---
Section 8.27 No Misrepresentations. All representations and warranties in
------------ ---------------------
this Agreement and each of the Loan Documents shall be true as of the Closing
Date and the Administrative Agent and the Lenders shall have received a
certificate of the chief executive officer, president or vice president of the
Borrower and each Guarantor to the effect that neither the Borrower nor any
Guarantor has failed to disclose to the Administrative Agent or any Lender any
material fact with respect to the Network or their respective financial
conditions (including any contingent liabilities), or has failed to disclose any
information, the absence of which makes any information previously disclosed to
the Administrative Agent or any Lender materially misleading.
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Section 8.28 Compliance Certificate. The Lenders and the Administrative
------------ ----------------------
Agent shall have received a Compliance Certificate in the form attached hereto
as Exhibit K.
---------
Section 8.29 FCC Debt. The Administrative Agent shall have received
------------ --------
evidence satisfactory to it that the Borrower and the License Subsidiaries on a
Consolidated Basis shall have FCC Debt of less than or equal to $25,000,000.
Section 8.30 Other Information. The Lenders and the Administrative Agent
------------ -----------------
shall have received such other information respecting the business, condition
(financial or otherwise), operations, performance, properties or prospects of
any Loan Party or any of its Subsidiaries as any Lender (through the
Administrative Agent) may from time to time reasonably request.
ARTICLE IX
CONDITIONS TO ADVANCES
----------------------
Section 9.01 Conditions Precedent to an Initial Advance. The obligations
------------ ------------------------------------------
of each Lender to make any initial Advance shall be subject to the satisfaction
of the following conditions precedent on or prior to the date of such initial
Advance:
(a) The Administrative Agent shall have received on or before the date
of the initial Advance the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to each Lender (unless
otherwise specified) and in sufficient copies for each Lender;
(i) a certificate of the Borrower signed on behalf of the
Borrower by its General Partner, dated the date of the initial Advance
(the statements made in which certificate shall be true on and as of
the date of the initial Advance), certifying as to
(A) the truth of the representations and warranties and
compliance with the covenants of the Borrower contained in the
Loan Documents;
(B) the absence of any event occurring and continuing, or
resulting from the initial Advance, that constitutes a Default;
(C) absence of any material adverse change in the business,
condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any of its
Subsidiaries since the date of the most recent audited
financial statements
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provided to the Lenders, and all information provided by or on
behalf of the Borrower to the Lenders prior to the date of the
initial Advance shall be true and correct in all material
aspects;
(D) neither the Borrower nor any Guarantor has failed to
disclose to the Administrative Agent or any Lender any material
fact with respect to the Network or their respective financial
conditions (including any contingent liabilities), or has failed
to disclose any information, the absence of which makes any
information previously disclosed to the Administrative Agent or
any Lender materially misleading.
(ii) The Administrative Agent shall have received on or before
the date of the initial Advance a Compliance Certificate dated the
date of such initial Advance.
Section 9.02 Conditions to All Advances. The obligation of each Lender
------------ --------------------------
to make any Advance, including its initial Advance (except that the condition
set forth in (S) 9.02(k) hereof shall only be a condition precedent to any
Advance, including any initial Advance, made on or after 180 days after the
Final FCC Transfer Application Date), shall also be subject to the satisfaction
of the conditions precedent that on the date of such Advance:
(a) The Administrative Agent shall have received a properly completed
Draw Request.
(b) Each of the representations and warranties of the Borrower and
each other Loan Party contained in this Agreement, the other Loan Documents
or in any document or instrument delivered pursuant to or in connection
with this Agreement or any other Loan Document is true and correct in all
material respects immediately prior to, and after giving effect to, the
making of such Advance and the application of the proceeds therefrom, as
though made on and as of such date (except to the extent that such
representations and warranties relate expressly to an earlier date). The
Administrative Agent shall have received a certificate of an authorized
officer of the Borrower to such effect.
(c) No event has occurred and is continuing, or would result from such
Advance or from the application of the proceeds therefrom, that constitutes
a Default or a default under any other Loan Document.
(d) No change shall have occurred in any law or regulations thereunder
or interpretations thereof that in the reasonable opinion of any Lender
would make it illegal for such Lender to make such Loan and no order of any
court or
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<PAGE>
Governmental Body has been entered prohibiting the consummation of
the transactions contemplated by the Loan Documents.
(e) Each Lender shall have received such statements in substance and
form reasonably satisfactory to such Lender as such Lender shall require
for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
(f) The Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request.
(g) The Borrower shall have delivered to the Administrative Agent
invoices or other evidence reasonably satisfactory to the Administrative
Agent showing the aggregate amount of expense for Nortel Goods and Services
that have been incurred by the Borrower and its Subsidiaries through the
date of such Advance.
(h) No Material Adverse Effect has occurred and is continuing.
(i) Neither the Borrower nor any Guarantor has failed to disclose to
the Administrative Agent or any Lender any material fact with respect to
the Network or their respective financial conditions (including any
contingent liabilities), or has failed to disclose any information, the
absence of which makes any information previously disclosed to the
Administrative Agent or any Lender materially misleading.
(j) The Administrative Agent shall have received a properly completed
Borrowing Base Certificate executed by an authorized officer of the
Borrower.
(k) The Administrative Agent shall have received satisfactory evidence
and opinions of Borrower's, OC's and DEC's counsel that, on or before 180
days following the Final FCC Application Date, the ownership of the FCC
Licenses held by the Omnipoint C-Block Subsidiary, the Omnipoint E-Block
Subsidiary and the D&E License Subsidiary listed on Parts II, III and IV of
--------------------
Schedule 5.07 has been transferred or assigned to the Borrower or a Wholly
-------------
Owned Subsidiary of the Borrower, free and clear of any Lien of any kind,
other than any Lien permitted under (S)7.02(g).
----------
.
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ARTICLE X
EVENTS OF DEFAULT; ACCELERATION; ETC.
