================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
UNDER THE TRUST INDENTURE ACT OF 1939
--------------------------------
NEXTWAVE TELECOM INC.
NEXTWAVE PERSONAL COMMUNICATIONS INC.
NEXTWAVE POWER PARTNERS INC.
(Names of Applicants)
3 Skyline Drive
Hawthorne, New York 10532
(Address of Principal Executive Offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
Title of Class Amount
-------------- ------
12% Senior Secured Subordinated The dollar amount of Allowed Claims of
Notes Due 2009 Senior Claimants (as such terms are
defined in the Plan hereinafter referred
to), expected, on the basis of present
information, to be approximately
$225,000,000, plus the amount(s) of any
additional such notes as may be issued
from time to time in payment of interest
as hereinafter described.
--------------------------------
Approximate Date of Proposed Public Offering: September 10, 1999
--------------------------------
Frank A. Cassou, Esq.
3 Skyline Drive
Hawthorne, New York 10532
(Name and Address of Agent for Service)
With a copy to:
Charles E. Harrell, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
- --------------------------------------------------------------------------------
The obligor hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness until: (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment, or (ii) such date as the Commission, acting pursuant
to Section 307(c) of the Act, may determine upon the written request of the
obligor.
<PAGE>
FORM T-3
GENERAL
ITEM 1. GENERAL INFORMATION.
(A) FORM OF ORGANIZATION.
Each of NextWave Telecom Inc. (the "Issuer"), NextWave Personal
Communications Inc. ("NPCI") and NextWave Power Partners Inc. ("NPPI" and,
together with NPCI, the "Guarantors") is a corporation. The Issuer and the
Guarantors are sometimes hereinafter referred to collectively as the
"Applicants".
(B) STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH ORGANIZED.
Each of the Applicants is organized under the laws of the State of
Delaware.
ITEM 2. SECURITIES ACT EXEMPTION APPLICABLE.
The Applicants rely upon Section 1145(a)(1) of the Bankruptcy Reform
Act of 1978, as amended, Title 11, United States Code (the "Bankruptcy Code"),
as the basis for their claim that registration of the offer and sale to Senior
Claimants (as defined in the Plan (as defined below)) in full satisfaction of
their claims against all of the Debtors (as defined below), pursuant to the
Plan, of the 12% Senior Secured Subordinated Notes Due 2009 (the "Notes") to be
issued by the Issuer under an indenture (the "Indenture") to be dated as of the
effective date of the Plan (the "Effective Date"), among the Issuer, the
Guarantors and a trustee (to be named by amendment) (the "Trustee"), is not
required under the Securities Act of 1933, as amended (the "Securities Act").
On June 8, 1998, certain subsidiaries of the Issuer, and thereafter,
on December 23, 1998, the Issuer, filed petitions for relief under Chapter 11
("Chapter 11") of the Bankruptcy Code in the United States District Court for
the Southern District of New York (the Issuer and such subsidiaries, in such
capacity, collectively, the "Debtors," and such District Court, the "Bankruptcy
Court"). Since such time, the Debtors have continued to operate their businesses
and manage their properties as debtors in possession pursuant to Sections 1107
and 1108 of the Bankruptcy Code.
Pursuant to the Debtors' Joint Plan of Reorganization Under Chapter
11 of the Bankruptcy Code dated July 27, 1999 (as it may be altered, amended or
modified from time to time, the "Plan"), on the Effective Date, or as promptly
thereafter as practicable, the Notes will be issued to Senior Claimants in full
satisfaction of their claims against all of the Debtors. Each of the Applicants
is a Debtor. In order to ensure that no such Senior Claimant is an "underwriter"
with respect to the Notes within the meaning of Section 1145(b)(1) of the
Bankruptcy Code, each such Senior Claimant will be required, as a condition to
receiving Notes without a legend restricting transfers thereof, to represent and
agree that such Senior Claimant is not such an "underwriter." An integral and
essential element of the Plan is that the issuance of the Notes pursuant to the
Plan shall be exempt from registration under the Securities Act pursuant to
Section 1145 of the Bankruptcy Code.
AFFILIATIONS
ITEM 3. AFFILIATES.
The following is a list of affiliates of the Applicants as of August
2, 1999:
2
<PAGE>
SUBSIDIARIES OF THE ISSUER, 100% OF THE
VOTING SECURITIES OF WHICH ARE OWNED DIRECTLY BY
THE ISSUER ("FIRST TIER SUBSIDIARIES")
(ALL OF THE FIRST TIER SUBSIDIARIES AND THE SECOND
TIER SUBSIDIARY NAMED BELOW ARE DEBTORS EXCEPT FOR
TELE*CODE INC., WHICH IS A NON-DEBTOR SUBSIDIARY OF THE ISSUER)
---------------------------------------------------------------
NextWave Personal Communications Inc.
NextWave Partners Inc.
NextWave Wireless Inc.
TELE*Code Inc.
SUBSIDIARY OF THE ISSUER, 100% OF THE VOTING
SECURITIES OF WHICH ARE OWNED DIRECTLY BY NEXTWAVE PARTNERS
INC., A FIRST TIER SUBSIDIARY ("SECOND TIER SUBSIDIARY")
--------------------------------------------------------
NextWave Power Partners Inc.
AS OF THE EFFECTIVE DATE (SUCH INFORMATION IS PROVIDED,
AS REQUIRED BY FORM T-3, ON THE BASIS OF PRESENT INFORMATION)
-------------------------------------------------------------
Pursuant to the Plan, on the Effective Date, holders of the Issuer's
Series A Common Stock, par value $.0001 per share ("Series A Common Stock"), and
Series B Common Stock, par value $.0001 per share ("Series B Common Stock"),
will retain their shares, subject to the rights, privileges and preferences of
holders of Plan Securities (as defined in the Plan). Holders of Existing
Options/Warrants (as defined in the Plan) will be entitled to exercise such
Existing Options/Warrants prior to the Effective Date pursuant to the Plan. Upon
effectiveness of the Issuer's Second Amended and Restated Certificate of
Incorporation, the Issuer will be authorized to issue 60,000,000 shares of
Series A Common Stock, 700,000,000 shares of Series B Common Stock, 1,019,444
shares of Series C Common Stock, par value $.0001 per share ("Series C Common
Stock") and 50,000,000 shares of undesignated preferred stock, par value $.01
per share ("Undesignated Preferred Stock"), which shall include 850,000 shares
of Senior Redeemable Preferred Stock (the "Senior Redeemable Preferred Stock")
and between 2,500,000 and 7,500,000 shares of the Series A Convertible Preferred
Stock (the "Series A Preferred Stock"). See "Capital Securities - Capitalization
- - Capitalization As of the Effective Date" in Item 7 of this Form T-3.
The following is a list of affiliates of the Applicants as they are
expected to be constituted as of the Effective Date:
SUBSIDIARIES OF THE ISSUER, 100% OF THE VOTING
SECURITIES OF WHICH WILL BE OWNED DIRECTLY BY THE ISSUER
--------------------------------------------------------
NextWave Personal Communications Inc.
NextWave Partners Inc.
NextWave Wireless Inc.
TELE*Code Inc.
SUBSIDIARY OF THE ISSUER, 100% OF THE VOTING SECURITIES
OF WHICH WILL BE OWNED DIRECTLY BY NEXTWAVE PARTNERS INC.,
A FIRST TIER SUBSIDIARY
-----------------------
NextWave Power Partners Inc.
OTHER AFFILIATES
----------------
On the basis of present holdings, commitments and information,
Navation, Inc. beneficially owns 19,091,435 shares of Series A Common Stock,
representing approximately 52.7% of the outstanding shares of Series A Common
Stock, and 20,058,308 shares of the Series B Common Stock, representing
approximately 12.88% of the outstanding shares of Series B Common Stock. See
"Management and Control - Principal Owners of Voting Securities - As of August
2, 1999."
3
<PAGE>
The identities of any other affiliates of the Issuer as of the
Effective Date will be included by amendment.
MANAGEMENT AND CONTROL
ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS.
DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER AS OF AUGUST 2, 1999
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Name Address Office/Position
---- ------- ---------------
<S> <C> <C>
Allen B. Salmasi c/o NextWave Telecom Inc. Chairman of the Board, Chief Executive Officer and
3 Skyline Drive President
Hawthorne, NY 10532
Frank A. Cassou c/o NextWave Telecom Inc. Executive Vice President, Corporate Development and
3 Skyline Drive General Counsel; Secretary
Hawthorne, NY 10532
Raymond P. Dolan c/o NextWave Telecom Inc. Chief Operating Officer
3 Skyline Drive
Hawthorne, NY 10532
Kevin M. Finn c/o NextWave Telecom Inc. Senior Vice President, Special Projects, Director
3 Skyline Drive
Hawthorne, NY 10532
Roy D. Berger c/o NextWave Telecom Inc. Senior Vice President and Chief Marketing Officer
3 Skyline Drive
Hawthorne, NY 10532
James S. Madsen c/o NextWave Telecom Inc. Senior Vice President, Sales & Business Development
3 Skyline Drive
Hawthorne, NY 10532
R. Andrew Salony c/o NextWave Telecom Inc. Senior Vice President, Strategic Relations and Chief
3 Skyline Drive Human Resources Officer
Hawthorne, NY 10532
Michael Regan, Jr. c/o NextWave Telecom Inc. Senior Vice President, External Affairs
3 Skyline Drive
Hawthorne, NY 10532
Edward M. Knapp c/o NextWave Telecom Inc. Senior Vice President, Chief Technical Officer
3 Skyline Drive
Hawthorne, NY 10532
William H. Webster c/o NextWave Telecom Inc. Director
3 Skyline Drive
Hawthorne, NY 10532
Allan E. Puckett c/o NextWave Telecom Inc. Director
3 Skyline Drive
Hawthorne, NY 10532
4
<PAGE>
Alan Cameron c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Theresa L. McCarthy c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Brian Montgomery c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
David Needham c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Charla Rath c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Michael Regan c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Michael Wack c/o NextWave Telecom Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF NPCI AS OF AUGUST 2, 1999
-------------------------------------------------------------
<TABLE>
<CAPTION>
Name Address Office/Position
- ---- ------- ---------------
<S> <C> <C>
Allen B. Salmasi c/o NextWave Personal Communications Inc. Chairman of the Board, Chief Executive
3 Skyline Drive Officer and President
Hawthorne, NY 10532
Kevin M. Finn c/o NextWave Personal Communications Inc. Senior Vice President, Director
3 Skyline Drive
Hawthorne, NY 10532
Edward M. Knapp c/o NextWave Personal Communications Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
James S. Madsen c/o NextWave Personal Communications Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Frank A. Cassou c/o NextWave Personal Communications Inc. Secretary
3 Skyline Drive
Hawthorne, NY 10532
</TABLE>
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF NPPI AS OF AUGUST 2, 1999
-------------------------------------------------------------
<TABLE>
<CAPTION>
Name Address Office/Position
- ---- ------- ---------------
<S> <C> <C>
Allen B. Salmasi c/o NextWave Power Partners Inc. Chairman of the Board, Chief Executive
3 Skyline Drive Officer and President
Hawthorne, NY 10532
Kevin M. Finn c/o NextWave Power Partners Inc. Senior Vice President, Director
3 Skyline Drive
Hawthorne, NY 10532
Roy D. Berger c/o NextWave Power Partners Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Edward M. Knapp c/o NextWave Power Partners Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
James S. Madsen c/o NextWave Power Partners Inc. Vice President
3 Skyline Drive
Hawthorne, NY 10532
Frank A. Cassou c/o NextWave Power Partners Inc. Secretary
3 Skyline Drive
Hawthorne, NY 10532
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE APPLICANTS
AS OF THE EFFECTIVE DATE (SUCH INFORMATION IS PROVIDED, AS
REQUIRED BY FORM T-3, ON THE BASIS OF PRESENT INFORMATION)
----------------------------------------------------------
On or prior to the Effective Date, pursuant to the Plan, the Issuer
will file a Second Amended and Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware that will provide that, at the
effective time thereof, the Board of Directors of the Issuer will consist of not
less than three nor more than nine members.
The names of the directors and executive officers of each of the
Applicants, and the offices and/or positions of such persons with the respective
Applicant and their respective mailing addresses, will be provided by amendment.
ITEM 5. PRINCIPAL OWNERS OF VOTING SECURITIES.
AS OF AUGUST 2, 1999
--------------------
I. ISSUER.
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Percentage of
Name and Voting
Complete Mailing Address Title of Class Owned Amount Owned Securities Owned
------------------------ -------------------- ------------ ----------------
<S> <C> <C> <C>
Navation, Inc. Series A Common Stock 19,091,435 9.94%(1)(2)
271 East 86th Street, Suite 352
New York, New York 10028
6
<PAGE>
Navation, Inc. Series B Common Stock 20,058,308 10.45%(1)(3)
271 East 86th Street, Suite 352
New York, New York 10028
</TABLE>
- -------------------
(1)Represents the percentage of outstanding voting securities of the Issuer
(i.e., of the aggregate of the Series A Common Stock and Series B Common Stock
outstanding) beneficially owned (assuming that no Existing Options/Warrants are
exercised) as of July 30, 1999.
(2)Navation, Inc. owns 52.67% of the outstanding Series A Common Stock and its
combined ownership of Series A Common Stock and Series B Common Stock
constitutes a total of 20.39% of the outstanding voting securities of the Issuer
(i.e., of the aggregate of the Series A Common Stock and Series B Common Stock
outstanding), assuming that no Existing Options/Warrants are exercised.
(3)Navation, Inc. owns 12.88% of the outstanding Series B Common Stock and its
combined ownership of Series A Common Stock and Series B Common Stock
constitutes a total of 20.39% of the outstanding voting securities of the Issuer
(i.e., of the aggregate of the Series A Common Stock and Series B Common Stock
outstanding), assuming that no Existing Options/Warrants are exercised.
II. NPCI.
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Percentage of
Name and Voting
Complete Mailing Address Title of Class Owned Amount Owned Securities Owned
------------------------ -------------------- ------------ ----------------
<S> <C> <C> <C>
NextWave Telecom Inc. Capital Stock, par value 1,000 shares 100.00%
3 Skyline Drive $.0001 per share
Hawthorne, NY 10532
III. NPPI.
Col. A Col. B Col. C Col. D
------ ------ ------ ------
Percentage of
Name and Voting
Complete Mailing Address Title of Class Owned Amount Owned Securities Owned
------------------------ -------------------- ------------ ----------------
NextWave Partners Inc. Capital Stock, par value 1,000 shares 100.00%
3 Skyline Drive $.0001 per share
Hawthorne, NY 10532
</TABLE>
AS OF THE EFFECTIVE DATE (SUCH INFORMATION IS
PROVIDED, AS REQUIRED BY FORM T-3, ON THE BASIS
OF PRESENT HOLDINGS, COMMITMENTS AND INFORMATION)
-------------------------------------------------
Disclosure concerning the principal owners of voting securities as of
the Effective Date will be provided by amendment.
7
<PAGE>
UNDERWRITERS
ITEM 6. UNDERWRITERS.
(a) None.
(b) No principal underwriter within the meaning of Section 303(4) of
the Trust Indenture Act of 1939, as amended (the "1939 Act"), has been proposed
with respect to the Notes.
CAPITAL SECURITIES
ITEM 7. CAPITALIZATION.
AS OF AUGUST 2, 1999
(A) CAPITALIZATION.
I. ISSUER.
<TABLE>
<CAPTION>
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding
-------------- ----------------- ------------------
<S> <C> <C>
Series A Common Stock 60,000,000 shares 36,245,031 shares
Series B Common Stock 350,000,000 shares 155,745,055 shares
Series C Common Stock 1,019,444 shares NONE
Undesignated Common Stock 88,980,556 shares NONE
II. NPCI.
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding
-------------- ----------------- ------------------
Capital Stock, par value $.0001 per share 1,000 shares 1,000 shares
III. NPPI.
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding
-------------- ----------------- ------------------
Capital Stock, par value $.0001 per share 1,000 shares 1,000 shares
</TABLE>
8
<PAGE>
AS OF THE EFFECTIVE DATE (SUCH INFORMATION IS PROVIDED,
AS REQUIRED BY FORM T-3, ON THE BASIS OF PRESENT INFORMATION)(1)
----------------------------------------------------------------
I. ISSUER.
<TABLE>
<CAPTION>
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding(2)
-------------- ----------------- ---------------------
<S> <C> <C>
Series A Common Stock 60,000,000 shares
Series B Common Stock 700,000,000 shares
Series C Common Stock 1,019,444 shares
Undesignated Preferred Stock 41,650,000 to 46,650,000 shares
Series A Preferred Stock 2,500,000 to 7,500,000 shares
Senior Redeemable Preferred Stock 850,000 shares
12% Senior Secured Subordinated Notes Due 2009 (3)
</TABLE>
- ---------------
(1)In addition, pursuant to the Plan, on the basis of present information, the
Issuer will issue to (i) certain new investors who subscribe to purchase shares
of Series A Preferred Stock, (ii) the recipients of Senior Redeemable Preferred
Stock and (iii) the Bridge Noteholders, Hanareum and LG InfoComm (each as
defined in the Disclosure Statement filed as Exhibit T3E hereto) approximately
75,000,000 Series B Warrants (the "Series B Warrants"), each of which will be
exercisable for one share of Series B Common Stock at an exercise price of $3.00
per share. The Series B Warrants will be exercisable until 5:00 p.m., New York
City time, on the fifth anniversary of the Effective Date. The number of shares
of Series B Common Stock purchasable upon the exercise of the Series B Warrants
and such exercise price are subject to adjustment as set forth in the warrant
agreement governing such warrants. Also pursuant to the Plan, the Issuer will
issue to certain of its senior executives an aggregate of up to 6.9 million
shares of Series B Common Stock.
(2)The amount of capital securities expected to be outstanding as of the
Effective Date will be provided by amendment.
(3)The amount of authorized Notes will be equal to the dollar amount of Allowed
Claims of Senior Claimants (as such terms are defined in the Plan), expected, on
the basis of present information, to be approximately $225,000,000.
II. NPCI.
<TABLE>
<CAPTION>
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding
-------------- ----------------- ------------------
<S> <C> <C>
Capital Stock, par value $.0001 per share 1,000 shares 1,000 shares
III. NPPI.
Col. A Col. B Col. C
Title of Class Amount Authorized Amount Outstanding
-------------- ----------------- ------------------
Capital Stock, par value $.0001 per share 1,000 shares 1,000 shares
</TABLE>
9
<PAGE>
(B) VOTING RIGHTS.
I. ISSUER.
SERIES A COMMON STOCK
---------------------
As of July 30, 1999, each outstanding share of the Series A Common
Stock has one vote for all purposes provided by law, provided that (i) the
number of directors which the holders of shares of Series A Common Stock shall
be entitled to elect shall be limited in that such holders shall be entitled to
elect a number of directors equal to the minimum number necessary to constitute
a majority of the total number of directors (except that, in the event there are
no holders of Series B Common Stock, the holders of Series A Common Stock shall
have the right to elect all of the directors of the Issuer), and (ii) the
holders of Series A Common Stock shall have the right to vote, as a separate
class, on certain matters set forth in Article VIII of the Amended and Restated
Certificate of Incorporation of the Issuer filed as Exhibit T3A-1 hereto (the
"Amended and Restated Certificate of Incorporation").
As of the Effective Date, each outstanding share of the Series A
Common Stock will have, on the basis of present information, one vote for all
purposes provided by law, provided that (i) the number of directors which the
holders of shares of Series A Common Stock shall be entitled to elect shall be
limited in that such holders shall be entitled to elect a number of directors
equal to the minimum number necessary to constitute a majority of the total
number of directors (except that, in the event there are no holders of Series B
Common Stock, the holders of Series A Common Stock shall have the right to elect
all of the directors of the Issuer), and (ii) the holders of Series A Common
Stock shall have the right to vote, as a separate class, on certain matters set
forth in Article VII of the Second Amended and Restated Certificate of
Incorporation of the Issuer filed as Exhibit T3A-2 hereto (the "Second Amended
and Restated Certificate of Incorporation").
SERIES B COMMON STOCK
---------------------
As of July 30, 1999, each outstanding share of the Series B Common
Stock has no right to vote, except as required by law, provided that (i) the
holders of Series B Common Stock voting with the holders of Series C Common
Stock shall be entitled to elect a limited number of directors equal to the
total number of directors less the number of directors to be elected by the
holders of Series A Common Stock, provided, however, that the number of
directors to be elected by the holders of Series B Common Stock and Series C
Common Stock shall always constitute a minority of the total number of directors
and (ii) the holders of Series B Common Stock voting with the holders of Series
C Common Stock shall have the right to vote, as a separate class, on the matters
set forth in Article VIII of the Amended and Restated Certificate of
Incorporation. Notwithstanding the foregoing and such limitations, upon the date
that is ten years after the License Grant Date (as defined in Amended and
Restated Certificate of Incorporation), each holder of Series B Common Stock
shall be entitled to one vote per share upon any and all matters submitted to
the stockholders of the Issuer for a vote.
As of Effective Date, each outstanding share of the Series B Common
Stock will have, on the basis of present information, no right to vote, except
as required by law, provided that (i) the holders of Series B Common Stock
voting with the holders of Series C Common Stock (and any other class or series
of Preferred Stock (as defined in the Second Amended and Restated Certificate of
Incorporation) to the extent provided in the certificates of designation filed
by the Issuer with Secretary of State of Delaware (including, without
limitation, the Series A Preferred Stock)) shall be entitled to elect a limited
number of directors equal to the total number of directors less the number of
directors to be elected by the holders of Series A Common Stock, provided,
however, that the number of directors to be elected by the holders of Series B
Common Stock and Series C Common Stock (and any other class or series of
Preferred Stock to the extent provided in the certificates of designation filed
by the Issuer with Secretary of State of Delaware (including, without
limitation, the Series A Preferred Stock)) shall always constitute a minority of
the total number of directors and (ii) the holders of Series B Common Stock
voting with the holders of Series C Common Stock shall have the right to vote,
as a separate class, on the matters set forth in Article VII of the Second
Amended and Restated Certificate of Incorporation. Notwithstanding the foregoing
and such limitations, upon the date that is ten years after the License Grant
Date (as defined in Second Amended and Restated Certificate of Incorporation),
each holder of Series B Common Stock shall be entitled to one vote per share
upon any and all matters submitted to the stockholders of the Issuer for a vote.