-------------------------------------
Section 10.01 Events of Default and Acceleration. Upon occurrence and
------------- ----------------------------------
during the continuance of any of the following events,
(a) the Borrower shall fail to pay any principal of the Loans, any
fee, any interest on the Loans or any other Obligations or any other sum
hereunder or under any of the other Loan Documents to which it is a party,
in any such case when the same shall become due and payable; or
(b) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Article VII or (S)(S) 6.01, 6.03, 6.04(c),
----------- ---------------------------
6.04(d), 6.08, 6.09, 6.12, 6.13(i), 6.14, 6.15, 6.16, 6.17 or 7.06;
------------------------------------------------------------------
provided that the Borrower shall have the right to comply with the
--------
covenants contained in (S)(S) 6.14(a) and (c) for any one or more fiscal
-------------- ---
quarters, and in (S)(S) 6.14(b) and (d) for any two fiscal quarters per
-------------- ---
covenant, by providing, prior to the delivery of the financial statement or
other report to the Administrative Agent disclosing the existence of such
default, additional cash equity to the extent that if such equity were
included in Gross Revenue, EBITDA or OCF, the Borrower would be in
compliance with (S)(S) 6.14(a), (b) (c) and (d), as the case may be; or
-------------------------------
(c) any Loan Party shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other
than those specified elsewhere in this (S) 10.01) and such failure shall
---------
continue for a period of ***** days; or
(d) any representation or warranty made by any Loan Party or any of
its Subsidiaries (or any of its officers) under this Agreement or any of
the other Loan Documents or in any certificate, statement, document or
instrument delivered pursuant to or in connection with this Agreement or
any Loan Document shall not be correct in any material respect upon the
date when made or confirmed or deemed to have been made, confirmed or
repeated; or
(e) any Loan Party or Partner of the Borrower shall
(i) make an assignment for the benefit of creditors, or
(ii) generally not pay its debts as such debts become due or
admit in writing its inability to generally pay or generally fail to
pay its debts as they mature or become due, or
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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(iii) petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of any Loan Party or any such
shareholder or of any substantial part of the assets of any Loan Party
or any such shareholder, or
(iv) shall commence any case or other proceeding relating to any
Loan Party or any such shareholder under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction
providing for the relief of debtors, now or hereafter in effect, or
(v) shall take any action to authorize or in furtherance of any
of the foregoing, or any such petition or application shall be filed
or any such case or other proceeding shall be commenced against any
Loan Party or any such shareholder and such Loan Party or shareholder
shall indicate its approval thereof, consent thereto or acquiescence
therein or shall not be able to have such proceeding dismissed within
30 days thereof or any of the actions sought in such proceeding
(including the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur;
or any Loan Party or any such shareholder shall take any corporate
action to authorize any of the actions above in this subsection (e);
or
(f) the Borrower or any of its License Subsidiaries or any Guarantor
or other Loan Party other than OC and DEC shall fail to pay any principal
of, premium or interest on or any other amount payable in respect of any
Indebtedness (other than Indebtedness owing to the FCC) that is outstanding
in an aggregate principal amount of at least ***** when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holder thereof to
cause, such Indebtedness to mature; or any such Indebtedness shall be
declared to be due and payable or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased
or defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
(g) any judgment or order for the payment of money in excess of
***** (excluding any portion thereof that an insurance company of
recognized standing and creditworthiness has agreed to pay), or any
material non-monetary judgment or order, shall be rendered against the
Borrower and either
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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(i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or
(ii) there shall be any period of 30 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
(h) any of the Loan Documents shall be cancelled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of the Lenders, or
any action at law, or in equity or other suit or legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced by
or on behalf of any Loan Party or any of its or their stockholders, or any
court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Loan Documents, is illegal, invalid or unenforceable in accordance with
the terms thereof; or
(i) with respect to any Guaranteed Pension Plan, an ERISA Event shall
have occurred and the Required Lenders shall have determined in their
reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower to the PBGC or such Guaranteed Pension
Plan in an aggregate amount exceeding ***** and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan; or
the PBGC shall have instituted proceedings to terminate such Guaranteed
Pension Plan; or appointed a trustee to administer or liquidate any plan;
or
(j) the Borrower or any of its Subsidiaries, or the Partners shall be
the subject of writs of attachment or garnishment and the like (a) relating
to Collateral which in the judgment of the Required Lenders is subject to
imminent execution or levy thereon, or (b) that might have a Material
Adverse Effect and that are unstayed for a period of 30 consecutive days or
any such attachment shall not have been bonded over within 30 days of the
entry thereof; or
(k) the FCC or any other Governmental Body shall cancel, revoke,
suspend or fail to renew any FCC License held by any License Subsidiary
relating to any right held by any Subsidiary to provide PCS services to any
POPs included in any Designated BTA, in either case for which the
cancellation, revocation, suspension or failure to renew the FCC License
relating to any Designated BTA.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
(l) the FCC or any other Governmental Body shall commence any
proceeding to cancel, revoke or suspend any FCC License held by any License
Subsidiary relating to BTAs described in clause (k) above, which proceeding
has not been stayed or enjoined within five Business Days after the
commencement of any such proceeding, or
(m) any License Subsidiary or any of its Affiliates shall fail to pay
any amount when due of FCC Debt owed by such License Subsidiary or
Affiliate or shall otherwise default on such Indebtedness, if such failure
to pay or default constitutes or would with the passage of time constitute
a default under any Indebtedness owing to the FCC in respect of any FCC
Licenses in respect of a Designated BTA; or
(n) the Administrative Agent shall cease to have a valid and perfected
first-priority Lien on any Collateral securing any Loan Party's obligations
under any Loan Document, or any Loan Party shall so assert (subject,
however, to Permitted Liens entitled to priority in accordance with the
terms of the Loan Documents); or
(o) at any time any of the following shall occur:
(i) there occurs a Change in Control;
(ii) any Person (other than Nortel and its Affiliates) engaged
in, or having an Affiliate engaged in, the business of manufacturing,
selling or distributing telecommunications equipment shall own,
directly or indirectly, legally or beneficially, more than ***** of
the Voting Stock of the Borrower then outstanding; or
(iii) all of each series and class of issued and outstanding
shares or units of Stock of the Borrower and each of its Subsidiaries
shall cease to be pledged as security for the obligations of the
Borrower, the other Loan Parties and their respective Subsidiaries
hereunder and under the other Loan Documents; or
(p) there shall occur in the judgment of the Required Lenders a
Material Adverse Effect; or
(q) the Borrower, the Partners or any Subsidiary shall default, after
any applicable grace period, under any equipment-acquisition agreement
(other than the Volume Purchase Agreement) providing for the purchase of
more than ***** in aggregate purchase price of equipment or other goods,
from any Person, or such Person shall so allege in writing;
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
(r) there shall occur an event or circumstance which constitutes a
default or an event of default under any other Loan Document or Collateral
Document or any other agreement included in the Collateral, provided that
-------------
any requirement for the giving of notice, the lapse of time, or both, or
any other circumstance, has been satisfied;
(s) there shall occur a Grandparent Debt Default unless:
(i) the Maximum Amount, as defined in the Capital Contribution
Agreement, has already been contributed to the Borrower;
(ii) OC, DEC, an Affiliate or a third party contributes the
Remaining Amount, within ***** days of the occurrence of a Grandparent
Debt Default, and no advances will be made until the Remaining Amount
has been received;
(iii) The Borrower provides a replacement for whichever of OC or
DEC or both is in default of investment grade credit quality which
commits to provide the Remaining Amount, or otherwise provides a
letter of credit or standby commitment to provide such Remaining
Amount acceptable to the Administrative Agent and the Required
Lenders; or
(iv) The Commitment Termination Date shall have occurred and the
ratio of (a) Total Debt (as of the end of a fiscal quarter) to (b)
EBITDA for that fiscal quarter multiplied by four, is no greater than
***** and the Borrower continues to meet that ratio at the end of each
succeeding fiscal quarter,
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Required Lenders shall, by
notice to the Borrower, (i) declare the obligation of each Lender to make
Advances to be terminated, whereupon the same shall forthwith terminate, and/or
(ii) declare the Notes, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that upon occurrence of an Event of Default under subsection (e) above,
- --------
(A) the obligation of each Lender to make Advances shall automatically be
terminated and (B) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without notice, presentment,
demand, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest or any notice or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Section 10.02 Remedies.
------------- --------
Upon the occurrence of an Event of Default under the Loan Documents, the
Administrative Agent shall have the right to exercise its remedies under the
Collateral Documents and/or as allowed under applicable law.
In case any one or more of the Events of Default shall have occurred and be
continuing, and whether or not the Required Lenders shall have accelerated the
maturity of the Loans pursuant to Section 10.01 hereof, each Lender, if owed any
-------------
amount with respect to the Loans may, with the consent of the Required lenders
but not otherwise, proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Loan Agreement and
the other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including as permitted by applicable law the
obtaining of the ex parte appointment of a receiver and, if such amount shall
--------
have become due, by declaration or otherwise, proceed to enforce the payment
thereof or any other legal or equitable right of such Lender. No remedy herein
conferred upon any Lender or the Administrative Agent or the holder of any Note
is intended to be exclusive of any other remedy and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or any other
provision of law.
Section 10.03 Distribution of Collateral Proceeds.
------------- -----------------------------------
In the event that, following the occurrence or during the continuance of
any Default or Event of Default, the Administrative Agent or any Lender, as the
case may be, receives any monies in connection with the enforcement of the
Collateral Documents or otherwise with respect to the realization upon any of
the Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect to all
reasonable costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Administrative Agent in connection with the
collection of such monies by the Administrative Agent, for the exercise,
protection or enforcement by the Administrative Agent of all or any of the
rights, remedies, powers and privileges of the Administrative Agent under
this Loan Agreement or any of the other Loan Documents or in respect of the
Collateral or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or liens which by law shall have, or
may have, priority over the rights of the Administrative Agent to such
monies;
(b) Second, to all other Obligations in such order or preference as
the Required Lenders may determine; provided, however, that distributions
-----------------
in respect
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to such Obligations to the Lenders with respect to each type of
Obligation such as interest, principal, fees, and expenses, shall be made
among the Lenders pro rata; and provided, further, that the Administrative
--- ---- -------- -------
Agent may in its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Lenders and the Administrative
Agent of all of the Obligations, to the payment of any obligations required
to be paid pursuant to (S)9-504(1)(c) of the Uniform Commercial Code of the
State of New York; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
as a court of competent jurisdiction may direct.
ARTICLE XI
THE ADMINISTRATIVE AGENT
------------------------
Section 11.01 Authorization and Action. Each Lender appoints and
------------- ------------------------
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement and the other
Loan Documents as are delegated to the Administrative Agent by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by the Loan
Documents (including enforcement or collection of the Notes), the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lenders; provided that
--------
the Administrative Agent shall not be required to take any action that exposes
the Administrative Agent to personal liability or that is contrary to this
Agreement or applicable law. The Administrative Agent will give to each Lender
prompt notice of each notice given to it by the Borrower pursuant to the terms
of this Agreement.
Section 11.02 Administrative Agent's Reliance, Etc. Neither the
------------- ------------------------------------
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent:
(a) may treat the Lender that made any Advance as the holder of the
Indebtedness resulting therefrom until the Administrative Agent receives
and accepts an Assignment and Acceptance entered into by such Lender, as
assignor, and an assignee, as provided in (S) 12.07;
---------
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<PAGE>
(b) may consult with legal counsel (including counsel for any Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts;
(c) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with the Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party;
(e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of,
or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or
any other instrument or document furnished pursuant thereto;
(f) shall incur no liability under or in respect of any Loan Document
by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopy, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties; and
(g) shall incur no liability as a result of any determination whether
the transactions contemplated by the Loan Documents constitute a "highly
------
leveraged transaction" within the meaning of the interpretations issued by
---------------------
the Comptroller of the Currency, the Federal Deposit Insurance Corporation
and the Board of Governors of the Federal Reserve System.
Section 11.03 Nortel and Affiliates. With respect to its Commitments, the
------------- ---------------------
Advances made by it and the Note issued to it, Nortel and any other
Administrative Agent in its individual capacity shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term "Lender" or "Lenders"
------ -------
shall, unless otherwise expressly indicated, include Nortel in its individual
capacity or any other Administrative Agent in its individual capacity. Nortel
or any other Administrative Agent in its individual capacity and its affiliates
may generally engage in any kind of business with the Borrower and any of its
Affiliates and any Person who may do business with or own securities of the
Borrower or any of its Affiliates, all as if Nortel or any other Administrative
Agent in its individual capacity were not the Administrative Agent and without
any duty to account therefor to the Lenders.
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Section 11.04 Lender Credit Decision. Each Lender acknowledges that it
------------- ----------------------
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
Section 11.05 Indemnification. Each Lender severally will indemnify the
------------- ---------------
Administrative Agent (to the extent not promptly reimbursed by the Borrower)
from and against such Lender's ratable share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by the Administrative Agent under the Loan Documents; provided that no Lender
--------
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Administrative Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender will reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses payable by the Borrower under (S) 12.04, to the extent that the
---------
Administrative Agent is not promptly reimbursed for such costs and expenses by
the Borrower. It is the express intent of the parties that the Administrative
Agent shall be indemnified hereunder for all negligent acts or omissions other
than those resulting from the Administrative Agent's gross negligence or willful
misconduct. For purposes of this (S) 11.05, the Lenders' respective ratable
---------
shares of any amount shall be determined, at any time, according to the sum of
(a) the aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lenders and (b) the aggregate unused portions of their
respective Commitments. The failure of any Lender to reimburse the
Administrative Agent promptly upon demand for its ratable share of any amount
required to be paid by the Lenders to the Administrative Agent as provided
herein shall not relieve any other Lender of its obligation hereunder to
reimburse the Administrative Agent for its ratable share of such amount, but no
Lender shall be responsible for the failure of any other Lender to reimburse the
Administrative Agent for such other Lender's ratable share of such amount.
Without prejudice to the survival of any other agreement of any Lender
hereunder, the agreements and obligations of each Lender contained in this (S)
---
11.05 shall survive the payment in full of principal, interest and all other
- -----
amounts payable hereunder and under the other Loan Documents.
Section 11.06 Successor Administrative Agents. The Administrative Agent
------------- -------------------------------
may resign at any time by giving written notice thereof to the Lenders. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so
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<PAGE>
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice
of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent and upon the execution and filing or recording of
such financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Administrative Agent
shall succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents. After any retiring Administrative Agent's resignation
hereunder, the provisions of this Article XI shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. A successor Administrative Agent will notify the Borrower
of its appointment promptly after its appointment.