10
<PAGE>
SERIES C COMMON STOCK
---------------------
As of July 30, 1999, each outstanding share of the Series C Common
Stock has no right to vote, except as required by law, provided that (i) the
holders of Series C Common Stock voting with the holders of Series B Common
Stock shall be entitled to elect a limited number of directors equal to the
total number of directors less the number of directors to be elected by the
holders of Series A Common Stock, provided, however, that the number of
directors to be elected by the holders of Series C Common Stock and Series B
Common Stock shall always constitute a minority of the total number of directors
and (ii) the holders of Series C Common Stock voting with the holders of Series
B Common Stock shall have the right to vote, as a separate class, on the matters
set forth in Article VIII of the Amended and Restated Certificate of
Incorporation. Notwithstanding the foregoing and such limitations, upon the date
that is ten years after the License Grant Date (as defined in Amended and
Restated Certificate of Incorporation), each holder of Series C Common Stock
shall be entitled to one vote per share upon any and all matters submitted to
the stockholders of the Issuer for a vote.
As of Effective Date, each outstanding share of the Series C Common
Stock will have, on the basis of present information, no right to vote, except
as required by law, provided that (i) the holders of Series C Common Stock
voting with the holders of Series B Common Stock (and any other class or series
of Preferred Stock (as defined in the Second Amended and Restated Certificate of
Incorporation) to the extent provided in the certificates of designation filed
by the Issuer with Secretary of State of Delaware (including, without
limitation, the Series A Preferred Stock)) shall be entitled to elect a limited
number of directors equal to the total number of directors less the number of
directors to be elected by the holders of Series A Common Stock, provided,
however, that the number of directors to be elected by the holders of Series C
Common Stock and Series B Common Stock (and any other class or series of
Preferred Stock to the extent provided in the certificates of designation filed
by the Issuer with Secretary of State of Delaware (including, without
limitation, the Series A Preferred Stock)) shall always constitute a minority of
the total number of directors and (ii) the holders of Series C Common Stock
voting with the holders of Series B Common Stock shall have the right to vote,
as a separate class, on the matters set forth in Article VII of the Second
Amended and Restated Certificate of Incorporation. Notwithstanding the foregoing
and such limitations, upon the date that is ten years after the License Grant
Date (as defined in Second Amended and Restated Certificate of Incorporation),
each holder of Series C Common Stock shall be entitled to one vote per share
upon any and all matters submitted to the stockholders of the Issuer for a vote.
The information set forth above in this Item 7(b) under the captions
"Series A Common Stock", "Series B Common Stock", "Series C Common Stock" and
"Undesignated Common Stock" is provided pursuant to the requirements of Form
T-3. However, the Issuer is currently under the protection of the Bankruptcy
Court and the owners of equity interests in the Issuer are subject to the
provisions of the Bankruptcy Code. Under the Bankruptcy Code, all actions taken
pursuant to the Plan must be approved by order of the Bankruptcy Court and, in
accordance with Section 303 of the Delaware General Corporation Law, may then be
carried out without the necessity of any further action by any stockholder of
the Issuer.
UNDESIGNATED PREFERRED STOCK
----------------------------
The Undesignated Preferred Stock will have, on the basis of present
information, such terms (including voting rights), as may be determined by the
Board of Directors of the Issuer pursuant to the Second Amended and Restated
Certificate of Incorporation.
SERIES A PREFERRED STOCK
------------------------
As of the Effective Date, each outstanding share of the Series A
Preferred Stock will have, on the basis of present information, no right to
vote, except as required by law, provided that (i) the holders of Series A
Preferred Stock voting with the holders of Series B Common Stock shall be
entitled to elect a limited number of directors equal to the total number of
directors less the number of directors to be elected by the holders of Series A
Common Stock and (ii) the holders of Series A Preferred Stock shall have the
right to vote, as a separate class, on the matters set forth in Section viii(c)
of the Certificate of Designation filed by the Issuer with Secretary of State of
Delaware with respect to the Series A Preferred Stock (the "Series A Certificate
of Designation") (unless such matters are approved by a majority of the
directors elected by the holders of the Series A Preferred Stock and the Series
B Common Stock). Each share of Series A Preferred Stock shall have one vote with
11
<PAGE>
respect to such matters and shall vote together as a single class with the
holders of Junior Stock (as defined in the Series A Certificate of Designation),
except as provided otherwise in the Series A Certificate of Designation.
Notwithstanding the foregoing, such voting rights shall terminate upon the
earlier of (a) the completion of a Qualified Public Offering (as defined in the
Series A Certificate of Designation) for the Series B Common Stock and (b) such
time as there is less than 30% of the Series A Preferred Stock issued on the
Issue Date (as defined in the Series A Certificate of Designation) outstanding.
SENIOR REDEEMABLE PREFERRED STOCK
---------------------------------
As of the Effective Date, each outstanding share of the Senior
Redeemable Preferred Stock will have, on the basis of present information, no
right to vote, except as required by law, and except that, in the event that
dividends payable on the Senior Redeemable Preferred Stock shall be in arrears
in an amount equal to at least six full quarterly dividends on the Senior
Redeemable Preferred Stock at the time outstanding, the holders of the
outstanding Senior Redeemable Preferred Stock shall have the exclusive right,
voting separately as a class, to elect two directors of the Issuer at the
Issuer's next annual meeting of stockholders and at each subsequent annual
meeting of stockholders, and as otherwise provided in the Certificate of
Designation filed by the Issuer with Secretary of State of Delaware with respect
to the Senior Redeemable Preferred Stock.
II. NPCI.
Each outstanding share of capital stock, par value $.0001 per share,
of the Guarantor has or will have, as applicable, on the basis of current
information, one vote with respect to all matters subject to stockholder vote.
The information set forth above is provided pursuant to the
requirements of Form T-3. However, the Guarantor is currently under the
protection of the Bankruptcy Court and the stockholder that presently holds
equity interests in the Guarantor is subject to the provisions of the Bankruptcy
Code. Under the Bankruptcy Code, all actions taken pursuant to the Plan must be
approved by order of the Bankruptcy Court and, in accordance with Section 303 of
the Delaware General Corporation Law, may then be carried out without further
action by the stockholder of the Guarantor.
III. NPPI.
Each outstanding share of capital stock, par value $.0001 per share,
of the Guarantor has or will have, as applicable, on the basis of current
information, one vote with respect to all matters subject to stockholder vote.
The information set forth above is provided pursuant to the
requirements of Form T-3. However, the Guarantor is currently under the
protection of the Bankruptcy Court and the stockholder that presently holds
equity interests in the Guarantor is subject to the provisions of the Bankruptcy
Code. Under the Bankruptcy Code, all actions taken pursuant to the Plan must be
approved by order of the Bankruptcy Court and, in accordance with Section 303 of
the Delaware General Corporation Law, may then be carried out without further
action by the stockholder of the Guarantor.
INDENTURE SECURITIES
ITEM 8. ANALYSIS OF INDENTURE PROVISIONS.
EVENTS OF DEFAULT
-----------------
An Event of Default will have occurred under the terms of the
Indenture with respect to the Notes if: (1) required payments of principal (or
premium, if any) or interest with respect to the Notes are not made when due and
payable (subject to a 10-day grace period in the case of a default upon a
payment of interest and a five Business Day (as defined in the Indenture) grace
period in the case of a default upon a payment of principal or premium); (2)
there is a default in or breach of any other agreement of the Issuer in the
Indenture (subject to a 60-day grace period after notice to the Issuer by the
Trustee or by the holders of at least 33-1/3% in outstanding principal amount of
12
<PAGE>
the Notes); (3) there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any indebtedness for money borrowed by the Issuer or any of its Restricted
Subsidiaries (as defined in the Indenture) (or the payment of which is
guaranteed by the Issuer or any of its Restricted Subsidiaries), which default
results in the acceleration of such indebtedness prior to its stated final
maturity and the principal amount of any such indebtedness, together with the
principal amount of any other such indebtedness the maturity of which has been
so accelerated, aggregates $50.0 million or more; (4) the Issuer or any of its
Restricted Subsidiaries fails to pay final judgments aggregating in excess of
$50.0 million (net of any amounts with respect to which a reputable and
creditworthy insurance Issuer has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days; (5) the
Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary
(as defined in the Indenture) commences a voluntary case under any applicable
bankruptcy law, consents to the entry of an order for relief against it in an
involuntary case under any applicable bankruptcy law, consents to the
appointment of a custodian of it or for all or substantially all of its
property, makes a general assignment for the benefit of its creditors, or
generally is not paying its debts as they become due; or (6) a court of
competent jurisdiction enters an order or decree under any bankruptcy law that
is for relief against the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary in an involuntary case, appoints a custodian of the
Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or
for all or substantially all of the property of the Issuer or any of its
Restricted Subsidiaries that is a Significant Subsidiary or orders the
liquidation of the Issuer or any of its Restricted Subsidiaries that is a
Significant Subsidiary, and the order or decree remains unstayed and in effect
for 60 consecutive days.
WITHHOLDING OF NOTICE
---------------------
If a default occurs under the Indenture with respect to the Notes,
the Trustee will give the holders of the Notes notice thereof as and to the
extent provided by the 1939 Act; provided, however, that except in the case of a
Default or Event of Default (each as defined in the Indenture) in payment of
principal of, premium, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers (as defined
in the Indenture) in good faith determines that withholding the notice is in the
interests of the holders of the Notes.
REGISTRATION AND DELIVERY OF NOTES; APPLICATION OF PROCEEDS
-----------------------------------------------------------
The aggregate principal amount of the Notes to be issued will be
determined in accordance with the Plan and will be equal to the dollar amount of
the Allowed Claims of Senior Claimants (as such terms are defined in the Plan),
expected, on the basis of present information, to be approximately $225,000,000,
subject to adjustment in the manner provided in the Plan and subject to the
issuance of such additional Notes as the Issuer may elect to issue in payment of
interest on the Notes pursuant to the Indenture. All of the Notes issued on the
Effective Date will be distributed to Senior Claimants in accordance with the
terms of the Plan. Each Note will be signed by the Issuer, authenticated by the
Trustee, registered in the security register by the Trustee or an agent
appointed by the Issuer to act as the transfer agent and registrar and delivered
to the Senior Claimants by the Issuer or an exchange or disbursing agent on
behalf of the Issuer.
RELEASE OR RELEASE AND SUBSTITUTION OF ANY PROPERTY SUBJECT TO
LIEN OF INDENTURE
-----------------
The Indenture contains the general provisions for the release of
collateral from the lien of the Collateral Agent (as defined in the Indenture)
in accordance with the 1939 Act, including delivery of the certificates and
opinions of fair value as and to the extent required by Section 314(d) of the
1939 Act. The Indenture permits, among other things, subject only to the
applicable requirements of the 1939 Act, if any, the Issuer or any subsidiary of
the Issuer, at any time and from time to time, in its sole and absolute
discretion, without any other action whatsoever, to effect and consummate, or
permit or cause to be effected and consummated, any sale (including, without
limitation, the issuance of capital stock or high-yield debt securities in a
public or private transaction), exchange, transfer, pledge or any other
disposition of the Collateral under the Indenture, in whole or in part, the
execution, delivery and performance of one or more joint venture agreements by
one or more of the License Holding Subsidiaries (as defined in the Indenture)
(or by the Issuer or any subsidiary of the Issuer that owns any capital stock in
any respective License Holding Subsidiary), the merger, consolidation or other
business combination of any nature of a License Holding Subsidiary with any
other Person, or any other similar such transaction, subject to a requirement
13
<PAGE>
that (with certain exceptions), the Issuer shall cause cash in an amount equal
to the Net Proceeds (as defined in the Indenture) from such transaction
allocable to the Collateral under the Indenture, if any, to be delivered and
pledged to the Collateral Agent upon the closing of such transaction. The
Indenture also provides that the Trustee and the Collateral Agent shall take, or
cause to be taken, any action reasonably requested by the Issuer to release any
and all liens in connection with such a transaction in accordance with the terms
and conditions of the Security Documents (as defined in the Indenture).
SATISFACTION AND DISCHARGE OF INDENTURE
---------------------------------------
The Applicants may satisfy and discharge the Indenture (subject to
certain surviving obligations) if (1) all securities previously authenticated
and delivered (with certain exceptions) have been delivered to the Trustee for
cancellation, or all such securities not so delivered have become due and
payable, or will become due and payable or will be called for redemption within
one year, and the Issuer has deposited in trust with the Trustee an amount
sufficient to pay and discharge the entire indebtedness on such securities, (2)
the Issuer has paid all other sums payable under the Indenture by the Issuer and
(3) the Issuer has delivered to the Trustee an officer's certificate and an
opinion of counsel, each stating that all conditions precedent in the Indenture
relating to such satisfaction and discharge have been satisfied.
The Issuer may effect a legal defeasance (i.e., the discharge of
certain of its obligations under the Indenture, including the indebtedness
represented by the Notes), or covenant defeasance (i.e., the release of certain
covenant obligations of the Issuer under the Indenture) with respect to the
Notes upon the satisfaction of certain conditions, including (1) the deposit by
the Issuer with the Trustee in trust for the benefit of the holders of Notes of
sufficient money, non-callable Government Securities (as defined in the
Indenture) or a combination thereof to pay the principal of and any premium and
interest on the Notes when the same shall be due, and (2) the delivery of
certain prescribed opinions of counsel, including an opinion with respect to
certain federal income tax matters.
EVIDENCE REQUIRED TO BE FURNISHED BY THE OBLIGOR
UPON THE INDENTURE SECURITIES TO THE TRUSTEE AS TO COMPLIANCE
WITH THE CONDITIONS AND COVENANTS PROVIDED FOR IN THE INDENTURE
---------------------------------------------------------------
The Issuer will deliver to the Trustee an annual officers'
certificate stating whether or not the Issuer is in default in the performance
and observance of any of the terms, provisions and conditions of the Indenture
and, if the Issuer is in default, specifying all such defaults and the nature
and status thereof.
ITEM 9. OTHER OBLIGORS.
None.
CONTENTS OF APPLICATION FOR QUALIFICATION.
THIS APPLICATION FOR QUALIFICATION COMPRISES -
(a) Pages number 1 to 17, consecutively.
(b) The statement of eligibility and qualification on Form T-1
of the trustee under the indenture to be qualified (to be
filed by amendment).
(c) The following exhibits in addition to those filed as part
of the statement of eligibility and qualification of the
trustee:
Exhibit T3A-1 Amended and Restated Certificate of
Incorporation of the Issuer, as in
effect on the date of filing hereof
(filed herewith).
Exhibit T3A-2 Form of Second Amended and Restated
Certificate of Incorporation of the
Issuer, to be filed with the Secretary
of State of the State of Delaware and to
become effective as of the Effective
Date (filed herewith).
14
<PAGE>
Exhibit T3A-3 Certificate of Incorporation of NPCI, as
in effect on the date of filing hereof
(to be filed by amendment).
Exhibit T3A-4 Certificate of Incorporation of NPPI, as
in effect on the date of filing hereof
(to be filed by amendment).
Exhibit T3B-1 Restated Bylaws of the Issuer, as in
effect on the date of filing hereof
(filed herewith).
Exhibit T3B-2 Form of Restated Bylaws of the Issuer to
become effective as of the Effective
Date (to be filed by amendment).
Exhibit T3B-3 Bylaws of NPCI, as in effect on the date
of filing hereof (to be filed by
amendment).
Exhibit T3B-4 Bylaws of NPPI, as in effect on the date
of filing hereof (to be filed by
amendment).
Exhibit T3C Indenture, to be dated as of the
Effective Date, between the Issuer and
the Trustee to be named therein, in the
form to be qualified, including an
itemized table of contents showing the
articles, sections and subsections of
the Indenture, together with the subject
matter thereof and the pages on which
they appear (filed herewith).
Exhibit T3D Not applicable.
Exhibit T3E Debtors' Joint Disclosure Statement
Pursuant to Section 1125 of the
Bankruptcy Code dated July 27, 1999
(filed herewith).
Exhibit T3F A cross reference sheet showing the
location in the Indenture of the
provisions inserted therein pursuant to
Section 310 through 318(a), inclusive,
of the 1939 Act (filed herewith).
15
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Applicants, each of NextWave Telecom Inc., NextWave Personal
Communications Inc. and NextWave Power Partners Inc., each a corporation
organized and existing under the laws of Delaware, has duly caused this
Application on Form T-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
City of Hawthorne, and State of New York, as of the 5th day of August, 1999.
(Seal) NEXTWAVE TELECOM INC.
By: /s/ Allen B. Salmasi
-------------------------------
Name: Allen B. Salmasi
Title: President and
Chief Executive Officer
Attest: /s/ Frank A. Cassou
-----------------------------------
Name: Frank A. Cassou
Title: Executive Vice President,
Corporate Development,
General Counsel and Secretary
(Seal) NEXTWAVE PERSONAL
COMMUNICATIONS INC.
By: /s/ Allen B. Salmasi
-------------------------------
Name: Allen B. Salmasi
Title: President and
Chief Executive Officer
Attest: /s/ Frank A. Cassou
-----------------------------------
Name: Frank A. Cassou
Title: Secretary
(Seal) NEXTWAVE POWER PARTNERS INC.
By: /s/ Allen B. Salmasi
-------------------------------
Name: Allen B. Salmasi
Title: President and
Chief Executive Officer
Attest: /s/ Frank A. Cassou
-----------------------------------
Name: Frank A. Cassou
Title: Secretary
16
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
Exhibit 25 Statement of Eligibility and Qualification of Trustee on
Form T-1 (to be filed by amendment).
Exhibit T3A-1 Amended and Restated Certificate of Incorporation of the
Issuer, as in effect on the date of filing hereof (filed
herewith).
Exhibit T3A-2 Form of Second Amended and Restated Certificate of
Incorporation of the Issuer, to be filed with the Secretary
of State of the State of Delaware and to become effective as
of the Effective Date (filed herewith).
Exhibit T3A-3 Certificate of Incorporation of NPCI, as in effect on the
date of filing hereof (to be filed by amendment).
Exhibit T3A-4 Certificate of Incorporation of NPPI, as in effect on the
date of filing hereof (to be filed by amendment).
Exhibit T3B-1 Restated Bylaws of the Issuer, as in effect on the date of
filing hereof (filed herewith).
Exhibit T3B-2 Form of Restated Bylaws of the Issuer to become effective as
of the Effective Date (to be filed by amendment).
Exhibit T3B-3 Bylaws of NPCI, as in effect on the date of filing hereof
(to be filed by amendment).
Exhibit T3B-4 Bylaws of NPPI, as in effect on the date of filing hereof
(to be filed by amendment).
Exhibit T3C Indenture, to be dated as of the Effective Date, between the
Issuer and the Trustee to be named therein, in the form to
be qualified, including an itemized table of contents
showing the articles, sections and subsections of the
Indenture, together with the subject matter thereof and the
pages on which they appear (filed herewith).
Exhibit T3D Not applicable.
Exhibit T3E Debtors' Joint Disclosure Statement Pursuant to Section 1125
of the Bankruptcy Code dated July 27, 1999 (filed herewith).
Exhibit T3F A cross reference sheet showing the location in the
Indenture of the provisions inserted therein pursuant to
Section 310 through 318(a), inclusive, of the 1939 Act
(filed herewith).
17
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NEXTWAVE TELECOM INC.
NextWave Telecom Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies:
1. The name of the Corporation is NextWave Telecom Inc., the same name
under which the Corporation was originally incorporated. The date the
Corporation filed its original Certificate of Incorporation with the Secretary
of State was May 16, 1995.
2. This Amended and Restated Certificate of Incorporation restates and
amends the provisions of the Restated Certificate of Incorporation of this
Corporation as heretofore in effect and was duly adopted by a majority of the
directors on July 11, 1997, in accordance with Section 242 of the General
Corporation Law of the State of Delaware. Thereafter, holders of a majority of
the outstanding shares of Series A Common Stock, voting separately as a class,
and holders of a majority of the outstanding shares of Series B Common Stock,
voting separately as a class, of said Corporation approved the Amended and
Restated Certificate of Incorporation by written consent in accordance with
Section 228 of the General Corporation Law of the State of Delaware. This
Amended and Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Section 245 of the General Corporation Law of
the State of Delaware.
3. The text of this Amended and Restated Certificate of Incorporation is
hereby restated to read as herein set forth in full:
Article I.
The name of the Corporation is NextWave Telecom Inc. (hereinafter referred
to as the "Corporation").
Article II.
The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, County of New Castle, Delaware. The name
of the registered agent of the Corporation at such address is Corporation
Service Company.
Article III.
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law
of Delaware.
Article IV.
The Corporation is authorized to issue only one class of stock, designated
"Common Stock". The total number of shares of Common Stock which the
Corporation is authorized to issue is 500,000,000 shares, having a par
value of $0.0001 per share.
HO1:\163891\01\3$GJ01!.DOC\65225.0004
<PAGE>
Article V.
The shares of Common Stock of the Corporation may be issued from time to
time in one or more series. Subject to the provisions of this Amended and
Restated Certificate of Incorporation, the Board of Directors is hereby
vested with authority to fix by resolution or resolutions, adopted by
majority vote, the designations and the powers, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including, without limitation, the
dividend rate, conversion rights, redemption price and liquidation
preference, of any series of shares of Common Stock, and to fix the number
of shares constituting any such series, and to increase or decrease the
number of shares of any such series (but not below the number of shares
thereof then outstanding). In case the number of shares of any such series
shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution or
resolutions originally fixing the number of shares of such series.
Article VI.
The Board of Directors has fixed and determined the powers, preferences,
rights, and restrictions of, and other matters relating to, the Series A
Common Stock, the Series B Common Stock and the Series C Common Stock of
the Corporation as follows:
1. Designation of Series. The first series of Common Stock is designated
Series A Common Stock and the number of shares constituting such
series shall be Sixty Million (60,000,000). The second series of
Common Stock is designated Series B Common Stock and the number of
shares constituting such series shall be Three Hundred Fifty Million
(350,000,000). The third series of Common Stock is designated Series C
Common Stock and the number of shares constituting such series shall
be One Million Nineteen Thousand Four Hundred Forty Four (1,019,444).
The balance of the authorized Common Stock shall initially be
undesignated.
2. Voting.
Series A Common Stock. The holders of shares of Series A Common Stock
shall have the right to vote for all purposes provided by law,
provided, however, that the number of directors which the holders of
shares of Series A Common Stock shall be entitled to elect shall be
limited as more fully described in Article VII hereof, and provided
further, that the holders of Series A Common Stock shall have the
right to vote, as a separate class, on the matters set forth in
Article VIII hereof. With respect to matters on which the holders of
Series A Common Stock may vote, each holder of Series A Common Stock
shall be entitled to one vote for each share thereof held.
Series B Common Stock. The holders of shares of Series B Common Stock
shall have no right to vote, except as required by law, provided,
however, that the holders of Series B Common Stock voting with the
holders of Series C Common
2
<PAGE>
Stock shall be entitled to elect a limitednumber of directors as more
fully described in Article VII hereof, and provided further, that the
holders of Series B Common Stock voting with the holders of Series C
Common Stock shall have the right to vote, as a separate class on the
matters set forth in Article VIII hereof. Notwithstanding the
foregoing and the limitations set forth in Articles VII and VIII
hereof, upon the Termination Date, as defined below in Section 5, each
holder of Series B Common Stock shall be entitled to one (1) vote per
share upon any and all matters submitted to the stockholders of the
Corporation for a vote.