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.01 Amendments, Etc. No amendment or waiver of any provision of
------------- ---------------
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders and, then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided that
--------
(a) no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders do any of the following at any time:
(i) waive any of the conditions specified in Article IX or, in
----------
the case of the initial Advance, Article VIII;
------------
(ii) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of
Lenders that shall be required for the Lenders or any of them to take
any action hereunder;
(iii) release any Collateral, other than as contemplated by the
Loan Documents;
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<PAGE>
(iv) permit the creation, incurrence, assumption or existence
of any Lien on any item of Collateral to secure any obligations other
than obligations owing to the Lenders and the Administrative Agent
under the Loan Documents and other than Indebtedness owing to any
other Person ;
(v) amend this (S) 12.01;
---------
(vi) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations;
(vii) reduce the principal of, or interest on, the Notes or any
fees or other amounts payable hereunder; or
(viii) postpone any date fixed for any payment of principal of,
or interest on, the Notes or any fees or other amounts payable
hereunder;
(b) no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent in addition to the Lenders required
above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and
(c) no amendment, waiver or consent with respect to (S) 2.09 (Use of
--------
Proceeds), the definition of "Borrowing Base" or this (S) 12.01(c) shall
--------------
be effective without the prior written consent of Nortel whether or not
Nortel is a Lender at the time of such proposed amendment, waiver or
consent.
Section 12.02 Notices, Etc. All notices and other communications provided
------------- ------------
for hereunder shall be in writing and mailed, telecopied or delivered,
(a) if to the Borrower, at:
D&E/Omnipoint Wireless Joint Venture, L.P.
250 Granite Run Drive
Lancaster, PA 17601
Attn: Robert L. Quaranta, CEO
***** (telephone)
***** (fax)
with copies to:
Omnipoint Venture Partners, LLC
16 Wing Drive
Cedar Knolls, NJ 07927
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Attn: Harry Plonskier
***** (telephone)
***** (fax)
Omnipoint Holdings II, LLC
3 Metro Center
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P. and Treasurer
***** (telephone)
***** (fax)
D&E Wireless, Inc.
124 Main Street
Ephrata, PA 17522-0458
Attn: Don Kaufmann
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
Vincent C. Deluzio, Esq.
Buchanan Ingersoll
One Oxford Center
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
***** (telephone)
***** (fax)
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
(b) if to any Lender, at its Domestic Lending Office; and
(c) if to the Administrative Agent, at:
Northern Telecom Inc.
2221 Lakeside Boulevard
Richardson, TX 75082
Attn: Vice President
Customer Finance - North America
***** (telephone)
***** (fax)
Northern Telecom Inc.
2221 Lakeside Boulevard
Richardson, TX 75082
Attn: Vice President
Finance - Wireless Networks
***** (telephone)
***** (fax)
with copies to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attn: Andrew Cohn, Esq.
***** (telephone)
***** (fax)
(d) if to the Omnipoint C-Block Subsidiary Parent, at:
OPCS, LLC
3 Bethesda Metro Center
Suite 400
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P. and Treasurer
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
(e) if to the Omnipoint E-Block Subsidiary Parent, at:
Omnipoint PCS Entrepreneurs Two, LLC
3 Bethesda Metro Center
Suite 400
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P. and Treasurer
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
if to the Omnipoint C-Block Subsidiary, at:
Omnipoint Reading License, LLC
3 Bethesda Metro Center
Suite 400
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P.
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
(f) if to the Omnipoint E-Block Subsidiary, at:
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Omnipoint Philadelphia-E. Lancaster E License, LLC
3 Bethesda Metro Center
Suite 400
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P. and Treasurer
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
(g) if to the D&E License Subsidiary at:
PCS Licenses, Inc.
1325 Air Motive Way, #130
Reno, NV 89502
Attn: Janice C. George
***** (telephone)
***** (fax)
with copies to:
Vincent C. Deluzio, Esq.
Buchanan Ingersoll
One Oxford Center
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
***** (telephone)
***** (fax)
(h) if to DEC, at:
D&E Communications, Inc.
4139 Oregon Pike
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
Ephrata, PA 17522
Attn: Donald Kaufman, V.P.
***** (telephone)
***** (fax)
with copies to:
Vincent C. Deluzio, Esq.
Buchanan Ingersoll
One Oxford Center
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
***** (telephone)
***** (fax)
(i) if to OC, at:
Omnipoint Corporation
3 Metro Center
Suite 400
Bethesda, MD 20814
Attn: Bradley E. Sparks, V.P. and Treasurer
***** (telephone)
***** (fax)
with copies to:
Piper & Marbury, L.L.P.
1200 19th Street, N.W.
Washington, D.C. 20036
Attn: Edwin M. Martin, Jr., Esq.
***** (telephone)
***** (fax)
(j) if to the Partners of the Borrower, as provided in (a) above.
Section 12.03 No Waiver; Remedies. No failure on the part of any Lender
------------- -------------------
or the Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note or any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 12.04 Costs, Expenses.
------------- ---------------
(a)
(i) Except as specified in clause (ii) or (iii) below, Nortel
will pay its own legal and other out-of-pocket costs in connection
with the drafting, negotiation and closing of this Agreement and the
other Loan Documents.
(ii) The Borrower shall pay on demand all out-of-pocket closing
costs, fees and reasonable expenses that are incurred in connection
with any necessary or desirable filings or recordations by the
Administrative Agent, or Nortel in connection with the closing of this
Agreement, the other Loan Documents and the transactions contemplated
hereby and thereby, whether or not any such transactions are
consummated, including, without limitation, stamp or other recording
costs and related taxes or charges, filing fees, costs and expenses
(but excluding legal fees).
(iii) The Borrower shall also pay on demand:
(A) so long as Nortel has assigned any Loans or Commitments
or has granted a participation in a portion of its Loans or
Commitments under the Credit Facility, all ongoing costs,
including, without limitation, all reasonable legal fees and
charges, recording costs and related taxes or charges, filing
fees, costs and expenses of the Administrative Agent (if other
than Nortel) and (except with respect to legal fees) the Lenders
related to (1) the enforcement of the Loan Documents, whether in
any action, suit or litigation, any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally or
otherwise, (2) the perfection, protection or preservation of any
of their respective rights or interests under the Loan Documents
or to or in the Collateral, (3) the administration of this
Agreement or any other Loan Document and (4) any amendments,
waivers or supplements related to this Agreement and the other
Loan Documents;
(B) all reasonable legal fees and expenses relating to the
matters described in clause (A) above incurred by Nortel as
Administrative Agent or a Lender if a Default shall have occurred
and be continuing under this Agreement; and
(C) all reasonable legal fees and expenses relating to the
matters described in clause (A) above incurred by any Lender
other
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<PAGE>
than Nortel or an Affiliate thereof or for which such
Lender would have an indemnification obligation (whether or not
contingent on non-payment thereof by the Borrower) under this
Agreement.
(b) If, at any time, Breakage Costs are due and owing hereunder, the
Borrower shall, upon demand by the Lender to whom such Breakage Costs are
due (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender any such Breakage
Costs.
(c) If the Borrower fails to pay when due any costs, expenses or other
amounts payable by it under any Loan Document, including fees and expenses
of counsel and indemnities, such amount may be paid on behalf of the
Borrower by the Administrative Agent or any Lender, in its sole discretion.