Series C Common Stock. The holders of shares of Series C Common Stock
shall have no right to vote, except as required by law, provided
however, that the holders of Series C Common Stock voting with the
holders of Series B Common Stock shall be entitled to elect a limited
number of directors as more fully described in Article VII hereof, and
provided further, that the holders of Series C Common Stock voting
with the holders of Series B Common Stock shall have the right to
vote, as a separate class, on the matters set forth in Article VIII
hereof. Notwithstanding the foregoing and the limitations set forth in
Article VII and VIII hereof, upon the Termination Date, as defined
below in Section 5, each holder of Series C Common Stock shall be
entitled to one (1) vote per share upon any and all matters submitted
to the stockholders of the Corporation for a vote.
3. Liquidation Preference. Except to the extent otherwise required by
applicable regulations of the Federal Communications Commission (the
"FCC"), as codified or otherwise adopted in decisions or orders of the
FCC from time to time, in the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the
holders of shares of Series B Common Stock shall be entitled to
receive out of funds legally available therefor, prior and in
preference to any distribution of any of the assets of the Corporation
to the holders of shares of Series A Common Stock and the holders of
shares of Series C Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (i) the price originally paid
to the Corporation by such holders (as such amount may be adjusted to
reflect recapitalizations and splits of such Series B Common Stock)
for each outstanding share of Series B Common Stock and (ii) an amount
equal to declared but unpaid dividends on such shares (collectively,
the "Series B Preference"). If, upon the occurrence of such
event, the assets and funds thus distributedamong all
the holders of Series B Common Stock shall be insufficient to permit
the payment to such holders of the full Series B Preference, then the
entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of Series
B Common Stock.
Upon payment in full of the Series B Preference, if assets remain in
the Corporation, the holders of Series C Common Stock shall be
entitled to receive out of funds legally available therefor an amount
per share equal to the sum of (i) the price originally paid to the
Corporation by such holders (as such amount may be adjusted to reflect
recapitalizations and splits of such Series C Common Stock) for each
outstanding share of Series C Common Stock and (ii) an amount equal to
3
<PAGE>
declared but unpaid dividends on such shares (collectively, the
"Series C Preference"). If the assets and funds available for
distribution among all the holders of Series C Common Stock shall be
insufficient to permit the payment to such holders of the full Series
C Preference, then the assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the
holders of Series C Common Stock.
Upon payment in full of the Series B Preference and the Series C
Preference, if assets remain in the Corporation, the holders of Series
A Common Stock shall be entitled to receive out of funds legally
available therefor an amount per share equal to the sum of (i) the
price originally paid to the Corporation by such holders (as such
amount may be adjusted to reflect recapitalizations and splits of such
Series A Common Stock) for each outstanding share of Series A Common
Stock and (ii) an amount equal to declared but unpaid dividends on
such shares (collectively, the "Series A Preference"). If the assets
and funds available for distribution among all the holders of Series A
Common Stock shall be insufficient to permit the payment to such
holders of the full Series A Preference, then the assets and funds of
the Corporation legally available for distribution shall be
distributed ratably among the holders of Series A Common Stock.
Thereafter, the assets and funds which remain in the Corporation, if
any, shall be distributed ratably on a per share basis among the
holders of shares of Series A Common Stock, Series B Common Stock, and
Series C Common Stock. In the event of any liquidation, dissolution or
winding up of the Corporation, no distribution shall be made to
holders of other shares of capital stock of the Corporation.
Neither the consolidation, merger or other business combination of the
Corporation with or into any other person or persons nor the sale,
lease, exchange or conveyance of less than all or substantially all of
the property, assets or business of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for
purposes of this Article VI, Section 3.
4. Dividend Rights. Except to the extent otherwise required by applicable
regulations of the FCC, as codified, or otherwise adopted in decisions
or orders of the FCC from time to time, as and when dividends are
declared and paid by the Corporation, whether in cash, property or
securities of the Corporation, the holders of Series A Common Stock
and the holders of Series B Common Stock shall be entitled to
participate in such dividends ratably on a per share basis in
preference to the holders of shares of Series C Common Stock and any
other shares of capital stock of the Corporation.
5. Conversion. The shares of Series A Common Stock and the shares of
Series C Common Stock shall be convertible into shares of Series B
Common Stock at the times and in the manner set forth below:
4
<PAGE>
a. Special Definitions. For purposes of this Section 5 only, the
following definitions shall apply:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued (or deemed to be issued pursuant to Section 5.f) by the
Corporation, other than shares of Series B Common Stock issued or issuable
or deemed to be issued:
1) upon conversion of shares of Series A Common Stock, including
the issuance of Control Group Warrants, as defined below, and upon the
exercise of Control Group Warrants;
2) upon conversion of shares of Series C Common Stock;
3) as a result of an adjustment made pursuant to subsection g
hereof;
4) as a result of an adjustment made pursuant to subsection h
hereof; or
5) as a dividend or distribution on shares of Series A Common
Stock or Series B Common Stock for which an adjustment is made pursuant to
subsection g hereof.
"Control Group" shall mean the holders of Series A Common Stock all of
whom are required, under applicable FCC rules and regulations, to
beneficially own the Required Percentage Interest, as defined below, and to
control at least fifty and one-tenth percent (50.1%) of the voting power of
the Corporation.
"Control Group Warrant" shall mean a warrant to purchase one share of
Series B Common Stock at the Fair Market Price as of the date of the
Control Group Warrant issuance, which warrant shall be exercisable until
the Termination Date.
"Convertible Securities" shall mean any evidence of indebtedness,
shares or other securities convertible into or exchangeable for (whether
subject to the occurrence of a condition or otherwise) shares of Common
Stock.
"Dilutive Issuance" shall mean an issuance of Additional Shares of
Common Stock with issuance, in the absence of an automatic conversion of
shares of Series A Common Stock or issuance of Control Group Warrants
pursuant to Section 5(b) hereof, would cause the aggregate equity interest
in the Corporation of the Control Group or the Qualifying Principals to
fall below the Required Percentage Interest, as defined below.
"Fair Market Price" shall mean the Market Price of the Series B Common
Stock as of the date at which the relevant Dilutive Issuance occurs.
5
<PAGE>
"License Grant Date" shall mean the date when the FCC grants the last
of the C-Block or F-Block licenses to the Corporation or a Subsidiary of
the Corporation. For purposes of this definition, C-Block license means a
license awarded by the FCC in the FCC's C-Block auction restricted to
entities meeting certain financial and other criteria, and F-Block license
means a license awarded by the FCC in the FCC's F-Block auction restricted
to entities meeting certain financial and other criteria.
"Market Price" shall mean (a) the closing sales price of the Series B
Common Stock on the Nasdaq National Market or such other national
securities exchange on which the Series B Common Stock is then listed or
admitted for trading, or (b) if the Series B Common Stock is not then
listed or traded on any exchange or the Nasdaq National Market, the average
of the closing bid and ask prices per share on the Nasdaq Market, or (c) or
if such quotation is not available, the fair market value thereof as
determined by the Board of Directors of the Corporation acting in good
faith.
"Minimum Ownership Requirements" shall mean the Three Thousand (3,000)
shares of Series A Common Stock which the Control Group collectively shall
maintain in order to comply with the regulations of the FCC until the
Termination Date, as defined below.
"Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire (whether subject to the occurrence of a
condition or otherwise) either shares of Common Stock or Convertible
Securities.
"Qualified Public Offering" shall mean a firm commitment underwritten
public offering of the Series B Common Stock in which the aggregate price
paid by the public is at least $20 Million and the number of shares issued
represents at least five percent (5%) of the then outstanding equity
interests in the Corporation, on a fully diluted basis.
"Qualifying Principals" shall mean those members of the Control Group
designated as such to the FCC from time to time.
"Required Percentage Interest" shall mean a twenty-five percent (25%)
aggregate equity interest in the Corporation, on a fully-diluted basis,
required hereunder to be held by the Control Group for a period of three
(3) years from the License Grant Date, of which the Qualifying Principals
are required to hold a fifteen percent (15%) aggregate equity interest, and
thereafter at all times prior to the Termination Date shall mean a ten
percent (10%) aggregate equity interest in the Corporation, on a fully
diluted basis, required hereunder to be held by the Qualifying Principals.
"Series A Conversion Ratio" shall mean the ratio at which shares of
Series A Common Stock shall convert (i) as provided in Sections 5.b.(1) and
5.c below, into shares of Series B Common Stock and Control Group Warrants
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which shall be initially at a ratio of one share of Series B Common Stock
and one Control Group Warrant to one share of Series A Common Stock and
(ii) as provided in Section 5.b.(2), into shares of Series B Common Stock,
which shall be initially at a ratio of one share of Series B Common Stock
to one share of Series A Common Stock.
"Series C Conversion Ratio" shall mean the ratio at which shares of
Series C Common Stock shall convert into shares of Series B Common Stock
which shall be initially at a ratio of one share of Series B Common Stock
to one share of Series C Common Stock.
"Subsidiary" shall mean NextWave Personal Communications, Inc., a
Delaware corporation and/or any other corporation which will hold one or
more C-Block or F-Block licenses and the majority of the capital stock of
which is owned directly or indirectly by the Corporation.
"Termination Date" shall mean ten years after the License Grant Date.
b. Automatic Conversion of Series A Common Stock; Automatic Issuance
of Control Group Warrants.
(1) In the event of a Dilutive Issuance, the Corporation shall convert
at the Series A Conversion Ratio for no consideration a number of shares of
Series A Common Stock held by the Control Group into shares of Series B
Common Stock and Control Group Warrants such that (i) prior to the third
anniversary of the License Grant Date, the number of shares of Series A
Common Stock held by the Control Group when added to the number of shares
of Series B Common Stock and Control Group Warrants held by the Control
Group, in the aggregate, equals the Required Percentage Interest and (ii)
thereafter until the Termination Date, the number of shares of Series A
Common Stock held by the Qualifying Principals when added to the number of
shares of Series B Common Stock and Control Group Warrants held by the
Qualifying Principals, in the aggregate equals the Required Percentage
Interest. Such conversions shall be effected on a pro-rata basis among all
holders of shares of Series A Common Stock. Upon conversion of shares of
Series A Common Stock pursuant to this Section 5.b.(1), any accrued but
unpaid dividends with respect to the shares of Series A Common Stock so
converted shall be due and payable in full. Notwithstanding the foregoing
provisions of this Section 5.b.(1), there shall be no conversion prior to
the Termination Date of the shares of Series A Common Stock constituting
the Minimum Ownership Requirement. In the event of a Dilutive Issuance
subsequent to the conversion of all shares (except the shares comprising
the Minimum Ownership Requirement) of Series A Common Stock held by the
Control Group as set forth above, prior to the third anniversary of the
License Grant Date, the Control Group shall be issued, and thereafter until
the Termination Date, the Qualifying Principals shall be issued, on a
pro-rata basis (based upon their ownership of Series A Common Stock) and at
no additional
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consideration, Control Group Warrants in an amount sufficient to maintain
the Required Percentage Interest.
(2) Upon the Termination Date, except to the extent otherwise required
by applicable regulations of the FCC, as codified or otherwise adopted in
decisions or orders of the FCC from time to time, all shares of Series A
Common Stock, including the shares constituting the Minimum Ownership
Requirement, shall be converted at the applicable Series A Conversion Ratio
into fully-paid and nonassessable shares of Series B Common Stock. The
Series A Conversion Ratio shall be subject to adjustment as set forth
below. Upon conversion of the Series A Common Stock pursuant to this
Section 5.b.(2), any declared but unpaid dividends with respect to the
shares of Series A Common Stock so converted shall be due and payable in
full.
c. Voluntary Conversion of Series A Common Stock. From and after the
closing of a Qualified Public Offering and upon the approval of a majority
in interest of the holders of the Series A Common Stock, all or part of the
shares of Series A Common Stock shall, subject to the Minimum Ownership
Requirement, convert at the applicable Series A Conversion Ratio, on a
pro-rata basis, at no consideration, into fully paid and nonassessable
shares of Series B Common Stock and Control Group Warrants. Upon any such
conversion, any declared but unpaid dividends with respect to the shares of
Series A Common Stock so converted shall be due and payable in full.
d. Conversion of Series C Common Stock. Any holder of shares of Series C
Common Stock may convert at the Series C Conversion Ratio at no
consideration all or part of its shares of Series C Common Stock into
fully-paid and non-assessable shares of Series B Common Stock (i) from and
after the first anniversary of the License Grant Date, (ii) immediately
prior to a change in control, whether by consolidation, merger or the sale
or issuance of securities of the Corporation, which will result in the
Corporation's shareholders immediately prior to such transaction not
holding (by virtue of such shares or securities issued solely with respect
thereto) at least fifty percent (50%) of the voting power of the surviving
or continuing entity or (iii) immediately prior to the closing of the sale,
lease, exchange or conveyance of all or substantially all of the property,
assets or business of the Corporation. Immediately prior to a Qualified
Public Offering, any and all unconverted shares of Series C Common Stock
shall convert, at the Series C Conversion Ratio, into shares of Series B
Common Stock. Upon any conversion pursuant to this paragraph (d), any
accrued but unpaid dividends with respect to the shares of Series C Common
Stock so converted shall be due and payable in full.
e. Mechanics of Conversion.
(1) Upon the conversion of shares of Series A Common Stock as set
forth in Sections 5.b. and 5.c., above, the Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder, or to the nominee
or nominees of such
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holder, a certificate or certificates for the number of shares of Series B
Common Stock rounded to the nearest whole share and, if applicable, a
Control Group Warrant to which such holder shall be entitled. Upon such
conversion, the person(s) entitled to receive the shares of Series B Common
Stock shall be treated for all purposes as the record holder or holders of
such shares of Series B Common Stock as of such date. No fractional shares
of Common Stock shall be issued upon conversion of shares of Series A
Common Stock.
(2) Upon conversion of shares of Series C Common Stock as set forth in
Section 5.d. above, the Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of
Series B Common Stock to which such holder shall be entitled, rounded to
the nearest whole share. Upon such conversion, the person(s) entitled to
receive the shares of Series B Common Stock shall be treated for all
purposes as the record holder or holders of such shares of Series B Common
Stock as of such date. No fractional shares of Common Stock shall be issued
upon conversion of shares of Series C Common Stock.
f. Options and Convertible Securities. In the event the Corporation at any
time or from time to time after the License Grant Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares
(as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefore, the maximum number of shares
issuable upon the conversion or exchange of such Convertible Securities,
shall be deemed to be issued as of the time of such issue or, in case such
a record date shall have been fixed, as of the close of business on such
record date, provided that in any such case in which shares of Series B
Common Stock are deemed to be issued:
(1) no further shares of Series B Common Stock shall be deemed to be
issued upon the subsequent issuance of shares of Series B Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities; and
(2) if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the number of
shares of Series B Common Stock issuable upon the exercise, conversion or
exchange thereof, the calculation of the number of additional shares of
Series B Common Stock to be deemed to be issued to the holders of Series B
Common Stock hereunder shall, upon any such increase becoming effective, be
recomputed to reflect such increase.
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g. Adjustments for Subdivisions, Dividends, Combinations or Consolidations
affecting the Series A Conversion Ratio.
(1) In the event the outstanding shares of Series A Common Stock or
Series B Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Series A
Common Stock and Series B Common Stock, respectively, the Series A
Conversion Ratio in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased or decreased as
appropriate.
(2) In the event the Corporation shall declare or pay any dividend on
the Series A Common Stock payable in shares of Series A Common Stock or on
the Series B Common Stock payable in shares of Series B Common Stock or in
the event the outstanding shares of Series B Common Stock shall be
subdivided, by reclassification or otherwise than by payment of a dividend
in Series A Common Stock or Series B Common Stock, respectively, into a
greater number of shares of Series A Common Stock or Series B Common Stock,
respectively, the Series A Conversion Ratio in effect immediately prior to
such dividend or subdivision shall be proportionately decreased or
increased as appropriate, 1) in the case of any such dividend immediately
after the close of business on the record date for the determination of
holders of any class of securities entitled to receive such dividend, or 2)
in the case of any such subdivision, at the close of business on the date
immediately prior to the date upon which such corporate action becomes
effective. If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the adjustment
previously made in the Series A Conversion Ratio which became effective on
such record date shall be canceled as of the close of business on such
record date, and thereafter the Series A Conversion Ratio shall be adjusted
as of the time of actual payment of such dividend.
h. Adjustments for Subdivisions, Dividends, Combinations or
Consolidations affecting the Series C Conversion Ratio.
(1) In the event the outstanding shares of Series C Common Stock or
Series B Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Series C
Common Stock or Series B Common Stock, respectively, the Series C
Conversion Ratio in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased or decreased as
appropriate.
(2) In the event the Corporation shall declare or pay any dividend on
the Series C Common Stock payable in shares of Series C Common Stock or on
the Series B Common Stock payable in shares of Series B Common Stock or in
the event the outstanding shares of Series B Common Stock shall be
subdivided, by reclassification or otherwise than by payment of a dividend
in Series C
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Common Stock or Series B Common Stock, respectively, into a greater number
of shares of Series C Common Stock or Series B Common Stock, respectively,
the Series C Conversion Ratio in effect immediately prior to such dividend
or subdivision shall be proportionately decreased or increased as
appropriate, 1) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of
any class of securities entitled to receive such dividend, or 2) in the
case of any such subdivision, at the close of business on the date
immediately prior to the date upon which such corporate action becomes
effective. If such record date shall have been fixed and such dividend
shall not have been fully-paid on the date fixed therefor, the adjustment
previously made in the Series C Conversion Ratio which became effective on
such record date shall be canceled as of the close of business on such
record date, and thereafter the Series C Conversion Ratio shall be adjusted
as of the time of actual payment of such dividend.
i. Adequate Capitalization. The Corporation shall from time to time in
accordance with the laws of the State of Delaware increase the authorized
amount of its Series B Common Stock if at any time the number of shares of
Series B Common Stock remaining unissued and available for issuance shall
not be sufficient to permit full conversion of the shares of Series A
Common Stock and Series C Common Stock.
j. Notices of Record Date. In the event that this Corporation shall propose
at any time:
(1) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(2) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series
or other rights;
(3) to effect any reclassification or recapitalization of its Common
Stock outstanding involving a change in the common Stock; or
(4) to merge or consolidate with or into any other corporation, or
sell, lease or convey all or substantially all of its property or business,
or to liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall send
to the holders of the Common Stock:
(a) at least 10 days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall
be entitled thereto) or for determining rights to vote in respect of the
matters referred to in subsection j.(3) and j.(4), above, if any; and
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(b) in the case of the matters referred to in subsection j.(3) and
j.(4) above, at least 10 days' prior written notice of the date when the
same shall take place (and specifying, if practicable, or estimating the
date on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon the
occurrence of such event).
Each such written notice shall be given via facsimile or by first
class mail, postage prepaid, addressed to the holders of Common Stock at
the address for each such holder as shown on the books of this Corporation.
6. No Fractional Shares. No fraction of a shares of Series B Common Stock
shall be issued hereunder and fractional interests shall be paid in
cash on the basis of the adjusted purchase price.
7. Notices. Any notice to the Corporation provided for herein shall be
addressed to it in care of its Secretary, at its principal executive
offices in San Diego, California, and any notice to a shareholder
shall be addressed to its address as shown in the records of the
Corporation's transfer agent or as otherwise on file with the
Corporation, or to such other address as either may designate to the
other in writing. Any notice shall be deemed to be duly given if and
when enclosed in a properly sealed envelope and addressed as stated
above and deposited, postage prepaid, in a Post Office or branch Post
Office regularly maintained by the United State Government. In lieu of
giving notice by mail as aforesaid, any written notice under this
Agreement may be given to a shareholder by personal delivery.
Article VII.
As long as shares of Series A Common Stock remain outstanding, the
election of the Directors of the Corporation shall be as follows:
Election of Directors by Holders of Series A Common Stock. The
holders of Series A Common Stock shall have the right, voting
separately as a class, to elect a number of Directors equal to
the minimum number necessary to constitute a majority of the
total number of Directors. In the event there are no holders of
Series B Common Stock, the holders of Series A Common Stock shall
have the right to elect all of the Directors of the Corporation.
Election of Directors by Holders of Series B Common Stock and
Series C Common Stock. The holders of Series B Common Stock and
the holders of Series C Common Stock have the right, voting
together as a class, to elect a number of Directors equal to the
total number of Directors less the number of Directors to be
elected by the holders of Series A Common Stock, provided,
however, that the number of Directors to be elected by the
holders of Series B Common Stock and Series C Common Stock shall
always constitute a minority of the total number of Directors.
A quorum for a meeting of the Board of Directors of the Corporation
shall consist of a majority of the total number of Directors,
provided, however, that in no event shall a
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quorum exist unless those Directors elected by the holders of Series A
Common Stock constitute a majority of the Directors present at such
meeting. Resolutions of the Board of Directors of the Corporation
shall be adopted by a majority of the Directors voting.
A vacancy in the Board of Directors created by the departure of a
Director elected by the holders of Series A Common Stock shall be
filled by the other Directors elected by the holders of Series A
Common Stock, voting separately, and a vacancy in the Board of
Directors created by the departure of a Director elected by the
holders of Series B Common Stock and Series C Common Stock shall be
filled by the other Directors elected by the holders of Series B
Common Stock and Series C Common Stock. Vacancies created by an
increase in the total number of Directors shall be filled in such a
manner as to ensure that the number of Directors elected by the
holders of Series A Common Stock constitutes a majority of the total
number of Directors.
Article VIII.
At all times prior to the Termination Date, unless this Article VIII
is nullified or modified, in whole or in part, as set forth herein,
the Corporation shall not directly or indirectly take or engage in any
of the following actions without the prior approval of the holders of
a majority of the shares of (i) Series A Common Stock, voting
separately as a class and (ii) Series B Common Stock and Series C
Common Stock, voting together as a class:
1. Amendments. An amendment to the Certificate of Incorporation or the
By-laws which would adversely affect the rights of the
holders of Series B Common Stock or Series C Common Stock conferred
under the Certificate of Incorporation or the By-laws, provided,
however, that, except as otherwise provided by law,
no amendment to the Certificate of Incorporation or the By-laws shall
first require the approval of the holders of Series B Common Stock or
Series C Common Stock if such amendment is necessary to comply with
any rules, regulations or orders of the FCC, or otherwise deemed
necessary by a majority of the Board of Directors of this Corporation
to comply with Article IX hereof.
2. Assets. A sale, lease, mortgage, or other disposal or encumbrance
involving all or substantially all of the Corporation's assets.
3. Merger. A merger or other business combination involving the
Corporation which will result in the Corporation's shareholders
immediately prior to such transaction not holding (by virtue of such
shares on securities issued solely with respect thereto) at least
fifty percent (50%) of the voting power of the surviving or continuing
entity.
4. Dissolution. The liquidation, dissolution or winding up of the
Corporation.
5. Issuances. An issuance by the Corporation of any capital stock or debt
or rights to obtain capital stock or debt (including, without
limitation, issuances pursuant to mergers and other business
combinations) with class voting rights equal or superior to those of
the Series A Common Stock or Series B Common Stock.
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6. Dividends. The declaration of any dividends other than (a) a dividend
payable solely in shares of capital stock or in options to purchase
shares of capital stock, or (b) a regular periodic dividend (whether
on Common Stock or preferred stock, if any) payable in cash and
declared out of the earned surplus of this Corporation.
7. Issuance of Shares of Series C Common Stock. The issuance of any
shares of Series C Common Stock other than shares of Series C Common
Stock which the Corporation has issued or has committed to issue on or
prior to the License Grant Date, as defined in Article VI, hereof.
8. Employee Benefit Plans. The issuance or deemed issuance of Common
Stock to officers or employees of, or consultants to, the Corporation
pursuant to a stock grant, option plan, purchase plan or other stock
incentive program (collectively, the "Plans") which issuance or deemed
issuance would cause the number of shares issued or reserved for
issuance under such Plans to exceed in the aggregate 12.5% of the
equity of the Corporation, determined on a fully diluted basis or
10,000,000 shares, whichever is greater.
9. Reorganizations/Recapitalizations. Any capital reorganization of the
Corporation, any reclassification or recapitalization of the capital
stock of the Corporation or any transfer of all or substantially all
the assets of the Corporation to any other corporation.
10. Public Offerings. Effect a public offering of any class of stock of
the Corporation other than shares of Series B Common Stock.
Notwithstanding the foregoing, any and all special approval rights,
preferences or designations granted to the holders of Series B Common Stock
and Series C Common Stock pursuant to paragraphs 5, 7, 8 and 10 of this
Article VIII shall become null and void and unenforceable immediately prior
to a Qualified Public Offering, as defined in Section 5 of Article VI
hereof. In addition, any special approval right, preference or designation
granted to the holders of Series B Common Stock and Series C Common Stock
pursuant to this Article VIII shall become null, void and unenforceable to
the extent that it would prevent the Corporation, as determined by a
majority of the Board of Directors of the Corporation, from qualifying as a
"Designated Entity" and "Small Business" under Part 24 of the Rules of the
FCC applicable to broadband Personal Communications Services.
The Board of Directors of the Corporation may prescribe additional special
approval or other rights of the Series B Common Stock and/or Series C
Common Stock through a resolution passed by a majority of such Board
pursuant to Section 151 of the Delaware General Corporation Law, provided
however, that in authorizing such additional rights, if any, the Board of
Directors shall comply with the provisions of Article VII hereof.
Article IX.
In recognition of the fact that one or more Subsidiaries of the Corporation
has been or will be granted one or more Personal Communications Services
licenses, as determined
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by the FCC during certain auctions administered by the FCC and is required
to comply with the foreign ownership restrictions of Section 310(b) of the
Communications Act of 1934, as amended, the Corporation may not issue
shares to a foreign party, if such issuance will cause the foreign
ownership of the capital stock of the Corporation to exceed, in the
aggregate, twenty five percent (25%), as determined by the rules and
regulations of the FCC, except to the extent permitted by an order or
decision of the FCC addressing the amount of foreign ownership of the
Corporation or other C-block or F-block licensees generally. Any transfer
of Common Stock of the Corporation by any party shall be void and of no
force and effect to the extent that such transfer will cause the
Corporation to violate the foreign ownership restrictions. If any issuance
is made which subsequently is determined to be in violation of the
foregoing sentence, such issuance shall be void and of no force and effect
to the extent of such violation, and any and all consideration previously
paid to the Corporation in respect of such voided issuance shall be
returned immediately upon such determination.
In addition, in recognition of the fact that one or more Subsidiaries of
the Corporation has been or will be granted one or more C-block or F-block
Personal Communications Services licenses and must maintain its Designated
Entity and Small Business eligibility until the Termination Date in order
to maintain favorable bidding and financing preferences, any transfer of
Common Stock of the Corporation by any party shall be void and of no force
and effect to the extent that such transfer will prevent the Corporation
from qualifying as a "Designated Entity" and "Small Business" under Part 24
of the Rules of the FCC applicable to broadband Personal Communications
Services, including the 25% limitation on non-attributable equity contained
in Section 24.709(b) of the Rules of the FCC or any successor provision
thereto.
Article X.
Elections of directors need not be by written ballot except and to the
extent provided in the Bylaws of the Corporation.
Article XI.
The Corporation shall indemnify to the fullest extent permitted by the
General Corporation Law of Delaware any person who has been made, or is
threatened to be made, a party to an action, suit, or proceeding, whether
civil criminal, administrative, investigative, or otherwise (including an
action, suit or proceeding by or in the right of the Corporation), by
reason of the fact that the person is or was a director or officer of the
Corporation, or a fiduciary within the meaning of the Employee Retirement
Income Security Act of 1974 with respect to an employee benefit plan of the
Corporation, or serves or served at the request of the Corporation as a
director, or as an officer, or as a fiduciary of an employee benefit plan,
of another corporation, partnership, joint venture, trust or other
enterprise. In addition, subject to the terms of the Corporation's By-laws,
the Corporation shall pay for or reimburse any expenses incurred by such
persons who are parties to such proceedings, in advance of the final
disposition of such proceedings, to the full extent permitted by the
General Corporation Law of Delaware.
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Article XII.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a
director; provided that this Article shall not eliminate the liability of a
director for any act or omission for which such elimination of liability is
not permitted under the General Corporation Law of Delaware. No amendment
to that Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any
act or omission which occurs prior to the effective date of such amendment.
Article XIII.
The Board of Directors shall have the power to make, alter, or repeal the
Bylaws of the Corporation, subject to the right of the stockholders of the
Corporation to alter or repeal any bylaw made by the Board of Directors.
IN WITNESS WHEREOF, said NextWave Telecom Inc. has caused this
certificate to be signed by Frank A. Casson, its Senior Vice President,
this 16th day of July, 1997.
By: /s/ Frank A.Cassou .
---------------------------------
Its: Senior Vice President
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
NEXTWAVE TELECOM INC.
NEXTWAVE TELECOM INC. (the "Corporation"), a corporation duly
incorporated by the filing of its original Certificate of Incorporation (the
"Original Certificate of Incorporation") with the Secretary of State of the
State of Delaware on May 16, 1995 , as heretofore amended, desiring to amend and
restate said Original Certificate of Incorporation, as heretofore amended, and
such amended and restated Certificate of Incorporation having been duly adopted
in accordance with Sections 245 and 303 of the General Corporation Law of the
State of Delaware, hereby certifies as follows:
1. The name of the Corporation is NextWave Telecom Inc., the same name
under which the Corporation was originally incorporated. The Original
Certificate of Incorporation was amended by that certain Restated Certificate of
Incorporation filed on __________, and by that certain Amended and Restated
Certificate of Incorporation filed on August 5, 1997.
2. This Second Amended and Restated Certificate of Incorporation amends and
restates the Original Certificate of Incorporation, as amended to date, and has
been duly adopted in accordance with Sections 242, 245 and 303 of the General
Corporation Law of the State of Delaware, as amended (the "DGCL"), pursuant to
the authority granted to the Corporation under Section 303 of the DGCL to put
into effect and carry out the Debtors' Joint Plan of Reorganization under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") for the
Corporation, et al. (the "Plan"), as confirmed on ___________ __, 1999 by order
of the United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"). Provision for the making of this Second Amended and
Restated Certificate of Incorporation is contained in the order of the
Bankruptcy Court having jurisdiction under the Bankruptcy Code for the
reorganization of the Corporation.
3. The text of the Amended and Restated Certificate of Incorporation is
hereby restated to read as herein set forth in full:
Article I.
The name of the Corporation is NextWave Telecom Inc. (hereinafter referred
to as the "Corporation").
Article II.
The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, County of New Castle, Delaware. The name
of the registered agent of the Corporation at such address is Corporation
Service Company.
WGM_TrailerC:\data\EDGAR\t3-a2.rtf
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Article III.
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the DGCL.
Article IV.
1. Authorized Shares. The total number of shares of all classes of
capital stock which the Corporation shall have the authority to issue
is 811,019,444 shares, consisting of:
a. 60,000,000 shares of Series A Common Stock, par value $0.0001 per
share (the "Series A Common Stock");
b. 700,000,000 shares of Series B Common Stock, par value $0.0001
per share (the "Series B Common Stock");
c. 1,019,444 shares of Series C Common Stock, par value $0.0001 per
share (the "Series C Common Stock", and together with the Series
A Common Stock and, the Series B Common Stock, the "Common
Stock"); and
d. 50,000,000 shares of undesignated Preferred Stock, par value
$0.01 per share (the "Undesignated Preferred Stock"; the
Undesignated Preferred Stock and the Common Stock collectively
referred to herein as the "Capital Stock").
2. Designations, Preferences, etc. The designations, preferences, powers,
qualifications, and special or relative rights, or privileges of the
capital stock of the Corporation shall be as set forth in Article V
and Article IX below.
3. Relative Rights of Preferred Stock and Common Stock. All preferences,
voting powers, relative, participating, optional or other special
rights and privileges, and qualifications, limitations, or
restrictions of the Common Stock are expressly made subject and
subordinate to those that may be fixed with respect to any shares of
the Preferred Stock unless otherwise provided by the Board of
Directors.
Article V.
The Board of Directors of the Corporation (the "Board of Directors") has
fixed and determined the powers, preferences, rights, and restrictions of,
and other matters relating to, the Corporation's Common Stock as follows:
1. Voting.
Series A Common Stock. The holders of shares of Series A Common Stock
shall have the right to vote for all purposes provided by law,
provided, however, that the number of directors which the holders of
shares of Series A Common Stock shall be entitled to elect shall be
limited as more fully described in Article VI
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hereof, and provided further, that the holders of Series A Common
Stock shall have the right to vote, as a separate class, on the
matters set forth in Article VII hereof. With respect to matters on
which the holders of Series A Common Stock may vote, each holder of
Series A Common Stock shall be entitled to one vote for each share
thereof held.
Series B Common Stock. The holders of shares of Series B Common Stock
shall have no right to vote, except as required by law, provided,
however, that the holders of Series B Common Stock voting with the
holders of Series C Common Stock shall be entitled to elect a limited
number of directors as more fully described in Article VI hereof, and
provided further, that the holders of Series B Common Stock voting
with the holders of Series C Common Stock shall have the right to
vote, as a separate class on the matters set forth in Article VII
hereof. Notwithstanding the foregoing and the limitations set forth in
Articles VI and VII hereof, upon the Termination Date, as defined
below in Section 5, each holder of Series B Common Stock shall be
entitled to one (1) vote per share upon any and all matters submitted
to the stockholders of the Corporation for a vote.
Series C Common Stock. The holders of shares of Series C Common Stock
shall have no right to vote, except as required by law, provided,
however, that the holders of Series C Common Stock voting with the
holders of Series B Common Stock shall be entitled to elect a limited
number of directors as more fully described in Article VI hereof, and
provided further, that the holders of Series C Common Stock voting
with the holders of Series B Common Stock shall have the right to
vote, as a separate class, on the matters set forth in Article VII
hereof. Notwithstanding the foregoing and the limitations set forth in
Article VI and VII hereof, upon the Termination Date, as defined below
in Section 4, each holder of Series C Common Stock shall be entitled
to one (1) vote per share upon any and all matters submitted to the
stockholders of the Corporation for a vote.
2. Liquidation Preference. Except to the extent otherwise required by
applicable regulations of the Federal Communications Commission (the
"FCC"), as codified or otherwise adopted in decisions or orders of the
FCC from time to time, in the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, after
distribution in full of the preferential amounts, if any, to be
distributed to the holders of shares of the Preferred Stock, the
holders of Common Stock shall receive such amounts as set forth below:
The holders of shares of Series B Common Stock shall be entitled to
receive out of funds legally available therefor, prior and in
preference to any distribution of any of the assets of the Corporation
to the holders of shares of Series A Common Stock and the holders of
shares of Series C Common Stock by reason of their ownership thereof,
an amount per share equal to the sum of (i) the price originally paid
to the Corporation by such holders (as such amount may be adjusted to
reflect recapitalizations and splits of such Series B Common Stock)
for each outstanding share of Series B Common Stock and (ii) an amount
equal to declared but unpaid dividends on such shares (collectively,
the "Series B Preference").
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If, upon the occurrence of such event, the assets and funds thus
distributed among all the holders of Series B Common Stock shall be
insufficient to permit the payment to such holders of the full Series
B Preference, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among
the holders of Series B Common Stock.
Upon payment in full of the Series B Preference, if assets remain in
the Corporation, the holders of Series C Common Stock shall be
entitled to receive out of funds legally available therefor an amount
per share equal to the sum of (i) the price originally paid to the
Corporation by such holders (as such amount may be adjusted to reflect
recapitalizations and splits of such Series C Common Stock) for each
outstanding share of Series C Common Stock and (ii) an amount equal to
declared but unpaid dividends on such shares (collectively, the
"Series C Preference"). If the assets and funds available for
distribution among all the holders of Series C Common Stock shall be
insufficient to permit the payment to such holders of the full Series
C Preference, then the assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the
holders of Series C Common Stock.
Upon payment in full of the Series B Preference and the Series C
Preference, if assets remain in the Corporation, the holders of Series
A Common Stock shall be entitled to receive out of funds legally
available therefor an amount per share equal to the sum of (i) the
price originally paid to the Corporation by such holders (as such
amount may be adjusted to reflect recapitalizations and splits of such
Series A Common Stock) for each outstanding share of Series A Common
Stock and (ii) an amount equal to declared but unpaid dividends on
such shares (collectively, the "Series A Preference"). If the assets
and funds available for distribution among all the holders of Series A
Common Stock shall be insufficient to permit the payment to such
holders of the full Series A Preference, then the assets and funds of
the Corporation legally available for distribution shall be
distributed ratably among the holders of Series A Common Stock.
Thereafter, the assets and funds which remain in the Corporation, if
any, shall be distributed ratably on a per share basis among the
holders of shares of Series A Common Stock, Series B Common Stock, and
Series C Common Stock. In the event of any liquidation, dissolution or
winding up of the Corporation, no distribution shall be made to
holders of other shares of capital stock of the Corporation.
Neither the consolidation, merger or other business combination of the
Corporation with or into any other person or persons nor the sale,
lease, exchange or conveyance of less than all or substantially all of
the property, assets or business of the Corporation shall be deemed to
be a liquidation, dissolution or winding up of the Corporation for
purposes of this Article V, Section 2.
3. Dividend Rights. Except to the extent otherwise required by applicable
regulations of the FCC, as codified, or otherwise adopted in decisions
or orders of
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the FCC from time to time, as and when dividends are declared and paid
by the Corporation, whether in cash, property or securities of the
Corporation, the holders of Series A Common Stock and the holders of
Series B Common Stock shall be entitled to participate in such
dividends ratably on a per share basis in preference to the holders of
shares of Series C Common Stock and any other shares of common stock
of the Corporation.
4. Conversion. The shares of Series A Common Stock and the shares of
Series C Common Stock shall be convertible into shares of Series B
Common Stock at the times and in the manner set forth below:
a. Special Definitions. For purposes of this Section 4 only, the
following definitions shall apply:
"Additional Shares of Capital Stock" shall mean all shares of
Common Stock and Preferred Stock (collectively, "Capital Stock")
issued (or deemed to be issued pursuant to Section 4.f) by the
Corporation, other than shares of Series B Common Stock issued or
issuable or deemed to be issued:
1) upon conversion of shares of Series A Common Stock,
including the issuance of Control Group Warrants, as defined below,
and upon the exercise of Control Group Warrants;
2) upon conversion of shares of Series C Common Stock;
3) as a result of an adjustment made pursuant to subsection
g hereof;
4) as a result of an adjustment made pursuant to subsection
h hereof; or
5) as a dividend or distribution on shares of Series A
Common Stock or Series B Common Stock for which an adjustment is made
pursuant to subsection g hereof.
"Control Group" shall mean the holders of Series A Common Stock
all of whom are required, under applicable FCC rules and regulations,
to beneficially own the Required Percentage Interest, as defined
below, and to control at least fifty and one-tenth percent (50.1%) of
the voting power of the Corporation.
"Control Group Warrant" shall mean a warrant to purchase one
share of Series B Common Stock at the Fair Market Price as of the date
of the Control Group Warrant issuance, which warrant shall be
exercisable until the Termination Date.
"Convertible Securities" shall mean any evidence of indebtedness,
shares or other securities convertible into or exchangeable for
(whether subject to the occurrence of a condition or otherwise) shares
of Common Stock.
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"Dilutive Issuance" shall mean an issuance of Additional Shares
of Capital Stock, which issuance, in the absence of an automatic
conversion of shares of Series A Common Stock or issuance of Control
Group Warrants pursuant to Section 4.b hereof, would cause the
aggregate equity interest in the Corporation of the Control Group or
the Qualifying Principals to fall below the Required Percentage
Interest, as defined below.
"Fair Market Price" shall mean the Market Price of the Series B
Common Stock as of the date at which the relevant Dilutive Issuance
occurs.
"License Grant Date" shall mean the date when the FCC grants the
last of the C-Block or F-Block licenses to the Corporation or a
Subsidiary of the Corporation. For purposes of this definition,
C-Block license means a license awarded by the FCC in the FCC's
C-Block auction restricted to entities meeting certain financial and
other criteria, and F-Block license means a license awarded by the FCC
in the FCC's F-Block auction restricted to entities meeting certain
financial and other criteria.
"Market Price" shall mean (a) the closing sales price of the
Series B Common Stock on the Nasdaq National Market or such other
national securities exchange on which the Series B Common Stock is
then listed or admitted for trading, or (b) if the Series B Common
Stock is not then listed or traded on any exchange or the Nasdaq
National Market, the average of the closing bid and ask prices per
share on the Nasdaq market, or (c) or if such quotation is not
available, the fair market value thereof as determined by the Board of
Directors of the Corporation acting in good faith.
"Minimum Ownership Requirements" shall mean the three thousand
(3,000) shares of Series A Common Stock which the Control Group
collectively shall maintain in order to comply with the regulations of
the FCC until the Termination Date, as defined below.
"Options" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire (whether subject to the occurrence
of a condition or otherwise) either shares of Common Stock or
Convertible Securities.
"Qualified Public Offering" shall mean a firm commitment
underwritten public offering of the Series B Common Stock in which the
aggregate price paid by the public is at least $20 Million and the
number of shares issued represents at least five percent (5%) of the
then outstanding equity interests in the Corporation, on a fully
diluted basis.
"Qualifying Principals" shall mean those members of the Control
Group designated as such to the FCC from time to time.
"Required Percentage Interest" shall mean a twenty-five percent
(25%) aggregate equity interest in the Corporation, on a fully-diluted
basis, required hereunder to be held by the Control Group for a period
of three (3) years from the
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License Grant Date, of which the Qualifying Principals are required to
hold a fifteen percent (15%) aggregate equity interest, and thereafter
at all times prior to the Termination Date shall mean a ten percent
(10%) aggregate equity interest in the Corporation, on a fully diluted
basis, required hereunder to be held by the Qualifying Principals.
"Series A Conversion Ratio" shall mean the ratio at which shares
of Series A Common Stock shall convert (i) as provided in Sections
4.b.(1) and 4.c below, into shares of Series B Common Stock and
Control Group Warrants which shall be initially at a ratio of one
share of Series B Common Stock and one Control Group Warrant to one
share of Series A Common Stock and (ii) as provided in Section
4.b.(2), into shares of Series B Common Stock, which shall be
initially at a ratio of one share of Series B Common Stock to one
share of Series A Common Stock.
"Series C Conversion Ratio" shall mean the ratio at which shares
of Series C Common Stock shall convert into shares of Series B Common
Stock which shall be initially at a ratio of one share of Series B
Common Stock to one share of Series C Common Stock.
"Subsidiary" shall mean NextWave Personal Communications, Inc., a
Delaware corporation and/or any other corporation which will hold one
or more C-Block or F-Block licenses and the majority of the capital
stock of which is owned directly or indirectly by the Corporation.
"Termination Date" shall mean ten years after the License Grant
Date.
b. Automatic Conversion of Series A Common Stock; Automatic Issuance
of Control Group Warrants.
(1) In the event of a Dilutive Issuance, the Corporation shall
convert at the Series A Conversion Ratio for no consideration a number
of shares of Series A Common Stock held by the Control Group into
shares of Series B Common Stock and Control Group Warrants such that
(i) prior to the third anniversary of the License Grant Date, the
number of shares of Series A Common Stock held by the Control Group
when added to the number of shares of Series B Common Stock and
Control Group Warrants held by the Control Group, in the aggregate,
equals the Required Percentage Interest and (ii) thereafter until the
Termination Date, the number of shares of Series A Common Stock held
by the Qualifying Principals when added to the number of shares of
Series B Common Stock and Control Group Warrants held by the
Qualifying Principals, in the aggregate equals the Required Percentage
Interest. Such conversions shall be effected on a pro rata basis among
all holders of shares of Series A Common Stock. Upon conversion of
shares of Series A Common Stock pursuant to this Section 4.b.(1), any
accrued but unpaid dividends with respect to the shares of Series A
Common Stock so converted shall be due and payable in full.
Notwithstanding the foregoing provisions of this Section 4.b.(1),
there shall be no conversion prior to the
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Termination Date of the shares of Series A Common Stock constituting
the Minimum Ownership Requirement. In the event of a Dilutive Issuance
subsequent to the conversion of all shares (except the shares
comprising the Minimum Ownership Requirement) of Series A Common Stock
held by the Control Group as set forth above, prior to the third
anniversary of the License Grant Date, the Control Group shall be
issued, and thereafter until the Termination Date, the Qualifying
Principals shall be issued, on a pro rata basis (based upon their
ownership of Series A Common Stock) and at no additional
consideration, Control Group Warrants in an amount sufficient to
maintain the Required Percentage Interest.
(2) Upon the Termination Date, except to the extent otherwise
required by applicable regulations of the FCC, as codified or
otherwise adopted in decisions or orders of the FCC from time to time,
all shares of Series A Common Stock, including the shares constituting
the Minimum Ownership Requirement, shall be converted at the
applicable Series A Conversion Ratio into fully paid and
non-assessable shares of Series B Common Stock. The Series A
Conversion Ratio shall be subject to adjustment as set forth below.