(d) The Borrower will indemnify each Lender, the Administrative Agent
and their respective affiliates and their officers, directors, employees,
agents and advisors (each, an "Indemnified Party") and hold each
-----------------
Indemnified Party harmless from and against any and all claims, damages,
losses, liabilities and expenses (including reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with
(i) the Notes, this Agreement and other Loan Documents, any of
the transactions contemplated herein or therein or the actual or
proposed use of the proceeds of the Advances, or
(ii) the actual or alleged presence of Materials of
Environmental Concern on any property of the Borrower or any
environmental proceeding relating in any way to the Borrower,
except to the extent such claim, damage, loss, liability or expense is found in
a final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of any investigation, litigation or other proceeding to which the
indemnity in this (S) 12.04(d) applies, the indemnity shall be effective whether
------------
or not such investigation, litigation or proceeding is brought by the Borrower,
its directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated. The Borrower also shall
not assert any claim against the Administrative Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Notes, this
Agreement, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Advances.
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<PAGE>
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this (S) 12.04 shall survive the payment in full of principal
---------
and interest hereunder and the termination of the Commitments.
Section 12.05 Right of Set-off. Upon the occurrence and during the
------------- ----------------
continuance of any Event of Default, each Lender and each of its Affiliates is
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and otherwise apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender or such Affiliate to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and the Note or Notes held by
such Lender, irrespective of whether such Lender shall have made any demand
under this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application; provided that the failure to give such notice shall not
--------
affect the validity of such set-off and application. The rights of each Lender
and its Affiliates under this (S) 12.05 are in addition to other rights and
---------
remedies (including other rights of set-off) that such Lender and its Affiliates
may have.
Section 12.06 Binding Effect. This Agreement shall become effective when
------------- --------------
it shall have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have been notified by each Lender that such
Lender has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Administrative Agent, each Lender and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lenders.
Section 12.07 Assignments and Participations.
------------- ------------------------------
(a) Each Lender may assign to one or more banks or other entities
(including any trust or other Person in connection with a securitization or
monetization of the Advances or other indirect raising of capital) all or a
portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment or Commitments, the Advances owing to it
and/or the Note or Notes held by it) without the consent of the Borrower;
provided that
--------
(i) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of
all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment and/or Advances of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date
of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000.
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<PAGE>
(ii) the parties to each such assignment shall
(A) execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of ***** and
(B) deliver a copy of such Assignment and Acceptance to the
Borrower at the time it delivers a copy to the Administrative
Agent;
(C) prior to the Commitment Termination Date, have a
combined capital and surplus in excess of $50 million;
(iii) assignments to Persons, other than a commercial bank or
other financial institution, that is engaged in, or has an Affiliate
that is engaged in, the business of providing PCS telecommunications
services to the public may be made no sooner than 15 days after
acceleration of the Loans hereunder pursuant to (S) 10.01 hereof,
---------
absent the Borrower's prior consent; and
(iv) the assigning Lender's rights under Article IV and
(S) 12.04 accrued through the date of assignment shall continue.
---------
A Lender may assign outstanding Advances without assigning undrawn Commitments,
and may assign undrawn Commitments without assigning outstanding Advances. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in such Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder and thereunder, and (y) the Lender
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance,
such assigning Lender makes no representation or warranty and assumes
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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<PAGE>
no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of
any of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement and each other Loan Document, together with copies of the
financial statements referred to in (S) 5.04 and such other documents
--------
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance
upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement;
(v) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such
powers and discretion under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers
and discretion as are reasonably incidental thereto;
(vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender;
(vii) such assignee makes the representations in subsection
(a)(iv) above; and
(viii) such assignee confirms that it is bound by the
confidentiality provisions in (S) 12.10.
---------
(c) The Administrative Agent shall maintain at its address referred to
in (S) 12.02 a copy of each Assignment and Acceptance delivered to and
---------
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount of
the Advances owing to, each
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<PAGE>
Lender from time to time (the "Register"). The entries in the Register
--------
shall be conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is substantially in the form of
Exhibit A,
---------
(i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register,
and
(iii) give prompt notice thereof to the Borrower.
Within five Business Days after its receipt of such notice, the Borrower, at its
own expense, shall execute and deliver to the Administrative Agent in exchange
for the surrendered Note or Notes a new Note to the order of such assignee in an
amount equal to the Advances and/or Commitments assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained Advances or
Commitments hereunder, a new Note to the order of the assigning Lender in an
amount equal to the Advances and/or Commitments retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be
substantially in the form of Exhibit A.
---------
(e) Each Lender may sell participations in or to all or a portion of
its rights and obligations under this Agreement (including all or a portion
of its Commitments, the Advances owing to it and the Note or Notes held by
it); provided that
--------
(i) such Lender's obligations under this Agreement (including
its Commitments) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for
all purposes of this Agreement, and
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<PAGE>
(iv) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement .
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this (S) 12.07,
---------
disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior to any such
--------
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender.
(g) Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in all or any portion of its
rights under this Agreement (including the Advances owing to it and the
Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
(h) The Borrower shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Borrower,
------------------------
shall be kept by the Administrative Agent on behalf of the Borrower at no
extra charge to the Borrower at the address to which notices to the
Administrative Agent are to be send hereunder) on which it enters the name
of the registered owner of each of the Loans evidenced by a Registered
Note. Notwithstanding anything to the contrary contained in this
(S)12.07(h), a Registered Note and the Loans evidenced thereby may be
-----------
assigned or otherwise transferred in whole or in part only by registration
of such assignment or transfer of such Registered Note and the Loans
evidenced thereby on the Registered Note Register (and each Registered Note
shall expressly so provide). Any assignment or transfer of all or part of
such Loans and the Registered Note evidencing the same shall be registered
on the Registered Note Register only upon surrender for registration of
assignment or transfer of the Registered Note evidencing such Loans, duly
endorsed by (or accompanied by a written instrument of assignment or
transfer duly executed by) the registered noteholder thereof, and thereupon
one or more new Registered Notes in the same aggregate principal amount
shall be issued to the designated assignee(s) or transferee(s). Prior to
the due presentment for registration of transfer of any Registered Note,
the Borrower and the Administrative Agent shall treat the Person in whose
name such Loans and the Registered Note(s) evidencing the same are
registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding any notice to the
contrary. The Registered Note Register shall be available for inspection
by the Borrower and any Lender at any reasonable time upon reasonable prior
notice.
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Section 12.08 Governing Law. This Agreement and the Notes shall be
------------- -------------
governed by, and construed in accordance with, the laws of the State of New
York.
Section 12.09 Execution in Counterparts. This Agreement may be executed
------------- -------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 12.10 Confidentiality. Neither the Administrative Agent nor any
------------- ---------------
Lender shall disclose any Confidential Information to any Person without the
consent of the Borrower, other than
(a) to the Administrative Agent's or such Lender's Affiliates and
their officers, directors, employees, agents and advisors and to actual or
prospective assignees and participants, and then only on a confidential
basis,
(b) as required by any law, rule or regulation or judicial process,
and
(c) as requested or required by any state, federal or foreign
authority or examiner regulating banks or banking.