Upon conversion of the Series A Common Stock pursuant to this Section
4.b.(2), any declared but unpaid dividends with respect to the shares
of Series A Common Stock so converted shall be due
and payable in full.
c. Voluntary Conversion of Series A Common Stock. From and after the
closing of a Qualified Public Offering and upon the approval of a
majority in interest of the holders of the Series A Common Stock,
all or part of the shares of Series A Common Stock shall, subject
to the Minimum Ownership Requirement, convert at the applicable
Series A Conversion Ratio, on a pro rata basis, at no
consideration, into fully paid and non-assessable shares of
Series B Common Stock and Control Group Warrants. Upon any such
conversion, any declared but unpaid dividends with respect to the
shares of Series A Common Stock so converted shall be due and
payable in full.
d. Conversion of Series C Common Stock. Any holder of shares of
Series C Common Stock may convert at the Series C Conversion
Ratio, at no consideration, all or part of its shares of Series C
Common Stock into fully paid and non-assessable shares of Series
B Common Stock (i) from and after the first anniversary of the
License Grant Date, (ii) immediately prior to a change in
control, whether by consolidation, merger or the sale or issuance
of securities of the Corporation, which will result in the
Corporation's shareholders immediately prior to such transaction
not holding (by virtue of such shares or securities issued solely
with respect thereto) at least fifty percent (50%) of the voting
power of the surviving or continuing entity or (iii) immediately
prior to the closing of the sale, lease, exchange or conveyance
of all or substantially all of the property, assets or business
of the Corporation. Immediately prior to a Qualified Public
Offering, any and all unconverted shares of Series C Common Stock
shall
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convert, at the Series C Conversion Ratio, into shares of Series
B Common Stock. Upon any conversion pursuant to this paragraph
(d), any accrued but unpaid dividends with respect to the shares
of Series C Common Stock so converted shall be due and payable in
full.
e. Mechanics of Conversion.
(1) Upon the conversion of shares of Series A Common Stock as set
forth in Sections 4.b and 4.c, above, the Corporation shall, as soon
as practicable thereafter, issue and deliver to such holder, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Series B Common Stock rounded to the nearest
whole share and, if applicable, a Control Group Warrant to which such
holder shall be entitled. Upon such conversion, the person(s) entitled
to receive the shares of Series B Common Stock shall be treated for
all purposes as the record holder or holders of such shares of Series
B Common Stock as of such date. No fractional shares of Series B
Common Stock shall be issued upon conversion of shares of Series A
Common Stock.
(2) Upon conversion of shares of Series C Common Stock as set
forth in Section 4.d above, the Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder, or to the
nominee or nominees of such holder, a certificate or certificates for
the number of shares of Series B Common Stock to which such holder
shall be entitled, rounded to the nearest whole share. Upon such
conversion, the person(s) entitled to receive the shares of Series B
Common Stock shall be treated for all purposes as the record holder or
holders of such shares of Series B Common Stock as of such date. No
fractional shares of Series B Common Stock shall be issued upon
conversion of shares of Series C Common Stock.
f. Options and Convertible Securities. In the event the Corporation
at any time or from time to time after the License Grant Date
shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in
the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefore, the
maximum number of shares issuable upon the conversion or exchange
of such Convertible Securities, shall be deemed to be issued as
of the time of such issue or, in case such a record date shall
have been fixed, as of the close of business on such record date,
provided that in any such case in which shares of Series B Common
Stock are deemed to be issued:
(1) no further shares of Series B Common Stock shall be deemed to
be issued upon the subsequent issuance of shares of Series B Common
Stock upon
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the exercise of such Options or conversion or exchange of such
Convertible Securities; and
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the number of shares of Series B Common Stock issuable upon the
exercise, conversion or exchange thereof, the calculation of the
number of additional shares of Series B Common Stock to be deemed to
be issued to the holders of Series B Common Stock hereunder shall,
upon any such increase becoming effective, be recomputed by the Board
of Directors to reflect such increase.
(3) Upon the expiration of the right to convert, exchange or
exercise any such Options or Convertible Securities, the issuance of
which resulted in an increase in the number of shares of Series B
Common Stock, if any such Options or Convertible Securities shall not
have been converted, exercised or exchanged, the number of shares of
Series B Common Stock shall be decreased as appropriate by the Board
of Directors.
g. Adjustments for Subdivisions, Dividends, Combinations or
Consolidations affecting the Series A Conversion Ratio.
(1) In the event the outstanding shares of Series A Common Stock
or Series B Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Series A Common Stock and Series B Common Stock, respectively, the
Series A Conversion Ratio in effect immediately prior to such
combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased or decreased as appropriate by the Board of Directors.
(2) In the event the Corporation shall declare or pay any
dividend on the Series A Common Stock payable in shares of Series A
Common Stock or on the Series B Common Stock payable in shares of
Series B Common Stock or on the Preferred Stock payable in Common
Stock, Options or Convertible Securities or in the event the
outstanding shares of Series B Common Stock shall be subdivided, by
reclassification or otherwise than by payment of a dividend in Series
A Common Stock or Series B Common Stock, respectively, into a greater
number of shares of Series A Common Stock or Series B Common Stock,
respectively, the Series A Conversion Ratio in effect immediately
prior to such dividend or subdivision shall be proportionately
decreased or increased as appropriate by the Board of Directors, (1)
in the case of any such dividend immediately after the close of
business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, (2) in the case
of any such subdivision, at the close of business on the date
immediately prior to the date upon which such corporate action becomes
effective. If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the
adjustment previously made in the Series A Conversion Ratio which
became effective on such record date shall be canceled as of the close
of
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business on such record date, and thereafter the Series A Conversion
Ratio shall be adjusted as of the time of actual payment of such
dividend.
h. Adjustments for Subdivisions, Dividends, Combinations or
Consolidations affecting the Series C Conversion Ratio.
(1) In the event the outstanding shares of Series C Common Stock
or Series B Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of
Series C Common Stock or Series B Common Stock, respectively, the
Series C Conversion Ratio in effect immediately prior to such
combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be proportionately
increased or decreased as appropriate by the Board of Directors.
(2) In the event the Corporation shall declare or pay any
dividend on the Series C Common Stock payable in shares of Series C
Common Stock or on the Series B Common Stock payable in shares of
Series B Common Stock or on the Preferred Stock payable in Common
Stock, Options or Convertible Securities or in the event the
outstanding shares of Series B Common Stock shall be subdivided, by
reclassification or otherwise than by payment of a dividend in Series
C Common Stock or Series B Common Stock, respectively, into a greater
number of shares of Series C Common Stock or Series B Common Stock,
respectively, the Series C Conversion Ratio in effect immediately
prior to such dividend or subdivision shall be proportionately
decreased or increased as appropriate by the Board of Directors, (1)
in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or (2) in the
case of any such subdivision, at the close of business on the date
immediately prior to the date upon which such corporate action becomes
effective. If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the
adjustment previously made in the Series C Conversion Ratio which
became effective on such record date shall be canceled as of the close
of business on such record date, and thereafter the Series C
Conversion Ratio shall be adjusted as of the time of actual payment of
such dividend.
i. Adequate Capitalization. The Corporation shall from time to time
in accordance with the laws of the State of Delaware increase the
authorized amount of its Series B Common Stock if at any time the
number of shares of Series B Common Stock remaining unissued and
available for issuance shall not be sufficient to permit full
conversion of the shares of Series A Common Stock, Series C
Common Stock and, if applicable, Preferred Stock.
j. Notices of Record Date. In the event that this Corporation shall
propose at any time:
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(1) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(2) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any
class or series or other rights;
(3) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(4) to merge or consolidate with or into any other corporation,
or sell, lease or convey all or substantially all of its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Corporation shall
send to the holders of the Common Stock:
(a) at least 10 days' prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock
shall be entitled thereto) or for determining rights to vote in
respect of the matters referred to in subsection j.(3) and j.(4),
above, if any; and
(b) in the case of the matters referred to in subsection j.(3)
and j.(4) above, at least 10 days' prior written notice of the date
when the same shall take place (and specifying, if practicable, or
estimating the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be given via facsimile or by first
class mail, postage prepaid, addressed to the holders of Common Stock
at the address for each such holder as shown on the books of this
Corporation.
5. No Fractional Shares. No fractional shares of Series B Common
Stock shall be issued hereunder and fractional interests shall be
paid in cash on the basis of the adjusted purchase price.
6. Notices. Any notice to the Corporation provided for herein shall
be addressed to it in care of its Secretary, 3 Skyline Drive,
Hawthorne, New York 10532, and any notice to a shareholder shall
be addressed to its address as shown in the records of the
Corporation's transfer agent or as otherwise on file with the
Corporation, or to such other address as either may designate to
the other in writing. Any notice shall be deemed to be duly given
if and when enclosed in a properly sealed envelope and addressed
as stated above and deposited, postage prepaid, in a Post Office
or branch Post Office regularly maintained by the United State
Government. In lieu of giving notice by mail as aforesaid, any
written notice under this Agreement may be given to a shareholder
by personal delivery.
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Article VI.
1. As long as shares of Series A Common Stock remain outstanding,
the election of the Directors of the Corporation shall be as
follows:
a. Election of Directors by Holders of Series A Common Stock.
The holders of Series A Common Stock shall have the right,
voting separately as a class, to elect a number of Directors
equal to the minimum number necessary to constitute a
majority of the total number of Directors (the "Series A
Directors"). In the event there are no holders of Series B
Common Stock, Series C Common Stock or, if applicable (as
provided below), Preferred Stock, the holders of Series A
Common Stock shall have the right to elect all of the
Directors of the Corporation.
b. Election of Directors by Holders of Series B Common Stock
and Series C Common Stock. The holders of Series B Common
Stock and the holders of Series C Common Stock (and any
other class or series of Preferred Stock to the extent
provided in certificates of designation filed by the
Corporation with the Secretary of State of Delaware) shall
have the right, voting together as a class, to elect a
number of Directors equal to the total number of Directors
less the number of Directors to be elected by the holders of
Series A Common Stock, provided, -------- however, that the
number of Directors to be elected by the holders of Series B
Common Stock and Series C ------- Common Stock (and any
other class or series of Preferred Stock to the extent
provided in certificates of designation filed by the
Corporation with the Secretary of State of Delaware) shall
always constitute a minority of the total number of
Directors (the "Series B Directors").
2. A quorum for a meeting of the Board of Directors of the
Corporation shall consist of a majority of the total number of
Directors, provided, however, that in no event shall a quorum
exist unless those Directors elected by the holders of Series A
Common Stock constitute a majority of the Directors present at
such meeting. Resolutions of the Board of Directors of the
Corporation shall be adopted by a majority of the Directors
voting.
3. A vacancy in the Board of Directors created by the departure of a
Director elected by the holders of Series A Common Stock shall be
filled by the other Directors elected by the holders of Series A
Common Stock, voting separately, and a vacancy in the Board of
Directors created by the departure of a Director elected by the
holders of Series B Common Stock, Series C Common Stock and, if
applicable, Preferred Stock shall be filled by the other
Directors elected by the holders of Series B Common Stock and
Series C Common Stock. Vacancies created by an increase in the
total number of Directors shall be filled in such a manner as to
ensure that the number of Directors elected by the holders of
Series A Common Stock constitutes a majority of the total number
of Directors.
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4. The Board of Directors shall consist of not less than [three nor
more than nine], with the exact number of Directors to be
determined from time to time solely by resolution adopted by the
affirmative vote of a majority of the entire Board of Directors.
The Directors shall be divided into three classes as determined
by the Board of Directors, designated Class I, Class II and Class
III. Each class shall consist, as nearly as may be possible, of
one-third of the total number of Directors constituting the
entire Board of Directors. To the extent practicable, each class
of Directors shall consist of a pro rata share of the Series A
Directors and the Series B Directors as determined by the Board
of Directors. Except as otherwise provided in the Certificate of
Incorporation, each Director shall serve for a term ending on the
date of the [second] annual meeting of stockholders next
following the annual meeting at which such Director was elected.
Notwithstanding the foregoing, each Director shall hold office
until such Director's successor shall have been duly elected and
qualified or until such Director's earlier death, resignation or
removal.
5. Elections of Directors need not be by written ballot except and
to the extent provided in the Bylaws of the Corporation.
Article VII.
At all times prior to the Termination Date, unless this Article VII is
nullified or modified, in whole or in part, as set forth herein, the
Corporation shall not directly or indirectly take or engage in any of
the following actions without the prior approval of the holders of a
majority of the shares of (i) Series A Common Stock, voting separately
as a class and (ii) Series B Common Stock and Series C Common Stock,
voting together as a class:
1. Amendments. An amendment to the Certificate of Incorporation or
the Bylaws which would adversely affect the rights of the holders
of Series B Common Stock or Series C Common Stock conferred under
the Certificate of Incorporation or the Bylaws, provided,
however, that, except as otherwise provided by law, no amendment
to the Certificate of Incorporation or the Bylaws shall first
require the approval of the holders of Series B Common Stock or
Series C Common Stock if such amendment is necessary to comply
with any rules, regulations or orders of the FCC, or otherwise
deemed necessary by a majority of the Board of Directors of this
Corporation to comply with Article VIII hereof.
2. Assets. A sale, lease, mortgage, or other disposal or encumbrance
involving all or substantially all of the Corporation's assets.
3. Merger. A merger or other business combination involving the
Corporation which will result in the Corporation's shareholders
immediately prior to such transaction not holding (by virtue of
such shares on securities issued solely with respect thereto) at
least fifty percent (50%) of the voting power of the surviving or
continuing entity.
4. Dissolution. The liquidation, dissolution or winding up of the
Corporation.
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5. Issuances. An issuance by the Corporation of any Capital Stock or
debt or rights to obtain Capital Stock or debt (including,
without limitation, issuances pursuant to mergers and other
business combinations) with class voting rights equal or superior
to those of the Series A Common Stock or Series B Common Stock.
6. Dividends. The declaration of any dividends other than (a) a
dividend payable solely in shares of capital stock or in options
to purchase shares of Capital Stock, or (b) a regular periodic
dividend (whether on Common Stock or, if any, Preferred Stock)
payable in cash and declared out of the earned surplus of this
Corporation.
7. Issuance of Shares of Series C Common Stock. The issuance of any
shares of Series C Common Stock other than shares of Series C
Common Stock which the Corporation has issued or has committed to
issue on or prior to the License Grant Date, as defined in
Article V, hereof.
8. Employee Benefit Plans. The issuance or deemed issuance of Common
Stock to officers or employees of, or consultants to, the
Corporation pursuant to a stock grant, option plan, purchase plan
or other stock incentive program (collectively, the "Plans")
which issuance or deemed issuance would cause the number of
shares issued or reserved for issuance under such Plans to exceed
in the aggregate 12.5% of the equity of the Corporation,
determined on a fully diluted basis or 10,000,000 shares,
whichever is greater.
9. Reorganizations/Recapitalizations. Any capital reorganization of
the Corporation, any reclassification or recapitalization of the
Capital Stock of the Corporation or any transfer of all or
substantially all the assets of the Corporation to any other
corporation.
10. Public Offerings. Effect a public offering of any class of stock
of the Corporation other than shares of Series B Common Stock.
Notwithstanding the foregoing, any and all special approval rights,
preferences or designations granted to the holders of Series B Common
Stock and Series C Common Stock pursuant to paragraphs 5, 7, 8 and 10
of this Article VII shall become null and void and unenforceable
immediately prior to [upon consummation of] a Qualified Public
Offering, as defined in Section 4 of Article V hereof. In addition,
any special approval rights, preference or designation granted to the
holders of Series B Common Stock and Series C Common Stock pursuant to
this Article VII shall become null, void and unenforceable to the
extent that it would prevent the Corporation, as determined by a
majority of the Board of Directors of the Corporation, from qualifying
as a "Designated Entity" and "Small Business" under Part 24 of the
Rules of the FCC applicable to broadband Personal Communications
Services.
The Board of Directors may prescribe additional special approval or
other rights of the Series B Common Stock and, or Series C Common
Stock through a resolution passed by a majority of such Board pursuant
to Section 151 of the DGCL, provided, however, that in authorizing
such additional rights, if any, the Board of Directors shall comply
15
<PAGE>
with the provisions of Article VI hereof. Notwithstanding the
provisions of this Article VII, the Board of Directors may also
prescribe special approval or other rights to the holders of the
Preferred Stock pursuant to a certificate of designation filed with
the Secretary of State of the State of Delaware.
Article VIII.
In recognition of the fact that one or more Subsidiaries of the
Corporation has been or will be granted one or more Personal
Communications Services licenses, as determined by the FCC during
certain auctions administered by the FCC and is required to comply
with the foreign ownership restrictions of Section 310(b) of the
Communications Act of 1934, as amended, the Corporation may not issue
shares to a foreign party, if such issuance will cause the foreign
ownership of the capital stock of the Corporation to exceed, in the
aggregate, twenty five percent (25%), as determined by the rules and
regulations of the FCC, except to the extent permitted by an order or
decision of the FCC addressing the amount of foreign ownership of the
Corporation or other C-block or F-block licensees generally. Any
transfer of Capital Stock of the Corporation by any party shall be
void and of no force and effect to the extent that such transfer will
cause the Corporation to violate the foreign ownership restrictions.
If any issuance is made which subsequently is determined to be in
violation of the foregoing sentence, such issuance shall be void and
of no force and effect to the extent of such violation, and any and
all consideration previously paid to the Corporation in respect of
such voided issuance shall be returned immediately upon such
determination.
In addition, in recognition of the fact that one or more Subsidiaries
of the Corporation has been or will be granted one or more C-block or
F-block Personal Communications Services licenses and must maintain
its Designated Entity and Small Business eligibility until the
Termination Date in order to maintain favorable bidding and financing
preferences, any transfer of Capital Stock of the Corporation by any
party shall be void and of no force and effect to the extent that such
transfer will prevent the Corporation from qualifying as a "Designated
Entity" and "Small Business" under Part 24 of the Rules of the FCC
applicable to broadband Personal Communications Services, including
the 25% limitation on non-attributable equity contained in Section
24.709(b) of the Rules of the FCC or any successor provision thereto.
Article IX.
The shares of Undesignated Preferred Stock of the Corporation may be
issued from time to time in one or more series as may be determined by
the Board of Directors. Subject to the provisions of this Second
Amended and Restated Certificate of Incorporation, the Board of
Directors is hereby authorized to fix by resolution or resolutions,
adopted by majority vote, the designations and the powers, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including,
without limitation, the dividend rate, conversion rights, redemption
price and liquidation preference, of any series of shares of
Undesignated Preferred Stock, and to fix the number of shares
constituting any such series, and to increase or decrease the number
of shares of any such series (but not below the number of shares
thereof then
16
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outstanding). In case the number of shares of any such series shall be
so decreased, the shares constituting such decrease shall resume the
status which they had prior to the adoption of the resolution or
resolutions originally fixing the number of shares of such series.
Article X.
The Corporation shall indemnify to the fullest extent permitted by the
DGCL any person who has been made, or is threatened to be made, a
party to an action, suit, or proceeding, whether civil criminal,
administrative, investigative, or otherwise (including an action, suit
or proceeding by or in the right of the Corporation), by reason of the
fact that the person is or was a director or officer of the
Corporation, or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to an employee
benefit plan of the Corporation, or serves or served at the request of
the Corporation as a director, or as an officer, or as a fiduciary of
an employee benefit plan, of another corporation, partnership, joint
venture, trust or other enterprise. In addition, subject to the terms
of the Corporation's Bylaws, the Corporation shall pay for or
reimburse any expenses incurred by such persons who are parties to
such proceedings, in advance of the final disposition of such
proceedings, to the full extent permitted by the DGCL.
Article XI.
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a
director, provided that this Article shall not eliminate the liability
of a director for any act or omission for which such elimination of
liability is not permitted under the DGCL. No amendment to that Act
that further limits the acts or omissions for which elimination of
liability is permitted shall affect the liability of a director for
any act or omission which occurs prior to the effective date of such
amendment.
Article XII.
The Board of Directors shall have the power to make, alter, or repeal
the Bylaws of the Corporation, subject to the right of the holders of
Capital Stock of the Corporation, expressly conferred herein or under
the DGCL, to alter or repeal any bylaw made by the Board of Directors.
Article XIII.
Notwithstanding any other provision contained herein, the Corporation,
as a Debtor (as defined in the Plan) under the Plan shall not issue
nonvoting equity securities in connection with the Plan and shall
comply, to the extent applicable, with Section 1123(a)(6) of the
Bankruptcy Code. After the Effective Time, this Article XIII may be
amended or repealed by the affirmative vote of a majority of the
outstanding stock entitled to vote thereon in accordance with Section
242 of the DGCL.
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IN WITNESS WHEREOF, said NextWave Telecom Inc. has caused this Second
Amended and Restated Certificate of Incorporation to be signed by Frank A.
Cassou, its General Counsel, this ____ day of _____, 1999.
By:
-----------------------
Its: General Counsel
18
RESTATED BYLAWS
of
NEXTWAVE TELECOM INC.
HO1:\163895\01\3$GN01!.DOC\65225.0004
<PAGE>
TABLE OF CONTENTS
Page
Article I OFFICES.............................................1
Section 1. Registered Office...................................1
Section 2. Other Offices.......................................1
Article II MEETINGS OF STOCKHOLDERS............................1
Section 1. Time and Place of Meetings..........................1
Section 2. Annual Meeting......................................1
Section 3. Special Meetings....................................1
Section 4. Notice of Meetings..................................1
Section 5. Stockholder List....................................2
Section 6. Quorum..............................................2
Section 7. Proxies.............................................2
Section 8. Voting..............................................2
Section 9. Voting of Certain Shares............................3
Section 10. Action Without Meeting..............................3
Section 11. Treasury Stock......................................3
Section 12 Notice of Stockholder Business and Nominations......3
Section 13. Record Date for Action by Written Consent...........5
Section 14. Inspectors of Written Consent.......................6
Section 15. Effectiveness of Written Consent....................6
Article III DIRECTORS...........................................6
Section 1. Powers..............................................6
Section 2. Number and Term of Office...........................7
Section 3. Resignations and Vacancies..........................7
Section 4. Removal.............................................7
Section 5. Dividends and Reserves..............................8
Section 6. Regular Meetings....................................8
Section 7. Special Meetings....................................8
Section 8. Quorum..............................................8
Section 9. Written Action......................................8
Section 10 Presumption of Assent...............................8
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<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 11 Participation in Meetings by Conference Telephone...8
Section 12 Committees..........................................9
Section 13 Fees and Compensation of Directors..................9
Section 14. Rules...............................................9
Article IV NOTICES.............................................9
Section 1. Generally..........................................10
Section 2. Waivers............................................10
Article V OFFICERS...........................................10
Section 1. Offices and Official Positions.....................10
Section 2. Compensation.......................................10
Section 3. Succession.........................................10
Section 4. Authority and Duties...............................10
Section 5. Chairman of the Board..............................10
Section 6. President/Chief Executive Officer..................11
Section 7. Vice Presidents....................................11
Section 8. Secretary and Assistant............................11
Section 9. Treasurer and Assistant Treasurers.................12
Section 10. Control............................................12
Section 11. General Counsel....................................12
Article VI STOCKS.............................................13
Section 1. Certificates.......................................13
Section 2. Transfer...........................................13
Section 3. Lost, Stolen or Destroyed Certificates.............13
Section 4. Record Date........................................13
Article VII INDEMNIFICATION....................................14
Section 1 Indemnification....................................14
Article VIII GENERAL PROVISIONS.................................15
Section 1. Fiscal Year........................................15
Section 2. Corporate Seal.....................................15
Section 3. Reliance upon Books, Reports and Records...........15
ii
<PAGE>
TABLE OF CONTENTS
(continued)
Page
Section 4. Time Periods.......................................15
Section 5. Dividends..........................................15
Article IX CONTRACTS, LOANS, CHECKS AND DEPOSITS..............16
Section 1. Contracts and Other Instruments....................16
Section 2. Loans..............................................16
Section 3. Checks, Drafts, etc................................16
Section 4. Deposits...........................................16
Article X AMENDMENTS.........................................16
Section 1. Amendments.........................................16
iii
<PAGE>
RESTATED BYLAWS
of
NEXTWAVE TELECOM INC.
ARTICLE I
OFFICES
Section 1. REGISTERED OFFICE. The registered office of NextWave
Telecom Inc., a Delaware corporation (the "Corporation") in the State of
Delaware shall be located in the City of Wilmington, County of New Castle, State
of Delaware, and the name of its registered agent is Corporation Service
Company.
Section 2. OTHER OFFICES. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. TIME AND PLACE OF MEETINGS. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at any place within or without the State of Delaware, as may be authorized
by the Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. ANNUAL MEETING. Annual meetings of stockholders
shall be held on the date as shall be designated by the Board of Directors at
which meeting the stockholders shall elect by plurality vote by the directors to
succeed those whose terms expire and shall transact such other business as may
properly be brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by Certificate of Incorporation, may be called by the Board of
Directors, the Chairman of the Board or the President, and shall be called by
the President or the Secretary at the requests in writing of stockholders owning
a majority in the amount of entire capital stock of the Corporation issued and
outstanding and entitled to vote. Such request shall be sent to the President
and the Secretary and shall state the purpose or purposes of the proposed
meeting. Any special meeting of the stockholders shall be held at such place, on
such date and at such time as the Chairman of the Board, the President or the
Secretary, as the case may be, shall fix.
Section 4. NOTICE OF MEETINGS. Written notice of every meeting of the
stockholders, stating the place, date and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be given not less than ten (10) nor
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more than sixty (60) days before the date of the meeting to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or by law.
When a meeting is adjourned to another place, date or time, written notice need
not be given of the adjourned meeting if the place, date and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, written notice
of the place, date and time of the adjourned meeting shall be given in
conformity herewith. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 5. STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting, arranged in alphabetical order, and showing the address of
each such stockholder and the number of shares registered in the name of each
such stockholder. Such list shall be open to examination of any stockholder of
the Corporation during ordinary business hours, for any purpose germane to the
meeting, for a period of at least ten (10) days prior to the meeting, either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of meeting during the whole time thereof, and subject to the
inspection for any purpose germane to the meeting of any stockholder who may be
present.
Section 6. QUORUM. The holders of at least a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by law
or by the Certificate of Incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
Section 7. PROXIES. At every meeting of the stockholders, each
stockholder having the right to vote thereat shall be entitled to vote in person
or by proxy. Such proxy shall be appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three (3) years
prior to such meeting, unless such proxy provides for a longer period; and it
shall be filed with the Secretary of the Corporation before, or at the time of,
the meeting.
Section 8. VOTING. Except as otherwise provided by statute or by the
Certificate of Incorporation, each stockholder shall be entitled at every
meeting of the stockholders to one vote for each share of stock having voting
power standing in the name of such stockholder on the books of the Corporation
on the record date for the meeting and such votes may be cast either in person
or by written proxy. Every proxy must be executed in writing by the stockholder
or his or her duly authorized attorney. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. When a quorum
is present at any meeting, the vote of the holders of a majority of the stock
which has voting power present in person or represented by proxy and which has
actually voted shall decide any question properly brought before such meeting,
unless the question is one upon which by express provision of law,
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<PAGE>
the Certificate of Incorporation or these Bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
Section 9. VOTING OF CERTAIN SHARES. Shares standing in the name of
another corporation, domestic or foreign, and entitled to vote may be voted by
such officer, agent, or proxy as the bylaws of such corporation may prescribe
or, in the absence of such provision, as the Board of Directors of such
corporation may determine. Shares standing in the name of a deceased person, a
minor or an incompetent and entitled to vote may be voted by his administrator,
executor, guardian or conservator, as the case may be, either in person or by
proxy. Shares standing in the name of a trustee, receiver or pledgee and
entitled to vote maybe voted by such trustee, receiver or pledgee either in
person or by proxy as provided by Delaware law.
Section 10. ACTION WITHOUT MEETING. Unless otherwise provided in the
Certificate of Incorporation or these Bylaws, any action required to be taken at
any annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the actions so taken, shall be signed by the holders
of outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing. Such
consent shall be filed with the Minutes of Proceedings of the stockholders and
shall have the same force and effect as the unanimous vote of stockholders.
Section 11. TREASURY STOCK. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held by this
Corporation, shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares for the purpose of
determining whether a quorum is present Nothing in this section shall be
consumed to limit the right of this Corporation to vote shares of its own stock
held by it in a fiduciary capacity.
Section 12. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of notice provided for in this Bylaw, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw.
3
<PAGE>
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this Bylaw, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day an which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 14a-11 thereunder (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made, and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph
(A)(2) of this Bylaw to the contrary, in the event that the number of Directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement by the Corporation naming all of the nominees
for director or specifying the size of the increased Board of Directors at least
70 days prior to the first anniversary of the preceding year's annual meeting. a
stockholder's notice required by this Bylaw shall also be considered timely but
only with respect to nominees for any new positions creased by such increase, if
it shall be delivered to the Secretary at the principal execution offices of the
Corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made by the Corporation.
(B) Special Meeting of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of
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<PAGE>
meeting (a) by or at the direction of the Board of Directors at (b) provided
that the Board of Directors has determined that directors shall be elected at
such meeting, by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Bylaw who shall be
entitled to vote at the meeting and who complies with the notice procedures set
forth in this Bylaw. In the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors to the Board of
Directors, any such stockholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporations'
notice of meeting, if the stockholder's notice required by paragraph (A)(2) of
this Bylaw shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the close of business on the 90th
day prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment of special meeting commence a new time period for the giving of a
stockholder's notice as described above.
(C) General.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Bylaw shall be eligible to serve as director, and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with the procedures set forth in
this Bylaw. Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Bylaw and, in any proposed
nomination or business is not in compliance with this Bylaw, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of the Bylaw, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act
(3) Notwithstanding the foregoing provision of this Bylaw, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights
(i) of stockholders to request inclusion of proposal in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders
of any series of Preferred Stock to elect directors under specified
circumstances.
Section 13. RECORD DATE FOR ACTION BY WRITTEN CONSENT. In order that
the Corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board of Directors. Any stockholder of record
seeking to have the stockholders authorized or take corporate action by written
consent shall, by written
5
<PAGE>
notice to the Secretary, request the Board of Directors to fix a record date.
The Board of Directors shall promptly, but in all events within 10 days after
the date on which such a request is received, adopt a resolution fixing the
record date. If no record date has been filed by the Board of Directors within
10 days of the date on which such a request is received, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting. when no prior action by the Board of Directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in Delaware, its principal
place of business or to any officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of Directors
is required by applicable law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the date on which the Board of Directors adopts the
resolution taking such prior action.
Section 14. INSPECTORS OF WRITTEN CONSENT. In the event of the
delivery, in the manner provided by Section 13, to the Corporation of the
requisite written consent or consents to take corporate action and/or any
related revocation or revocations, the Corporation shall engage nationally
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the consents and revocations.
For the purpose of permitting the inspectors to perform such review, no action
by written consent without a meeting shall be effective until such date as the
independent inspectors certify to the Corporation that the consents delivered to
the Corporation in accordance with Section 13 represent at least the minimum
number of votes that would be necessary to take the corporate action. Nothing
contained in this paragraph shall in any way be construed to suggest or imply
that the Board of Directors or any stockholder shall not be entitled to contest
the validity of any consent or revocation thereof, whether before or after such
certification by the independent inspectors, or to take any other actions
(including. without limitation, the commencement, prosecution or defense of any
litigation with respect thereto, and the seeking of injunctive relief in such
litigation).
Section 15. EFFECTIVENESS OF WRITTEN CONSENT. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within 60 days of the date the earliest dated written consent
was received in accordance with Section 13, a written consent or consents signed
by a sufficient number of holders to take such action are delivered to the
Corporation in the manner prescribed in Section 13.
ARTICLE III
DIRECTORS
Section 1. POWERS. The business and affairs of the Corporation shall
be managed by or under the direction of its Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
Bylaws directed or required to be exercised or done by the stockholders.
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Section 2. NUMBER AND TERM OF OFFICE. The Board of Directors shall
consist of two classes of directors. designated as Series A and Series B. The
holders of the Series A Common Stock of the Corporation shall have the right,
voting separately as a class, to elect a number of the Series A directors equal
to the minimum number necessary to constitute a majority of the total number of
directors. In the event there are no holders of Series B Common Stock, the
holders of the Series A Common Stock shall have the right to elect all directors
of the Corporation. The holders of Series B Common Stock and Series C Common
Stock shall have the right, voting together, as a class to elect a number of
Series B directors equal to the to number of directors less the number of
directors to be elected by the holders of the Series A Common Stock, provided,
however, that the number of Series B directors to be elected by the holders of
the Series B Common Stock and Series C Common Stock shall always constitute a
minority of the total number of directors. The total number of directors of each
Series shall be fixed by resolution of the Board of Directors. The directors
shall be elected at the annual meeting of the stockholders, except as provided
in Section 3 of this Article, and each director elected shall hold office until
his successor is elected and qualified, except as required by law. Any decrease
in the authorized number of directors shall not be effective until the
expiration of the term of the directors then in office, unless, at the time of
such decrease there shall be vacancies on the Board which are being eliminated
by such decrease; provided, however, that such decrease does not allow for a
majority of the total directors to be held by the Series B directors.
Section 3. RESIGNATIONS AND VACANCIES. Any director may resign at any
time by giving written notice to the Board of Directors or to the President Any
such resignation shall take effect, at the date of the receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
If at any other time than the annual meeting of the stockholders, any vacancy
occurs in the Board of Directors caused by resignation, death, retirement,
disqualification or removal from office of any director or otherwise, or any new
directorship is created by an increase in the authorized number of directors by
amendment of Section 2 of Article III of these Bylaws, a majority of each class
of the directors then in office, although less than a quorum, may choose a
successor, or fill the newly created directorship, and the director so chosen
shall hold office until the next annual election of directors by the
stockholders and until his successor shall be duly elected and qualified, unless
sooner displaced, provided, however that a vacancy in the Series A directors
shall be filled by the remaining Series A directors and a vacancy in the Series
B directors shall be filled by the remaining Series B directors. Vacancies
created by an increase in the total number of directors shall be filled in such
a manner as to insure that the number of directors elected by the holders of
Series A Common Stock constitutes a majority of the total number of directors.
Section 4. REMOVAL. Any Series A or Series B director may be removed
with or without cause, at any meeting of the stockholders, by the affirmative
vote of the holders of a majority of the Series A Common Stock with respect to a
Series A director or of the Series B Common Stock and Series C Common Stock,
voting together as a class, with respect to a Series B director, of the
Corporation having voting power, and the vacancy in the Board of Directors
caused by such removal may be filled by the Series A or by the Series B or
Series C stockholders, voting together as a class, respectively, at such
meeting.
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Section 5. DIVIDENDS AND RESERVES. Dividends upon stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting pursuant to law and subject to the terms of the Certificate of
Incorporation. Dividends may be paid in cash, in property, in shares of stock or
otherwise in the form, and to the extent permitted by law. The Board of
Directors may set apart, out of any funds of the corporation available for
dividends, a reserve or reserves for working capital or for any other lawful
purpose, and also may abolish any such reserve in the manner in which it was
created.
Section 6. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice immediately after the
annual meeting of the stockholders and at such ocher time and place as shall
from time to time be determined by the Board of Directors.
Section 7. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President on one
day's written notice to each director by whom such notice is not waived, given
either personally or by mail, facsimile, or telegram, or shall be called by the
President or the Secretary in like manner and on like notice on the written
request of any two directors.
Section 8. QUORUM. A quorum for a meeting of the Board of Directors of
the corporation shall consist of a majority of the total number of directors,
provided, however, that in no event shall a quorum exist unless the directors
elected by the holders of the Series A Common Stock constitute a majority of the
directors present at such meeting for the transaction of business, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time to another
place, time or date, without notice other than announcement at the meeting until
a quorum shall be present
Section 9. WRITTEN ACTION. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board of Directors, or
committee, as the case may be, consent thereto in writing. and the writing or
writings are filed with the minutes or proceedings of the Board of Directors or
Committee.
Section 10. PRESUMPTION OF ASSENT. Unless otherwise provided by
statute, a director of the corporation who is present, at a meeting of the Board
of Directors at which action is taken on any corporate matter shall be presumed
to have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 11. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the Board of Directors, or any committee designated by the Board of Director,
may participate in a meeting of the Board of Directors, or any such committee,
by means of conference telephone
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or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 12. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation and each
to have such lawfully delegable powers and duties as the Board may confer. Each
such committee shall serve at the pleasure of the Board of Directors. The Board
may designate one or more directors as alternate members of any committee who
may replace any absent or disqualified member at any meeting of the committee.
Except as otherwise provided by law, any such committee, to the extent provided
in the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Certificate of Incorporation
adopting, an Agreement of Merger or Consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of dissolution, or amending the
Bylaws of the Corporation; and unless the resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Any
committee or committees so designated by the Board shall have such name or names
as may be determined from time to time by resolution adopted by the Board of
Directors. Unless otherwise prescribed by the Board of Directors, a majority of
the members of the committee shall constitute a quorum for the transaction of
business, and the act of a majority of the members present at a meeting at which
there is a quorum shall be the act of such committee.
Each committee shall prescribe its own rules for calling and
holding meetings and its method of procedure, subject to any rules prescribed by
the Board of Directors, and shall keep a written record of all actions taken by
it.
Section 13. FEES AND COMPENSATION OF DIRECTORS. Directors shall not
receive any stated salary for their services as such; but, by resolution of the
Board of Directors, a fixed fee, with or without expenses of attendance, may be
allowed for attendance at each regular or special meeting of the board. Members
of the board shall be allowed their reasonable traveling expenses when actually
engaged in the business of the corporation. Members of any committee may be
allowed like fees and expenses for attending committee meetings. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 14. RULES. The Board of Directors may adopt such special rules
and regulations for the conduct of their meetings and the management of the
affairs of the Corporation as they may deem proper, not inconsistent with law or
these by-laws.
ARTICLE IV
NOTICES
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Section 1. GENERALLY. Whenever under the provisions of the statutes or
the Certificate of Incorporation or these Bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to the directors may also be given by telegram, telephone or facsimile.
Section 2. WAIVERS. Whenever any notice is required to be given under
the provisions of the statutes or the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time of the event for which notice is
to be given shall be deemed equivalent to such notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. OFFICES AND OFFICIAL POSITIONS. The officers of the
Corporation shall be a Chairman of the Board, President, one or more Vice
Presidents. a Secretary, a Treasurer, and such Assistant Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and other officers as the Board of
Directors shall determine. Any two or more offices may be held by the same
person. None of the officers need be a director, a stockholder of the
corporation or a resident of the State of Delaware.
Section 2. COMPENSATION. The compensation of all officers and agents
of the Corporation who are also directors of the Corporation shall be fixed by
the Board of Directors. The Board of Directors may delegate the power to fix the
compensation of other officers and agents of the Corporation to an officer of
the Corporation.
Section 3. SUCCESSION. The officers of the Corporation shall hold
office until their successors are elected and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the Corporation may be filled by the Board of Directors.
Section 4. AUTHORITY AND DUTIES. Each of the officers of the
Corporation shall have such authority and shall perform such duties as are
stated in these Bylaws or as may be specified by the Board of Directors in a
resolution which is not inconsistent with these Bylaws customarily incident to
their respective offices, or as may be specified from time to time by the Board
of Directors in a resolution which is not inconsistent with these Bylaws.
Section 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors and he
shall have such other
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duties and responsibilities as may be assigned to him by the Board of Directors.
The Chairman shall have overall responsibility for the management and direction
of the business and affairs of the Corporation. The Chairman shall be the senior
officer of the Corporation and in case of the inability or failure of the
President to perform the duties of that office, shall perform the duties of the
President. The Chairman may delegate to any qualified person authority to chair
any meeting of the stockholders, either on a temporary or a permanent basis.
In the absence of the Chairman of the Board, the Vice Chairman of
the Board, if any, shall preside at all meetings of the Board of Directors and
of the stockholders at which he shall be present. He shall have and may exercise
such powers as are, from time to time, assigned to him by the Board of Directors
and as may be provided by law.
Section 6. PRESIDENT/CHIEF EXECUTIVE OFFICER. The President may or may
not be the Chief Executive Officer of the corporation and either the Chief
Executive Officer or the President shall preside at all meetings of the
stockholders, the Board of Directors or any committee of the Board if either
officer is a member. The President and Chief Executive Officer shall each have
the overall supervision of the business of the Corporation and shall direct the
affairs and policies of the Corporation, subject to such policies and directions
as may be determined by the Chairman of the Board or provided by the Board of
Directors. Both the Chief Executive Officer and the President shall have
authority to designate the duties and powers of other officers and delegate
special powers and duties to specified officers, so long as such designation
shall not be inconsistent with the statutes, these Bylaws or action of the Board
of Directors. The President and Chief Executive Officer in general shall have
all other powers and shall perform all other duties as may be prescribed by the
Board of Directors from time to time.
Section 7. VICE PRESIDENTS. In the absence of the President and the
Chief Executive Officer, or in the event of such individuals inability or
refusal to act, the Vice Presidents in order of their rank as fixed by the Board
of Directors or, if not ranked, the Vice President designated by the Board of
Directors or the President, shall perform all duties of the President, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the President. The Vice Presidents shall have such other powers and perform
such other duties, not inconsistent with the statutes, these Bylaws, or action
of the Board of Directors, as from time to time may be prescribed for them,
respectively, by the Board of Directors or the President. Any Vice President may
sign. with the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, certificates for shares of stock of the Corporation the
issuance of which shall have been duly authorized by the Board of Directors.
Section 8. SECRETARY AND ASSISTANT. The Secretary shall attend all
meetings of the stockholders and all meetings of the Board of Directors and
record all the proceedings of the meetings of the stockholders and of the Board
of Directors and shall perform like duties for the standing committees when
requested by the Board of Directors, the Chairman, or the President. The
Secretary shall give, or cause to be given. notice of all meetings of the
stockholders and meetings of the Board of Directors. The Secretary shall perform
such duties as may be prescribed by the Board of Directors, the Chairman, or the
President. The Secretary shall have charge of the seal of the Corporation and
authority to affix the seal to any instrument. The Secretary or any Assistant
Secretary may attest to the corporate seal by handwritten or facsimile
signature. The Secretary shall keep and account for all books, documents, papers
and records of
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the Corporation except for those for which some other officer or agent has been
designated or is otherwise properly accountable. The Secretary shall have
authority to sign stock certificates.
Assistant Secretaries, in order of their seniority, shall assist
the Secretary and, if the Secretary is unavailable or fails to act, perform the
duties and exercise the authorities of the Secretary and shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe.
Section 9. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
have the custody of the corporate funds and securities belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Treasurer with the prior approval of the Board of Directors, the
Chairman, and the President The Treasurer shall disburse the funds and pledge
the credit of the Corporation as may be directed by the Board of Directors and
shall render to the Board of Directors, the Chairman, and the President, as and
when required by them, or any of them, an account of all transactions by the
Treasurer.
If required by the Board of Directors, he shall give the
Corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all boxes, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Assistant Treasurers, in the order of their seniority, shall
assist the Treasurer and, if the Treasurer is unable or fails to act, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 10. CONTROL. The Controller shall be the chief accounting
officer of the Corporation. The Controller shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation in
accordance with accepted accounting methods and procedures. The Controller shall
initiate periodic audits of the accounting records, methods and systems of the
Corporation. The Controller shall render to the Board of Directors, the
Chairman, and the President, as and when required by them, or any of them, a
statement of the financial condition of the Corporation.
Section 11. GENERAL COUNSEL. The General Counsel shall be the chief
legal officer of the Corporation. The General Counsel shall provide legal
counsel and advice to the Board of Directors and to the officers with respect to
compliance with applicable laws and regulations. The General Counsel shall also
provide or obtain legal defense of the Corporation. The General Counsel shall
render to the Board of Directors, the Chairman, and the President, as and when
required by them, or any of them, a report on the status of claims against, and
pending litigation of the Corporation.
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ARTICLE VI
STOCKS
Section 1. CERTIFICATES. Certificates representing shares of stock of
the Corporation shall be in such form as shall be determined by the Board of
Directors, subject to applicable legal requirements. Such certificates shall be
numbered and their issuance recorded in the books of the Corporation, and such
certificate shall exhibit the holder's name and the number of shares and shall
be signed by, or in the name of the Corporation by, the Chairman of the Board or
the President and the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Corporation and shall bear the corporate seal. Where
any such certificate is countersigned by a transfer agent or a registrar other
than the Corporation or its employee, the signatures of any such officers of the
Corporation and the seal of the Corporation, if any, upon such certificates my
be facsimiles, engraved or printed.
Section 2. TRANSFER. Except as provided in the Certificate of
Incorporation or by law, upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue, or to cause its transfer agent to issue, a
new certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The President or
the Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost. stolen or destroyed, upon the making of
an affidavit of that fact, satisfactory to the President, by the person claiming
the certificate of stock to be lost, stolen or destroyed. As a condition
precedent to the issuance of a new certificate or certificates the President
requires the owner of such lost, stolen or destroyed certificate or certificates
to give the Corporation a bond in such sum and with such surety or sureties as
the President may direct as indemnity against any claims that may be made
against the Corporation with respect to the certificate alleged to have been
lost; stolen or destroyed or the issuance of the new certificate.
Section 4. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
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In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by this chapter, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolution taking such
prior action.
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
ARTICLE VII
INDEMNIFICATION
Section 1. INDEMNIFICATION. The Corporation shall indemnify every
person who was or is a party or is or was threatened to be made a party to any
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation, as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including counsel
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, to the fall
extent permitted by applicable law. Expenses incurred by a person who is or was
a director or officer of the Corporation in appearing at, participating in or
defending any such action, suit or proceeding shall be paid by the Corporation
at reasonable intervals in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized by this Section 1.