The Administrative Agent and the Lenders shall not, and the Borrower shall
not, and shall cause its Subsidiaries and Affiliates not to, disclose the terms
of this Agreement, the other Loan Documents or the transactions contemplated
hereby to any Person without the consent of the other party hereto, except
(i) to the extent that such terms or transactions become
generally available to the public,
(ii) to their respective Affiliates and their officers,
directors, employees, agents, advisors and (in the case of the
Lenders) to actual or prospective assignees and participants, in each
case to the extent that the Administrative Agent, any Lender or the
Borrower deems necessary or appropriate,
(iii) as required by any law, rule or regulation or judicial
process, and
(iv) as requested by any state, federal or foreign regulatory
authority.
A reasonable period of time prior to making any disclosure with respect to such
terms and transactions that is permitted under clause (iv) or (v) of the
preceding sentence, the
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<PAGE>
party proposing, or whose Affiliate is proposing, to make such disclosure will
consult with the other party concerning the need for and scope of any such
disclosure.
Section 12.11 Consent to Jurisdiction. The Borrower irrevocably:
------------- -----------------------
(a) submits to the jurisdiction of any New York state or federal court
sitting in New York City in any action or proceeding arising out of or
relating to any Loan Document;
(b) agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York state or federal court;
(c) waives, to the fullest extent that it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding;
(d) consents to the service of any and all process in any such action
or proceeding by the mailing of copies of such process to such the Borrower
at its address specified in (S) 12.02; and
---------
(e) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
Nothing in this (S) 12.11 shall affect the right of the Administrative Agent or
---------
any Lender to serve legal process in any other manner permitted by law or affect
the right of the Administrative Agent or any Lender to bring any action or
proceeding against any the Borrower or its property in the courts of other
jurisdictions.
Section 12.12 Limitation of Liability. None of the Administrative Agent,
------------- -----------------------
any Lender or any Affiliate, officer, director, employee, attorney or agent
thereof shall be liable for any error of judgment or act done in good faith, or
be otherwise liable or responsible under any circumstances whatsoever (including
such Person's negligence), except for such Person's gross negligence or willful
misconduct. None of the Administrative Agent, any Lender or any Affiliate,
officer, director, employee, attorney or agent thereof shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to sue
any of them upon any claim for any special, indirect, incidental or
consequential damages suffered or incurred by the Borrower or any other Loan
Party in connection with, arising out of or in any way related to this Agreement
or any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. The Borrower hereby waives,
releases and agrees not to sue the Administrative Agent or any Lender or any of
their respective Affiliates, officers, directors, employees, attorneys or agents
for exemplary or punitive damages in respect of any claim in connection with,
arising out of or in any way related
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<PAGE>
to this Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents.
Section 12.13 No Duty. All attorneys, accountants, appraisers and other
------------- -------
professional Persons and consultants retained by the Administrative Agent and
the Lenders shall have the right to act exclusively in the interest of the
Administrative Agent and the Lenders and shall have no duty of disclosure, duty
of loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to the Borrower of any of its Subsidiaries or any of their
shareholders or any other Person.
Section 12.14 No Fiduciary Relationship; No Agency Relationship. The
------------- -------------------------------------------------
relationship between the Borrower and each Lender is solely that of debtor and
creditor, and neither the Administrative Agent nor any Lender has any fiduciary
or other special relationship with the Borrower or any other Loan Party, and no
term or condition of any of the Loan Documents shall be construed so as to deem
the relationship between the Borrower and any Lender, or any other Loan Party
and any Lender, to be other than that of debtor and creditor. No joint venture
or partnership is created by this Agreement among the Lenders or among the
Borrower or any other Loan Party and the Lenders. The Administrative Agent
shall not be deemed to have any fiduciary relationship with any Lender or any
Loan Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing, the use of the term "agent" in this Agreement with respect to the
-----
Administrative Agent is not intended to connote any fiduciary or other express
or implied obligation arising under agency doctrine of any applicable law;
instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship among independent
contracting parties.
Section 12.15 Waiver of Jury Trial. Each of the Borrower, the
------------- --------------------
Administrative Agent and the Lenders irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to any of the Loan Documents, the
Advances or the actions of the Administrative Agent or any Lender in the
negotiation, administration, performance or enforcement thereof.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above.
D&E OMNIPOINT WIRELESS
JOINT VENTURE, L.P.
By: /s/ Robert L. Quaranta CEO
------------------------------
Name: Robert Quaranta
Title: Chief Executive Officer
<PAGE>
Commitment Percentage: 100% NORTHERN TELECOM INC.,
as a Lender
Domestic Lending Office and By: /s/ Michael W. McCorkle
- --------------------------- ---------------------------
LIBOR Lending Office: Name: Michael W. McCorkle
-------------------- Title: Director, Customer
Northern Telecom Inc. Finance-North America
2221 Lakeside Blvd.
Richardson, Texas 75082
A copy of any notice delivered pursuant to
(S) 12.02 also should be delivered to the
- ---------
address above to the attention of
Loan Administration *****
- --------------------------------------------------------------------------------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE>
EXHIBIT 10.2
CAPITAL CONTRIBUTION AGREEMENT
CAPITAL CONTRIBUTION AGREEMENT, dated as of September 18, 1998, made by
each of Omnipoint Corporation, a Delaware corporation ("Omnipoint"), and D&E
---------
Communications, Inc., a Pennsylvania corporation ("D&E"), in favor of
---
D&E/Omnipoint Wireless Joint Venture, L.P., a Delaware limited partnership (the
"Borrower"), and in favor of the Lenders (the "Lenders") from time to time
-------- -------
parties to the Loan Agreement (as defined below) and Northern Telecom Inc., as
administrative agent (together with its successors as such administrative agent,
the "Administrative Agent") for the Lenders.
--------------------
PRELIMINARY STATEMENTS:
(1) The Lenders and the Administrative Agent have entered into a Loan
Agreement dated as of September 18, 1998 with the Borrower (as amended or
otherwise modified from time to time, the "Loan Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
Each of Omnipoint and D&E will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Agreement.
(2) It is a condition precedent to the making of Advances by the Lenders
under the Loan Agreement that each of Omnipoint and D&E shall have executed and
delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances under the Loan Agreement, each of Omnipoint and D&E
agrees as follows:
SECTION 1. Obligation to Contribute Funds. Omnipoint and D&E shall
------------------------------
jointly and severally pay, or shall cause one of their Subsidiaries (other than
the Borrower or any of its Subsidiaries) (such other Subsidiaries, being "Other
-----
Subsidiaries") to pay, to the Borrower (except as otherwise provided herein)
- ------------
immediately upon written request by
(a) the Borrower, or
(b) if an Event of Default shall have occurred and be continuing, the
Administrative Agent,
cash in U.S. dollars in the amount specified in such request; provided that the
aggregate amount of cash required to paid to the Borrower by Omnipoint, D&E or
any Other Subsidiary pursuant to any such request as of any date of
determination shall not exceed the greater of zero and the following amount (the
"Maximum Amount"):
--------------
<PAGE>
(1) the sum of (I) $50,000,000, plus (II) the aggregate amount
of all dividends and other distributions by the Borrower in
respect of its Stock and payments of interest and principal owing
by the Borrower and its Subsidiaries to Omnipoint, D&E and their
Other Subsidiaries (other than the Borrower and its Subsidiaries)
on or before such date, plus (III) the aggregate amount of all
cash payments made to D&E or Omnipoint pursuant to Section 4(c)
of the Master Services Agreements,
minus
(2) the greater of
(I) zero, and
(II) the aggregate amount of all cash equity contributions
to the Borrower and Subordinated Debt excluding, however,
cumulative amounts advanced to Borrower to meet financial
covenants pursuant to Section 6.14(A)(a), (b), (c) and (d), of
------------------------------------
the Loan Agreement.