If a claim under this Section 1 is not paid in full by the Corporation within
ninety days after a written
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claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be paid
also the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law or other applicable law for the Corporation
to indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law or other applicable law, nor an actual determination by
the Corporation (including its board of directors, independent legal counsel or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed from time to time by resolution of the Board of Directors.
Section 2. CORPORATE SEAL. The Board of Directors may adopt a
corporate seal and use the same by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Section 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS. Each director,
each member of a committee designated by the Board of Directors, and each
officer of the corporation shall, in the performance of his or her duties, be
fully protected in relying in good faith upon the records of the Corporation and
upon such information, opinions, reports or statements presented to the
Corporation by any of the Corporation's officers or employees, or committees of
the Board of Directors, or by any other person as to matters the director,
committee member or officer believes are within such other person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Corporation.
Section 4. TIME PERIODS. In applying any provision of these Bylaws
which requires that an act be done or not be done a specified number of days
prior to an event or that an act be done during a period of a specified number
of days prior to an event, calendar days shall be used, the day of the doing of
the act shall be excluded and the day of the event shall be included.
Section 5. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting. pursuant to statute. Dividends may be paid in
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cash, in property, or in shares of the capital stock, subject to the provisions
of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purposes as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE IX
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of And on behalf of the
Corporation, or of any division thereof, and such authority may be general or
confirmed to specific instances.
Section 2. LOANS. No loans shall be contracted on behalf of the
Corporation, or any division thereof, and no evidence of indebtedness shall be
issued in the name of the Corporation or any division thereof, unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
Section 3. CHECKS, DRAFTS, ETC. All checks, demands, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, or any division thereof, shall be signed by such
officer or officers, agent or agents of the Corporation, and in such manner, as
shall from time to time be authorized by the Board of Directors.
Section 4. DEPOSITS. All funds of the Corporation, or any division
thereof, not otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other depositories
as the Board of Directors may select.
ARTICLE X
AMENDMENTS
Section 1. AMENDMENTS. These Bylaws may be altered, amended or
repealed or new Bylaws may be adopted by the stockholders or by the Board of
Directors, when such power is conferred upon the Board of Directors by the
Certificate of Incorporation. If the power to adopt, amend or repeal these
Bylaws is conferred upon the Board of Directors by the Certificate of
Incorporation it shall not divest or limit the power of the stockholders to
adopt, amend or repeal these Bylaws. An amendment to the Certificate of
Incorporation or these Bylaws which would adversely affect the rights of the
holders of Series A Common Stock, Series B Common Stock or Series C Common Stock
conferred under the Certificate of Incorporation or these Bylaws shall require
the approval of the majority of the holders of a majority of the shares of (i)
Series A Common Stock, voting separately as a class, and (ii) Series B Common
Stock and
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Series C Common Stock, voting together as a class; provided, however, the no
amendment to the Certificate of Incorporation or the Bylaws shall first require
the approval of the holders of Series B Common Stock and Series C Common Stock
if such amendment is necessary to comply with any rules, regulations or orders
of the Federal Communications Commission ("FCC"), or otherwise deemed necessary
by a majority of the Board of Directors of the Corporation to comply with
Article IX of the Certificate of Incorporation.
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CERTIFICATE OF SECRETARY
I, Frank Cassou, Assistant Secretary of NextWave Telecom Inc., a
Delaware corporation, do hereby certify that the foregoing Restated Bylaws of
NextWave Telecom Inc. are the duly adopted Bylaws of said Corporation as they
are in effect on the date hereof
Executed at San Diego effective as of April 9, 1996.
/s/ Frank Cassou
-------------------------------------------
Frank Cassou, Assistant Secretary
================================================================================
NEXTWAVE TELECOM INC.,
as Issuer,
THE GUARANTORS,
party hereto from time to time,
[NAME,
as Collateral Agent]
and
[NAME],
as Trustee
---------------------------
INDENTURE
Dated as of _______ ___, 1999
---------------------------
12% SENIOR SECURED SUBORDINATED NOTES DUE 2009
================================================================================
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INDENTURE dated as of _______ ___, 1999, between NextWave Telecom Inc., a
Delaware corporation (referred to herein as the "Company"), NextWave Personal
Communications Inc., a Delaware corporation ("NPCI"), NextWave Power Partners
Inc., a Delaware corporation ("NPPI") (NPPI and NPCI collectively referred to
herein as the "Guarantors") and ____________________, as trustee (the "Trustee")
[and ____________, as the collateral agent (the "Collateral Agent")].
GRANTING CLAUSE
THIS INDENTURE WITNESSETH, that, to secure the payment of the principal,
premium, if any, and interest on all the Notes (as hereinafter defined) from
time to time outstanding hereunder and the performance and observance of the
agreements, covenants and provisions contained herein, and in the other Security
Documents, and in consideration of the premises and of the issuance of the Notes
to the Holders (as hereinafter defined), the Company and the License Holding
Subsidiaries hereby irrevocably grant, assign, pledge, hypothecate, and create
in favor of the Collateral Agent, its successors and assigns, in the trust
created by the Security Documents for the ratable security and benefit of the
Holders of the Notes, a continuing security interest in and Lien on the
following described property, rights and privileges, whether now owned or
existing or hereafter acquired or arising and regardless of where located
(including, without limitation, all property, rights and privileges hereafter
subjected to the Lien of this Indenture); provided, however, that any such Liens
or security interests existing on, in or under the Collateral shall be subject
to the terms and the conditions of the Security Documents.
(a) The License Holding Subsidiary Shares of each License Holding
Subsidiary and the certificates representing such License Holding Subsidiary
Shares, and all dividends, distributions, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the License Holding Subsidiary
Shares of each such License Holding Subsidiary;
(b) subject to the exceptions set forth in this Indenture, all additional
shares of Capital Stock of any License Holding Subsidiary from time to time
acquired by the Company in any manner (which shares shall be deemed to be part
of the License Holding Subsidiary Shares), and the certificates representing
such additional shares, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all such shares;
(c) all shares of any Person who, after the date of this Indenture,
becomes, as a result of any occurrence, a License Holding Subsidiary (which
shares shall be deemed to be part of the License Holding Subsidiary Shares) and
the certificates representing such shares, and all dividends, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all such shares;
(d) all right, title and interest of the Company in, to and under the funds
on deposit, and the Permitted Investment Accounts held from time to time by the
Collateral Agent, in the Cash Collateral Account, including the rights of
enforcement with respect to the Permitted Investment Accounts, together with any
certificates or other instruments representing or evidencing such Permitted
Investment Accounts and all other rights, property and money at any
<PAGE>
time and from time to time received, receivable or otherwise distributed on or
in respect of or in exchange for any or all of such Permitted Investment
Accounts;
(e) all Instruments hereafter acquired by the Company as part of the Net
Proceeds from any Permitted License Holding Subsidiary Transaction, including
rights of enforcement with respect to the Instruments, together with any
certificates or other instruments representing or evidencing such Instruments
and all other rights, property and money at any time and from time to time
received, receivable or exchange for any or all of such Instruments;
(f) all property hereafter delivered to or acquired by, or on behalf of,
the Collateral Agent in substitution for or in addition to any of the foregoing,
and all other rights whatsoever of the Company in and to the same and every part
thereof with respect to all such property and all other property from time to
time subjected or required to be subjected to this Indenture; and
(g) all Proceeds of the foregoing (all of the foregoing being referred to
herein as the "Collateral").
TO HAVE AND TO HOLD the Collateral unto the Collateral Agent, its
successors and assigns;
BUT IN TRUST, NEVERTHELESS, for the equal and ratable benefit and security
of the Holders from time to time of all the Notes, without priority of one
Holder over any other, and for the uses and purposes, and subject to the terms
and provisions, of this Indenture and the other Security Documents;
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED that all the Notes are to
be issued and delivered, and that all property subject or to become subject
hereto is to be held, subject to further covenants, conditions, uses and trusts
hereinafter set forth, and the Company hereby binds itself and its successors
and assigns to warrant and forever defend to the Collateral Agent and its
successors and assigns all the properties included in the Collateral, and the
Company hereby further warrants and agrees to and with the Trustee for the equal
and proportionate benefit and security of those who shall hold the Notes, as
hereinafter set forth.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Accounts Receivable Subsidiary" means an Unrestricted Subsidiary of the
Company to which the Company or any of its Restricted Subsidiaries sells any of
its accounts receivable pursuant to a Receivables Facility.
"Acquired Indebtedness" means, with respect to any specified Person, (a)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien
encumbering an
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asset acquired by such specified Person at the time such asset is acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person which, directly
or indirectly, controls, is controlled by or is under direct or indirect common
control with, such specified Person. For purposes of this definition, "control,"
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary that apply to such transfer or exchange.
"Asset Sale" means the sale, conveyance, disposition or other transfer (a
"disposition") of any properties, assets or rights (provided that the sale,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole, whether by sale, merger,
consolidation or otherwise, will be governed by the Section 5.01 and not by the
provisions of Section 4.07). Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (a) dispositions in the ordinary course
of business; (b) a disposition of assets by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary; (c) the sale and leaseback of any assets within 90 days of the
acquisition thereof; (d) foreclosures on assets; (e) any exchange of property
for use in a Permitted Business including, without limitation, pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended; (f) any lease or
lease transaction, including, without limitation, a financing lease or a
sale-leaseback transaction; (g) any Indebtedness or other securities of, an
Unrestricted Subsidiary; (h) a Permitted Investment or a Restricted Payment that
is permitted by Section 4.06 hereof; and (i) sales of accounts receivable, or
participations therein, in connection with any Receivables Facility.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Expenditure Indebtedness" means Indebtedness incurred by any
Person to finance the purchase or construction of any property or assets
acquired or constructed by such Person which have a useful life of more than one
year so long as (a) the purchase or construction price for such property or
assets is included in "addition to property, plant or equipment" in accordance
with GAAP, (b) the acquisition or construction of such property or assets is not
part of any acquisition of a Person or line of business and (c) such
Indebtedness is incurred within 90 days of the acquisition or completion of
construction of such property or assets, and includes, without limitation, any
and all Indebtedness incurred pursuant to any Vendor Financing Facility.
3
<PAGE>
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (i) Government Securities, (ii) any certificate of
deposit maturing not more than 365 days after the date of acquisition issued by,
or demand deposit or time deposit of, an Eligible Institution, (iii) commercial
paper maturing not more than 365 days after the date of acquisition of an issuer
(other than an Affiliate of the Company) with a rating, at the time as of which
any investment therein is made, of "A-1" (or higher) according to S&P or "P-1"
(or higher) according to Moody's or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments, (iv) any bankers acceptances or money
market deposit accounts issued by an Eligible Institution, (v) any fund
investing substantially in investments of the types described in clauses (i)
through (iv) above and (vi) in the case of any Subsidiary organized or having
its principal place of business outside the United States, investments
denominated in the currency of the jurisdiction in which such Subsidiary is
organized or has its principal place of business which are similar to the items
specified in clauses (i) through (v) above (including, without limitation, any
deposit with a bank that is a lender to any Restricted Subsidiary).
"cash equivalents" means, for purposes of Article 10 of this Indenture,
Cash Equivalents of the type described in clause (i) of the definition thereof
maturing not more than 90 days after the date of the acquisition thereof.
"Change of Control" means the occurrence of any of the following: (a) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), other than the Principals and their Related Parties or (b)
the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d) of the Exchange Act), other than the Principals
and their Related Parties, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, of 50% or more of the voting
power of the outstanding voting equity interests of the Company.
"Collateral Agency Agreement" means the Collateral Agency Agreement of even
date herewith among ___________________, substantially in the form attached
hereto as Exhibit ___, as the same may be amended or supplemented from time to
time in accordance with its terms.
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<PAGE>
"Collateral Agent" means ___________ or such other institution or
institutions acting as collateral agent(s) under the Collateral Agency Agreement
as the Trustee may from time to time advise the Company in writing.
"Commission" means the Securities and Exchange Commission.
"Company" means NextWave Telecom Inc., a Delaware corporation, until a
successor corporation shall have become such pursuant to Section 5.02 and
thereafter "Company" shall mean such successor corporation.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (a) all income taxes of
such Person and its Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary or
nonrecurring gains or losses), (b) Consolidated Interest Expense and (c)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Restricted Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Hedging Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers' acceptance financing or
similar facilities, and (e) all accrued interest and (ii) the interest component
of Capital Lease Obligations paid or accrued by such Person and its Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP; provided that Consolidated Interest Expense shall not
include accrued interest that is evidenced by Secondary Notes, "payment in kind"
securities or similar instruments in respect of such accrued interest.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its Restricted Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided that there shall be excluded therefrom, without duplication, (a) gains
and losses from Asset Sales (without regard to the $___________ limitation set
forth in the definition thereof) or abandonments or reserves relating thereto
and the related tax effects, (b) items classified as extraordinary or
nonrecurring gains and losses, and the related tax effects according to GAAP,
(c) the net income (or loss) of any Person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Restricted Subsidiary of such
first referred to Person or is merged or consolidated with it or any of its
Restricted Subsidiaries, (d) the net income of any Restricted Subsidiary to the
extent that the declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by contract, operation of law
or otherwise and (e) the net income of any Person, other than a
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Restricted Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Restricted Subsidiary
by such Person and (y) the net income of such Person (but in no event less than
zero), and the net loss of such Person shall be included only to the extent of
the aggregate Investment of the first referred to Person or a consolidated
Restricted Subsidiary of such person. Notwithstanding the foregoing,
Consolidated Net Income shall not be reduced by accrued interest expense
evidenced by Secondary Notes, "payment in kind" securities or similar
instruments in respect of accrued interests.
"Consolidated Non-Cash Charges" means, with respect to any Person or any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary or nonrecurring item). "Corporate Trust Office of
the Trustee" shall be at the address of the Trustee specified in Section 13.02
hereof or such other address as to which the Trustee may give notice to the
Company.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A hereto except that such Note shall not bear the Global Note Legend and
shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means DTC or any successor thereto.
"Designated Noncash Consideration" means the fair market value of non-cash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the principal executive officer and the principal
financial officer of the Company, less the amount of cash or Cash Equivalents
received in connection with a sale of such Designated Noncash Consideration.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable), or upon the happening of any event (other than any event solely
within the control of the issuer thereof), matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, is exchangeable for
Indebtedness (except to the extent exchangeable at the option of such Person
subject to the terms of any debt instrument to which such Person is a party) or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the date on which the Notes mature; provided that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of an Asset Sale shall not constitute Disqualified Stock if the terms
of such Capital Stock provide that the
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<PAGE>
Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.06
hereof; provided further that, if such Capital Stock is issued to any plan for
the benefit of employees of the Company or its Subsidiaries or by any such plan
to such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Company in order to
satisfy applicable statutory or regulatory obligations; and provided further
that in no event shall any of (i) the Series A Convertible Preferred Stock, par
value $0.01 per share, or (ii) the Senior Redeemable Preferred Stock, par value
$0.01 per share, of the Company constitute Disqualified Stock.
"Distribution", for purposes of Article 10 of this Indenture, may consist
of a distribution, payment or other transfer of assets by or on behalf of the
Company (including, without limitation, a redemption, repurchase or other
acquisition of the Notes) from any source, of any kind or character, whether in
cash, securities or other property, by set-off or otherwise.
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus not less than $100.0 million or its equivalent in
foreign currency, whose short-term debt is rated "A-3" or higher according to
Standard & Poor's Ratings Group ("S&P") or "P-2" or higher according to Moody's
Investor Services, Inc. ("Moody's") or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Original Issuance Date, until such
amounts are repaid.
"Fair Market Value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Unless the TIA
otherwise requires, Fair Market Value shall be determined by the Board of
Directors of the Company acting in good faith and shall be evidenced by a
resolution of the Board of Directors of the Company delivered to the Trustee.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Original Issuance Date.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit or
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
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"Global Notes" means one or more permanent global Notes in substantially
the form of Exhibit A hereto bearing the Global Note Legend and having the
"Schedule of Exchanges of Interests in the Global Note" attached thereto and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in accordance with Section 2.01(b) or 2.06(d)(ii), as
applicable.
"Global Note Legend" means the legend set forth in Section 2.06(f), which
is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"incur" means to, directly or indirectly, create, incur, issue, assume,
Guarantee or otherwise become directly or in indirectly liable, contingently or
otherwise with respect to any Indebtedness.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable or customer advances, if and to the extent
any of the foregoing Indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any Indebtedness of any other Person, provided that
Indebtedness shall not include the pledge by the Company of the Capital Stock of
an Unrestricted Subsidiary of the Company to secure Non-Recourse Debt of such
Unrestricted Subsidiary. The amount of any Indebtedness outstanding as of any
date shall be (a) the outstanding principal amount at any date of any
Indebtedness less the unamortized portion of such Indebtedness (together with
any interest thereon that is more than 30 days past due), in the case of any
Indebtedness that does not require current payments of interest, and (b) the
principal amount thereof, in the case of any other Indebtedness provided that
the principal amount of any Indebtedness that is denominated in any currency
other than United States dollars shall be the amount thereof, as determined
pursuant to the foregoing provision, converted into United States dollars at the
Spot Rate in effect on the date that such Indebtedness was incurred (or, if such
indebtedness was incurred prior to the Original Issuance Date, the Spot Rate in
effect on the Original Issuance Date). The incurrence by the Company or any of
its Restricted Subsidiaries of Indebtedness represented by (i) the accrual of
interest (including the issuance of Secondary Notes, "payment in kind"
securities or similar
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<PAGE>
instruments in respect of such accrued interest), (ii) the accretion of original
issue discount or (iii) the mere extension of the maturity of any Indebtedness
shall not be deemed to be an incurrence of Indebtedness).
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the Uniform Commercial Code) evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of any non-cash consideration to the extent
that such non-cash consideration consists of (i) publicly traded debt securities
of a Person, which securities are rated at least "BBB-" by S&P and at least
"Baa3" by Moody's or (ii) other Indebtedness or publicly traded Capital Stock of
a Person if (x) the lowest rated long-term, unsecured debt obligation issued by
such Person is rated at least "BBB-" by S&P and at least "Baa3" by Moody's or
(y) in the case of other Indebtedness, the payment of such other Indebtedness is
secured by an irrevocable letter of credit issued by a commercial bank having
capital and surplus in excess of $100,000,000 and long-term unsecured debt
obligations rated at least "A-" by S&P and least "A3" by Moody's. For purposes
of this definition, debt securities or Capital Stock of a Person shall be deemed
to be publicly traded if listed, or admitted to unlisted trading privileges, on
a national securities exchange or quoted in an automated interdealer quotation
system.
"Interest Payment Date" has the meaning assigned to such term in Exhibit A
hereto.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including, without limitation, Guarantees by the referent Person
of, and Liens on any assets of the referent Person securing, Indebtedness or
other obligations of other Persons), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP, provided that an investment by the Company for
consideration consisting of common equity securities of the Company shall not be
deemed to be an Investment (other than for purposes of clause (iii) of the
definition of "Qualified Proceeds"). If the Company or any Restricted Subsidiary
of the Company sells or otherwise disposes of any Equity Interests of any direct
or indirect Restricted Subsidiary of the Company such that, after giving effect
to any such sale or disposition, such Person is no longer a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the greater of book value or Fair Market
Value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of Section 4.06
hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or the city in which the principal
corporate trust office of the Trustee is located, or at a place of payment, are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that
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place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue on such payment for the intervening period.
"License Holding Subsidiary" means any Restricted Subsidiary of the Company
that owns, leases or has a legal ownership interest, directly or indirectly, in
those certain C-, D-, E- or F-Block personal communications services licenses
granted by the FCC to any Subsidiary of the Company on or prior to the date
hereof or any substitute property therefor that the Company may, in its sole
discretion, expressly designate in writing from time to time hereafter. The
License Holding Subsidiaries existing on the Original Issuance Date are
identified on Schedule ____ hereto.
"License Holding Subsidiary Pledge Agreement" means each of the License
Holding Subsidiary Pledge Agreements, of even date herewith, between the Company
or a Restricted Subsidiary of the Company, as pledgor, and the Collateral Agent
as the secured party, to be executed in substantially the form of Exhibit __
hereto, as such agreement may be amended or supplemented from time to time
pursuant to the terms thereof, and any License Holding Subsidiary Pledge
Agreement hereafter entered into pursuant to Section 4.13 hereof pursuant to a
License Holding Subsidiary Pledge Agreement.
"License Holding Subsidiary Shares" means all shares of Capital Stock and
the certificates, if any, representing such Capital Stock, of the License
Holding Subsidiaries.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including, without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (or
loss), together with any related provision for taxes on such gain (or loss),
realized in connection with (i) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions) or (ii) the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries; and (b) any extraordinary or nonrecurring gain (or loss), together
with any related provision for taxes on such extraordinary or nonrecurring gain
(or loss).
"Maturity Date" means, with respect to the Notes, ______ __, 2009.
"Net Proceeds" means, with respect to any Asset Sale (including any
Permitted License Holding Subsidiary Transaction that would otherwise constitute
an Asset Sale), the aggregate cash proceeds received by the Company or any of
its Restricted Subsidiaries in respect of any such Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of, without duplication,
(a) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions, recording
fees, title transfer fees and appraiser fees and cost of preparation of assets
for sale) and any relocation expenses incurred as a
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result thereof, (b) taxes paid or payable as a result thereof , (c) amounts
required to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets that were the subject of such Asset Sale and (d) any reserve
established in accordance with GAAP or any amount placed in escrow, in either
case for adjustment in respect of the sale price of such asset or assets until
such time as such reserve is reversed or such escrow arrangement is terminated,
in which case Net Proceeds shall include only the amount of the reserve so
reversed or the amount returned to the Company or its Restricted Subsidiaries
from such escrow arrangement, as the case may be.
"Non-Recourse Debt" means Indebtedness (i) no default with respect to which
(including, without limitation, any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any Indebtedness having a principal
amount or available undrawn commitment in excess of $_________ of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (ii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock (other than the stock
of an Unrestricted Subsidiary pledged by the Company to secure debt of such
Unrestricted Subsidiary) or assets of the Company or any of its Restricted
Subsidiaries; provided that in no event shall Indebtedness of any Unrestricted
Subsidiary fail to be Non-Recourse Debt solely as a result of any default
provisions contained in a guarantee thereof by the Company or any of its
Restricted Subsidiaries if the Company or such Restricted Subsidiary was
otherwise permitted to incur such guarantee pursuant to this Indenture.
"Note Custodian" means the Trustee, as custodian with respect to the Global
Notes, or any successor entity thereto.
"Notes" means the 12% Senior Secured Subordinated Notes due 2009 issued
pursuant to this Indenture, including, without limitation, all Secondary Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes issued on the Original Issuance
Date by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Sections 13.04
and 13.05 hereof.