Omnipoint or any other Subsidiary shall make payment of funds hereunder through
additional capital or other contributions in respect of the owners' equity of
the Borrower; provided that
(x) to the extent such purchases or contributions are prohibited under
agreements binding on Omnipoint or D&E or both on the date hereof (the
"Conflicting Agreements"), such of Omnipoint, D&E or both which are party
-----------------------
to such Conflicting Agreements shall make payment hereunder through the
lending of funds to the Borrower by way of Subordinated Debt;
(y) if any such payment made as such a loan may at a later time be
made as an equity contribution to the Borrower without violating such
Conflicting Agreements, such loan shall be converted to an equity
contribution to the Borrower; and
(z) each of Omnipoint and D&E shall use its best efforts to take such
action as will permit any such loan to be converted to such an equity
contribution.
SECTION 2. Taxes. Etc. (a) Omnipoint and D&E, jointly and severally,
----------
will pay any present or future stamp or other taxes, charges or similar levies
(collectively, "Taxes"), including any interest and penalties, which arise from
-----
any payment made hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement.
-2-
<PAGE>
(b) Omnipoint and D&E, jointly and severally, will indemnify the
Administrative Agent and each Lender for the full amount of Taxes (including,
without limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section) paid by the Administrative Agent or such Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date the
Administrative Agent or such Lender (as the case may be) makes written demand
therefor.
SECTION 3. Obligation Absolute. Each of Omnipoint and D&E will perform
-------------------
its obligations under this Agreement regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of the terms of the
Notes, the Loan Agreement, the other Loan Documents or any other document
related thereto or the rights of the Administrative Agent or the Lenders with
respect thereto. The obligations of each of Omnipoint and D&E under this
Agreement are independent of the Loan Agreement, the Notes and the other Loan
Documents, and a separate action or actions may be brought and prosecuted
against either of Omnipoint or D&E or both to enforce this Agreement,
irrespective of whether any action is brought against the other of Omnipoint or
D&E or the Borrower or whether Omnipoint or D&E or the Borrower is joined in any
such action or actions. The obligations of each of Omnipoint and D&E under this
Agreement are joint and several and shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the Loan Agreement, the
Notes, any other Loan Document or any other agreement or instrument
relating thereto or any collateral therefor;
(ii) any change in the time, manner or place of payment of, or in any
other term of, the Notes, the Loan Agreement, any other Loan Document, or
any other amendment or waiver of or any consent to departure from the Loan
Agreement, the Notes or any other Loan Document, including, without
limitation, any increase in the Notes or the obligations of the Borrower
under the Loan Agreement resulting from the extension of additional credit
to the Borrower or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, the Notes, the Loan Agreement or any other
Loan Document;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the obligations evidenced by the Loan Agreement, the Notes or
any other Loan Document, or any manner of sale or other disposition of any
collateral for all or any of the obligations evidenced by the Loan
Agreement, the Notes or any other Loan Document or any other assets of the
Borrower or any of its Subsidiaries;
-3-
<PAGE>
(v) any charge, restructuring or termination of the corporate or
partnership structure or existence of the Borrower or any of its
Subsidiaries; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a surety.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Notes is rescinded or must
otherwise be returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
SECTION 4. Waiver. Each of Omnipoint and D&E waives promptness,
------
diligence, notice of acceptance and any other notice with respect to the Loan
Agreement, the Notes, the other Loan Documents and this Agreement and any
requirement that the Administrative Agent or any Lender protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against the Borrower or any other person or
entity or any collateral.
SECTION 5. Separate Undertaking. Without limiting the generality of any
--------------------
of the foregoing provisions of this Agreement, each of Omnipoint and D&E
irrevocably waives, to the full extent permitted by applicable law and for the
benefit of, and as a separate undertaking with, the Lenders and the
Administrative Agent, any defense to the performance of this Agreement which may
be available to either of Omnipoint or D&E or both as a consequence of this
Agreement being rejected or otherwise not assumed by the Borrower or any trustee
or other similar official for the Borrower or for any substantial part of the
property of the Borrower, or as a consequence of this Agreement being otherwise
terminated or modified, in any proceeding seeking to adjudicate the Borrower a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of the Borrower or
the debts of the Borrower under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, whether such rejection, non-assumption,
termination or modification be by reason of this Agreement being held to be an
executory contract or by reason of any other circumstance. If this Agreement
shall be so rejected or otherwise not assumed, or so terminated or modified,
each of Omnipoint and D&E promises for the benefit of, and as a separate
undertaking with, the Lenders and the Administrative Agent, unconditionally,
jointly and severally, to pay to the Administrative Agent an amount equal to
each payment which would otherwise be payable by Omnipoint or D&E under or in
connection with this Agreement if this Agreement were not so rejected or
otherwise not assumed or were otherwise not so terminated or modified, such
amount to be payable to the Administrative Agent, at its account specified in
the Loan Agreement for the payment of amounts owing by the Borrower thereunder
(or otherwise in accordance with the instructions of the Administrative Agent),
as and when such payment would otherwise be payable hereunder and such amount to
be applied as such payment would
-4-
<PAGE>
otherwise be applied under Section 2.07 of the Loan Agreement.
------------
SECTION 6. Representations and Warranties of Omnipoint. Omnipoint
-------------------------------------------
represents and warrants as follows:
(a) Omnipoint is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by Omnipoint of this
Agreement, and the consummation of the transactions contemplated hereby,
are within Omnipoint's corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (i) Omnipoint's charter
or by-laws or (ii) any law or any contractual restriction binding on or
affecting Omnipoint.
(c) No authorization or approval or other action by, and no notice to
or filing with any governmental authority or regulatory body or any other
third party is required for the due execution, delivery and performance by
Omnipoint of this Agreement.
(d) This Agreement has been duly executed and delivered by Omnipoint.
This Agreement is the legal, valid and binding obligation of Omnipoint
enforceable against Omnipoint in accordance with its terms.
(e) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(f) Omnipoint has, independently and without reliance upon the
Administrative Agent or any Lender and based on documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement.
SECTION 7. Representations and Warranties of D&E. D&E represents and
-------------------------------------
warrants as follows:
(a) D&E is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
(b) The execution, delivery and performance by D&E of this Agreement,
and the consummation of the transactions contemplated hereby, are within
D&E's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) D&E's charter or by-laws or
(ii) any law or any contractual restriction binding on or affecting D&E.
(c) No authorization or approval or other action by, and no notice to
or
-5-
<PAGE>
filing with any governmental authority or regulatory body or any other
third party is required for the due execution, delivery and performance by
D&E of this Agreement.
(d) This Agreement has been duly executed and delivered by D&E. This
Agreement is the legal, valid and binding obligation of D&E enforceable
against D&E in accordance with its terms.
(e) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(f) D&E has, independently and without reliance upon the
Administrative Agent or any Lender and based on documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement.
SECTION 8. Other Agreements. Each of Omnipoint and D&E will make its
----------------
senior officers available for discussions with potential purchasers of
assignments of or participations in loans made by or commitments of Northern
Telecom Inc. under the Loan Agreement and any loan agreement with Northern
Telecom Inc. regarding vendor-financing loans and commitments primarily in
respect of the Network (as defined in the Loan Agreement), and otherwise
cooperate in the syndication of such loans and commitments at such times and
with such frequency as the Administrative Agent may reasonably request, provided
--------
that the Administrative Agent shall use its best efforts to prevent unreasonable
- ----
interference with or disruption of Omnipoint's and D&E's business on account of
the foregoing.
SECTION 9. Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, and no consent to any departure by Omnipoint or D&E or both
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Borrower, the Administrative Agent and the Required Lenders
(provided that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, (a) limit the liability of Omnipoint or D&E or both
hereunder, or (b) change the number of Lenders required to take any action
hereunder), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 10. Expenses. Each of Omnipoint and D&E will, jointly and
--------
severally, upon demand pay to the Borrower and the Administrative Agent,
respectively, the amount of any and all expenses, including the fees and
expenses of their respective counsel and of any experts and agents, which the
Borrower and the Administrative Agent or the Lenders, as the case may be, may
incur in connection with (a) the exercise or enforcement of any of their
respective rights hereunder or (b) the failure by Omnipoint or D&E or both to
perform or observe any of the provisions hereof.
-6-
<PAGE>
SECTION 11. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telecopy communication)
and mailed, telecopied, or delivered if to Omnipoint, at its address at 3
Bethesda Metro Center, Suite 400, Bethesda, Maryland 20814, Attention: Bradley
Sparks (fax no. (301) 951-2580), if to D&E, at its address at
________________________, Attention: __________________ (fax no. ___________),
and if to the Borrower, the Administrative Agent or any Lender, at its address
specified in the Loan Agreement, or, as to any party at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and other communications shall, when mailed, be effective when
deposited in the mails or, when telecopied, when transmitted by telecopy,
respectively.
SECTION 12. No Waiver; Remedies. No failure on the part of the Borrower,
-------------------
the Administrative Agent or any Lender to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 13. Continuing Agreement; Assignments under Loan Agreement. This
------------------------------------------------------
Agreement is a continuing agreement and shall
(a) remain in full force and effect until the later of
(i) the payment in full of the Notes and all other amounts
payable under the Loan Agreement, the other Loan Documents or this
Agreement, and
(ii) the expiration or termination of the Commitments;
(b) be binding upon Omnipoint, D&E, and their respective successors
and assigns; and
(c) inure to the benefit of and be enforceable by the Borrower, the
Lenders, the Administrative Agent and their respective successors,
transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Loan Agreement and this Agreement (including, without limitation, all
or any portion of its Commitment, the Advances owing to it and any Note held by
it) to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to such
Lender herein or otherwise, subject, however, to the provisions of Article XI
----------
(concerning the Administrative Agent) of the Loan Agreement.
-7-
<PAGE>
SECTION 14. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 15. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 16. Consent to Jurisdiction. Each of Omnipoint and D&E
-----------------------
irrevocably
(a) submits to the jurisdiction of any New York state or federal court
sitting in New York City in any action or proceeding arising out of or
relating to this Agreement;
(b) agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York state court or in such federal
court;
(c) waives, to the fullest extent that it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding;
(d) consents to the service of any and all process in any such action
or proceeding by the mailing of copies of such process to such Borrower at
its address specified in Section 9; and
---------
(e) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
Nothing in this Section 16 shall affect the right of the Administrative Agent,
----------
any Lender or the Borrower to serve legal process in any other manner permitted
by law or affect the right of the Administrative Agent or any Lender to bring
any action or proceeding against Omnipoint or its property in the courts of
other jurisdictions.
SECTION 17. Waiver of Jury Trial. Each of Omnipoint, D&E and, by their
--------------------
acceptance hereof, the Borrower and the Administrative Agent (on behalf of
itself and the Lenders), irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of the
Administrative Agent, any Lender or the Borrower in the negotiation,
administration, performance or enforcement thereof.
-8-
<PAGE>
IN WITNESS WHEREOF, each of Omnipoint and D&E has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
OMNIPOINT CORPORATION
By: /s/ Bradley E. Sparks
----------------------------
Name: Bradley E. Sparks
Title: Vice President
D&E COMMUNICATIONS, INC.
By: /s/ Donald R. Kaufmann
----------------------------
Name: Donald R. Kaufmann
Title: Vice President
The foregoing Agreement is
accepted and agreed to as of the
date first-above written:
D&E/OMNIPOINT WIRELESS JOINT
VENTURE, L.P.
By: /s/ Robert L. Quaranta
-------------------------------
Name: Robert L. Quaranta
Title: Chief Executive Officer
NORTHERN TELECOM INC., as Administrative Agent
for itself and on behalf of the Lenders
By: /s/ Michael W. McCorkle
-------------------------------
Name: Michael W. McCorkle
Title: Director, Customer Finance - North America
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF OPERATIONS, BALANCE SHEETS AND STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN
ITS ENTIRETY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 61,982
<OTHER-PROPERTY-AND-INVEST> 12,278
<TOTAL-CURRENT-ASSETS> 33,257
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 3,380
<TOTAL-ASSETS> 110,897
<COMMON> 1,187
<CAPITAL-SURPLUS-PAID-IN> 36,428
<RETAINED-EARNINGS> 29,675
<TOTAL-COMMON-STOCKHOLDERS-EQ> 67,290
0
1,446
<LONG-TERM-DEBT-NET> 23,778
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,063
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 17,320
<TOT-CAPITALIZATION-AND-LIAB> 110,897
<GROSS-OPERATING-REVENUE> 38,678
<INCOME-TAX-EXPENSE> 923
<OTHER-OPERATING-EXPENSES> 33,327
<TOTAL-OPERATING-EXPENSES> 34,250
<OPERATING-INCOME-LOSS> 5,351
<OTHER-INCOME-NET> (4,479)
<INCOME-BEFORE-INTEREST-EXPEN> 872
<TOTAL-INTEREST-EXPENSE> (1,889)
<NET-INCOME> (9,890)
18
<EARNINGS-AVAILABLE-FOR-COMM> (9,890)
<COMMON-STOCK-DIVIDENDS> 2,151
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 8,672
<EPS-PRIMARY> (1.33)
<EPS-DILUTED> (1.33)
</TABLE>