"Opinion of Counsel" means an opinion in form and substance reasonably
satisfactory to the Trustee and from legal counsel who is reasonably acceptable
to the Trustee, that meets the
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requirements of Sections 13.04 and 13.05 hereof. The counsel may be an employee
of or counsel to the Company, any Subsidiary of the Company or the Trustee.
"Original Issuance Date" means _________, 1999, the date on which Notes are
first issued and authenticated under this Indenture.
"Pari Passu Indebtedness" means Indebtedness of the Company that ranks pari
passu in right of payment to the Notes.
"Participant" means, with respect to the Depositary, a Person who has an
account with the Depositary.
"Payment", for purposes of Article 10 of this Indenture, may consist of a
distribution, payment or other transfer of assets by or on behalf of the Company
(including, without limitation, a redemption, repurchase or other acquisition of
the Notes) from any source, of any kind or character, whether in cash,
securities or other property, by set-off or otherwise.
"Permitted Business" means _________________________________________.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in cash or Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (i) such Person
becomes a Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Restricted
Subsidiary of the Company; (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.07 hereof; (e) any Investment acquired solely in
exchange for Equity Interests (other than Disqualified Stock) of the Company;
(f) any Investment in a Person engaged in a Permitted Business (other than an
Investment in an Unrestricted Subsidiary) having an aggregate Fair Market Value,
taken together with all other Investments made pursuant to this clause (f) that
are at that time outstanding, not to exceed the greater of (i) $20.0 million and
(ii) 15% of Total Assets at the time of such Investment (with the Fair Market
Value of each Investment being measured at the time made and without giving
effect to subsequent changes in value); and (g) Investments relating to any
special purpose Wholly Owned Subsidiary of the Company organized in connection
with a Receivables Facility that, in the good faith determination of the board
of directors of the Company, are necessary or advisable to effect such
Receivables Facility.
"Permitted Investment Accounts" means (a) certificates of deposit, time
deposits, Eurocurrency deposits and similar types of investments routinely
offered by commercial banks with final maturities of one year or less issued by
commercial banks having capital and surplus in excess of $100,000,000 or for
terms in excess of one year if such investment secures an obligation incurred in
the ordinary course of business; (b) commercial paper issued by any corporation,
if such commercial paper has credit ratings of at least A-1 by S&P and at least
P-1 by Moody's; (c) U.S. Government Obligations and other securities that are
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, with a maturity of one year or
less; provided that investments of the type described in (c) may be for terms in
excess of one year if such investment secures an obligation incurred in the
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ordinary course of business; (d) purchase obligations having a term not
exceeding one year for instruments of the type described in (c); (e) shares of
money market mutual or similar funds having assets in excess of [$100,000,000];
provided that such funds are sponsored by commercial banks in which investments
pursuant to clause (a) of this definition have been made, and such shares do not
have an aggregate net asset value at any one time in excess of $[5,000,000]; (f)
certificates of deposit and time deposits in commercial banks made for the
purpose of supporting performance or surety bonds or letters of credit posted in
the ordinary course of business, to the extent any related Lien is a Permitted
Lien, or customs deposits made in the ordinary course of business; (g) accounts
receivable owing to the Company or any [Restricted] Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms, and provided that nothing in this clause
shall prevent the Company or any [Restricted] Subsidiary from providing such
concessionary trade terms as management deems reasonable in the circumstances,
and Investments resulting from settlements or compromises of accounts
receivables or trade payables in the ordinary course of business; (h) payroll
advances in the ordinary course of business; (i) other advances and loans to
officers and employees of the Company or any [Restricted] Subsidiary[, so long
as the aggregate principal amount of such advances and loans (determined without
regard to any write-downs or write-offs) does not exceed $1,000,000 at any one
time outstanding]; (j) advances to officers and employees of the Company or any
[Restricted] Subsidiary to cover travel expenses; (k) Investments made after the
Original Issuance Date pursuant to binding agreements existing on the Original
Issuance Date in a cumulative amount not to exceed $1,000,000 from and after the
Original Issuance Date; and (l) Investments in Allowable Investments.
"Permitted Junior Securities" means Equity Interests in the Company or debt
securities of the Company that are subordinated to all Senior Indebtedness (and
any debt securities issued in exchange for Senior Indebtedness) to substantially
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Indebtedness.
"Permitted License Holding Subsidiary Transaction" means the sale
(including, without limitation, the issuance of Capital Stock or high-yield debt
securities in a public or private transaction), exchange, transfer, pledge or
any other disposition of the Collateral, in whole or in part, the execution,
delivery and performance of one or more joint venture agreements by one or more
of the License Holding Subsidiaries (or by the Company or any Subsidiary of the
Company that owns any Capital Stock in any respective License Holding
Subsidiary), the merger, consolidation or other business combination of any
nature of a License Holding Subsidiary with any other Person, or any other
similar such transaction.
"Permitted Liens" means: (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary, provided that such Liens were not incurred in
contemplation of such merger or consolidation and do not secure any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets subject to the Liens prior to such merger or consolidation; (ii) Liens
existing on the Original Issuance Date; (iii) Liens securing Indebtedness
consisting of Capitalized Lease Obligations, purchase money Indebtedness,
mortgage financings, industrial revenue bonds or other monetary obligations, in
each case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Company or its Restricted Subsidiaries, or repairs, additions or
improvements to such assets, provided that (A) such Liens secure Indebtedness in
an amount not in excess of the original
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purchase price or the original cost of any such assets or repair, additional or
improvement thereto (plus an amount equal to the reasonable fees and expenses in
connection with the incurrence of such Indebtedness), (B) such Liens do not
extend to any other assets of the Company or its Restricted Subsidiaries (and,
in the case of repair, addition or improvements to any such assets, such Lien
extends only to the assets (and improvements thereto or thereon) repaired, added
to or improved), (C) such Liens relate to or arise in connection with either the
incurrence or maintenance of such Indebtedness in connection with any Vendor
Financing Facilities, or Capital Expenditure Indebtedness and (D) such Liens
attach within 365 days of such purchase, construction, installation, repair,
addition or improvement; (iv) Liens to secure any refinancings, renewals,
extensions, modification or replacements (collectively, "refinancing") (or
successive refinancings), in whole or in part, of any Indebtedness secured by
Liens referred to in the clauses above so long as such Lien does not extend to
any other property (other than improvements thereto); (v) Liens securing letters
of credit entered into in the ordinary course of business and consistent with
past business practice; (vi) Liens on and pledges of the capital stock of any
Unrestricted Subsidiary securing Non-Recourse Debt of such Unrestricted
Subsidiary; (vii) Liens securing Indebtedness incurred pursuant to any Vendor
Financing Facility, (viii) Liens securing existing Indebtedness; and (ix) other
Liens securing Indebtedness that is permitted by the terms of this Indenture to
be outstanding having an aggregate principal amount at any one time outstanding
not to exceed $20.0 million.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued within 120 days after repayment of,
in exchange for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund other Indebtedness of the Company or any of
its Restricted Subsidiaries; provided that (a) the principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if applicable), plus premium, if
any, and accrued interest on the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith), (b) such Permitted Refinancing Indebtedness has a
final maturity date no earlier than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, and (c) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness is subordinated in
right of payment to, the Notes on terms at least as favorable, taken as a whole,
to the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof
(including, without limitation, any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision or
business).
"Plan" means the Joint Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code of the Company and certain of its Subsidiaries, dated
_______________, 1999, as amended and modified.
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"Principals" means each "person" or "group" (as such terms are used in
Section 13(d) of the Exchange Act) that on the Original Issuance Date is the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly through one or more intermediaries of
five percent or more of the voting power of the outstanding voting equity
interests of the Company or that is a member of the Board of Directors of the
Company.
"Proceeds" means all proceeds of, and all other profits, income or
receipts, in whatever form, arising from the ownership, collection, sale,
exchange, assignment or other disposition of, or realization upon, the
Collateral, including without limitation, all claims of the Company against
third parties for loss of, or for proceeds payable under, or unearned premiums
with respect to, any such Collateral, and all interest, dividends (cash or
otherwise) and other payments and distributions on or with respect to such
Collateral or in exchange for such Collateral, in each case whether now existing
or hereafter arising.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person.
"Qualified Proceeds" means any of the following or any combination of the
following: (i) cash; (ii) Cash Equivalents; (iii) assets (other than
Investments) that are used or useful in a Permitted Business; and (iv) the
Capital Stock of any Person engaged in a Permitted Business if, in connection
with the receipt by the Company or any Restricted Subsidiary of the Company of
such Capital Stock, (A) such Person becomes a Restricted Subsidiary of the
Company or any Restricted Subsidiary of the Company or (B) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or any
Restricted Subsidiary of the Company.
"Receivables Facility" means one or more receivables financing facilities,
as amended from time to time, pursuant to which the Company or any of its
Restricted Subsidiaries sells its accounts receivable to an Accounts Receivable
Subsidiary.
"Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Related Party" means, with respect to any Principal, (i) any controlling
stockholder or partner of such Principal on the Original Issuance Date, or (ii)
any trust, corporation, partnership or other entity, the beneficiaries,
shareholders, partners, owners or Persons beneficially holding (directly or
through one or more Subsidiaries) a 51% or more controlling interest of which
consist of the Principals and/or such other Persons referred to in the
immediately preceding clauses (i) or (ii).
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Indebtedness.
"Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any
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other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any direct or indirect Subsidiary
of the referent Person that is not an Unrestricted Subsidiary and shall include
any direct or indirect License Holding Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means the Indenture, the Collateral Agency Agreement
and the License Holding Subsidiary Pledge Agreements.
"Secured Obligations" means (i) the obligations of the Company under this
Indenture and under the Notes, whether in respect of principal, premium, if any,
interest, or otherwise, (ii) the obligations of the Company under the Security
Documents and (iii) the obligations of the Company under each of its Vendor
Financing Facilities, to the extent the Collateral constitutes collateral
securing any such Vendor Financing Facility.
"Senior Indebtedness" means, with respect to any Person, (i) all
Indebtedness of such Person in existence on the Original Issuance Date permitted
by the Plan, (ii) Capital Expenditure Indebtedness, Capital Lease Obligations,
Indebtedness pursuant to any Vendor Financing Facility or other obligations, in
each case, the proceeds of which are used for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property, plant or equipment (including, without limitation, acquisitions of
Capital Stock of a Person that becomes a Restricted Subsidiary to the extent of
the Fair Market Value of the property, plant or equipment so acquired) used in
the business of the Company or such Restricted Subsidiary, (iii) any other
Indebtedness consented to by the Trustee and by the Holders of at least 25% in
principal amount of the Notes then outstanding unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to any other Senior Indebtedness of such Person and (iv) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (i) any
liability for federal, state, local or other taxes, (ii) any Indebtedness of
such Person to any of its Subsidiaries or (iii) any trade payables.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Solvent" means, when used with respect to any Person, that (a) the present
fair salable value of such Person's assets is in excess of the total amount of
such Person's liabilities; (b) such Person is able to pay its debts as they
become due; and (c) such Person does not have unreasonably small capital to
carry on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.
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"Spot Rate" means, for any currency, the spot rate at which such currency
is offered for sale against United States dollars as determined by reference to
the New York foreign exchange selling rates, as published in The Wall Street
Journal on such date of determination for the immediately preceding business day
or, if such rate is not available, as determined in any publicly available
source of similar market data.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Note Obligations" means all Obligations with respect to the
Notes, including, without limitation, principal, premium, if any, and interest
payable pursuant to the terms of the Notes (including, without limitation, upon
the acceleration or redemption thereof), together with and including, without
limitation, any amounts received or receivable upon the exercise of rights of
rescission or other rights of action (including, without limitation, claims for
damages) or otherwise.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership or limited liability company (i) the sole
general partner or the managing general partner or managing member of which is
such Person or a Subsidiary of such Person or (ii) the only general partners or
managing members of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Total Assets" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet (excluding
the footnotes thereto) of the Company.
"Trustee" means, except solely for purposes of Section 8.05 as otherwise
specified therein, the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a board resolution,
but only to the extent that such Subsidiary: (a) has no Indebtedness other than
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company; and (c) no Default or Event of Default is existing or will occur as a
consequence of such designation. Any
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such designation by the board of directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the board resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.06 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as a Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date. The board of directors of the Company
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if no Default or Event of Default would be in existence following such
designation.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
from time to time in the State of New York.
"Vendor Financing Facility" means any agreement(s) between the Borrower or
a Restricted Subsidiary of the Borrower and one or more vendors, lessors or
other third parties (or any affiliate of any such vendor, lessor or other third
party) providing financing for the acquisition (whether by lease, purchase or
otherwise), construction, installation, leasing or operation by the Borrower or
such Restricted Subsidiary of any equipment, capital assets, and shall include,
without, limitation, additional financing or working capital that is made
available to the Borrower as part of such "vendor financing".
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person, all of whose outstanding Capital Stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the directors of such Restricted Subsidiary is at the time directly
or indirectly owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person.
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SECTION 1.02 OTHER DEFINITIONS.
Term Defined in Section
---- ------------------
"Affiliate Transaction" ................................... 4.08
"Allowable Investments" ................................... 4.07(c)
"Authentication Order" .................................... 2.02(d)
"Cash Collateral Account" ................................. 11.01
"Change of Control Offer" ................................. 4.15
"Change of Control Payment" ............................... 4.15
"Change of Control Payment Date" .......................... 4.15
"Computation Period" ...................................... 4.06(ii)
"Covenant Defeasance" ..................................... 8.03
"DTC" ..................................................... 2.06(f)
"Event of Default" ........................................ 6.01
"Fractional Secondary Note" ............................... 2.02(e)
"Guarantee Obligations" ................................... 12.01
"Issuing Subsidiary" ...................................... 4.14
"Legal Defeasance" ........................................ 8.02
"Paying Agent" ............................................ 2.03
"Payment Blockage Notice" ................................. 10.03
"Registrar" ............................................... 2.03
"Restricted Payments" ..................................... 4.06
"Secondary Notes" ......................................... 2.02(e)
"SEC Reports" ............................................. 4.03
SECTION 1.03 INCORPORATION OF TIA PROVISIONS.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon the
Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 RULES OF CONSTRUCTION.
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the plural
include the singular;
(v) provisions apply to successive events and transactions; and
(vi) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the Commission from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01 FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. However, to the extent any provision of
any Note conflicts with the express provisions of this Indenture, the provisions
of this Indenture shall govern and be controlling.
(b) Global Notes. Notes (including Secondary Notes) shall be issued
initially in global form substantially in the form of Exhibit A attached hereto
(including, without limitation, the Global Note Legend and the "Schedule of
Exchanges of Interests in the Global Note" attached thereto), which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its [New York] office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of Participants, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. Each Global Note shall represent such of
the outstanding Notes as shall be specified therein and each shall provide that
it shall represent the aggregate principal amount of outstanding Notes from time
to time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions and the issuance of Secondary
Notes. The aggregate principal amount of the Global Notes may from time to time
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as the case may be, as herein
provided. Any endorsement of a Global Note to reflect the amount of any increase
or decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
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(c) Definitive Notes. Notes issued in definitive form shall be issued
substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto), duly executed by the Company and authenticated
by Trustee as hereinafter provided.
SECTION 2.02 EXECUTION AND AUTHENTICATION.
(a) One Officer shall sign the Notes for the Company by manual or facsimile
signature.
(b) If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
(c) A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
At any time after the execution and delivery of this Indenture, the Company
may deliver Notes executed by the Company to the Trustee for authentication,
together with a written request or order signed in the name of the Company by
its chairman, its president, any vice president, its treasurer or an assistant
treasurer, its secretary or an assistant secretary, and delivered to the Trustee
for the authentication and delivery of such Notes; and the Trustee in accordance
with such a written order of the Company shall authenticate and deliver such
Notes as in this Indenture provided and not otherwise upon receipt by the
Trustee of the following:
(i) an Officer's Certificate complying with Section 13.05;
(ii) stock certificates representing all License Holding Subsidiary
Shares with respect to all License Holding Subsidiaries
identified in Schedule ___ hereto, registered in the name of the
Company [or a [Restricted] Subsidiary of the Company] and
accompanied by undated stock powers duly executed in blank, and
accompanied by any required transfer tax stamps, all in form and
substance reasonably satisfactory to the [Trustee];
(iii) the Collateral Agency Agreement executed and delivered by the
parties thereto setting forth, among other things, the relative
rights and remedies of the parties with respect to the
Collateral; and
(iv) the License Holding Subsidiary Pledge Agreements executed by the
Company [or one or more of the [Restricted] Subsidiaries of the
Company] and covering, in the aggregate, all of the Collateral.
(d) The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up to
$225,000,000] in aggregate principal amount plus the aggregate principal amount
of any Secondary Notes issued pursuant to this Section 2.02. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.08 hereof.
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(e) On each Interest Payment Date, the Company shall, in lieu of a payment
in cash, execute and deliver to the Trustee for authentication, together with an
Authentication Order given not less than 15 nor more than 45 days prior to such
Interest Payment Date for the authentication and delivery thereof, additional
Notes ("Secondary Notes") in an aggregate principal amount equal to such
interest due and payable on the Notes on such Interest Payment Date in
accordance with Section 2.01(b). The Trustee, in accordance with such
Authentication Order, shall so authenticate and deliver to the Holders of record
on such record date such Secondary Notes requested in such Authentication Order
(such duly executed and authenticated Secondary Notes being of the same series
as the Notes), and the due issuance of such Secondary Notes shall constitute
full payment of such interest; provided, however, the Company may, at its
option, duly authorize the payment in cash of all or a portion of any interest
due on any such Interest Payment Date, in lieu of a payment in Secondary Notes,
by giving notice to the Holders and the Trustee not less than 15 nor more than
45 days prior to the record date for such Interest Payment Date; and provided
further, however, that in lieu of the issuance of any Secondary Notes the
principal amount of which (x) would be less than $1,000 or (y) would exceed the
largest integral multiple of $1,000 which is less than or equal to such
principal amount (in each case, a "Fractional Secondary Note"), the Company
shall, in the case of clause (y), issue a Secondary Note with a principal amount
equal to such largest integral multiple and shall, in the case of clauses (x)
and (y), in its sole discretion, either (1) on behalf of and for the accounts of
all Holders of Notes who would be entitled to Fractional Secondary Notes,
aggregate all such Fractional Secondary Notes and, on or before the tenth
Business Day following the applicable Interest Payment Date, sell such
aggregated Fractional Secondary Notes and, within six Business Days of such
sale, pay each such Holder its proportionate share of the net proceeds of such
sale, or (2) pay (on the applicable Interest Payment Date) each such Holder,
with respect to any Fractional Secondary Note that such Holder would otherwise
be entitled to receive, an amount in cash equal to the average closing price per
$1,000 principal amount of Notes for the ten trading days preceding the Business
Day immediately preceding the applicable Interest Payment Date multiplied by a
fraction, the numerator of which is the principal amount of such Fractional
Secondary Note otherwise issuable to such Holder and the denominator of which is
$1,000.
Each issuance of Secondary Notes in lieu of the payment in cash of all or
any portion of interest on the Notes shall be made pro rata with respect to the
outstanding Notes. All Secondary Notes shall be issued in the same series as the
Notes originally issued pursuant to this Indenture, and all Holders of Secondary
Notes shall be treated as Holders of Notes for any and all purposes of any
action of Holders or otherwise pursuant to this Indenture except as may
otherwise be required by law. Any such Secondary Notes shall be governed by this
Indenture and the terms of each such Secondary Note shall be identical to the
terms of the Notes except with respect to, as the case may be, the designation
of such Secondary Note (which may (but need not) indicate the Interest Payment
Date of its original issuance), its aggregate principal amount, its CUSIP number
or other required identifications, any required legends (including with respect
to taxation) and the date from which interest accrues and except as may
otherwise be required by law. Notwithstanding the foregoing, Secondary Notes may
be issued on any given Interest Payment Date in separate series if such is
required pursuant to a change in law after the date hereof, and, in such event,
the Holders of Secondary Notes shall continue to be treated in all respects as
Holders of Notes for all purposes of this Indenture (including with respect to
any action of Holders or otherwise pursuant to this Indenture) except as
required by such change in law.
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(f) The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes (including, without limitation, Secondary Notes,
if any). An authenticating agent may authenticate Notes whenever the Trustee may
do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent has the same
rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints DTC to act as Depositary with respect to the
Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money, if any, held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and will notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 2.05 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
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SECTION 2.06 TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue as
Depositary for the Notes or that it is no longer a clearing agency registered
under the Exchange Act and, in either case, a successor Depositary is not
appointed by the Company within 90 days after the date of such notice from the
Depositary, (ii) the Company, at its option, elects to cause the Global Notes
(in whole but not in part) to be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee or (iii) there shall have occurred
and be continuing a Default or Event of Default. In addition, beneficial
interests in a Global Note may be exchanged for Definitive Notes upon request
but only upon at least 20 days' prior written notice given to the Trustee by or
on behalf of DTC in accordance with customary procedures and subject to
compliance with Section 2.06(b)(ii) and Section 2.06(c). Upon the occurrence of
any of the preceding events upon which Definitive Notes are to be issued in
exchange for any Global Note or beneficial interests therein as specified above,
Definitive Notes shall be issued in such names and approved denominations as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note except as provided in this Section 2.06(a). A Global Note may not
be exchanged for another Note other than as provided in this Section 2.06(a) and
Sections 2.07 and 2.10; provided, however, that, beneficial interests in a
Global Note may be transferred and exchanged for beneficial interests in another
Global Note as provided in Section 2.06(b) hereof.
(b) Transfer and Exchange of Beneficial Interests in Global Notes for
Beneficial Interests in Global Notes or for Definitive Notes. The transfer and
exchange of beneficial interests in the Global Notes shall be effected through
the Depositary, in accordance with the provisions of this Indenture and the
Applicable Procedures. Transfers or exchanges of beneficial interests in Global
Notes for Definitive Notes shall also require compliance with Section 2.06(a),
Section 2.06(b)(ii) below and Section 2.06(c), and transfers or exchanges of
beneficial interests in Global Notes for beneficial interests in Global Notes
also shall require compliance with one or more of the other following
subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in the same
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests in a Global Note that are not subject to Section 2.06(b)(i)
above, the owner of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures
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directing the Depositary to credit or cause to be credited a beneficial
interest in another Global Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information regarding
the Participant account to be credited with such increase or (B) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information regarding
the Person in whose name such Definitive Note shall be registered to effect
the transfer or exchange referred to in clause (B)(1) above. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(i) hereof.
(c) Transfer and Exchange of Beneficial Interests in Global Notes for
Definitive Notes. Subject to Section 2.06(a), if any holder of a beneficial
interest in a Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction of
the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute
and the Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in
Global Notes.
(i) Definitive Notes to Beneficial Interests in Global Notes. A Holder
of a Definitive Note may exchange such Note for a beneficial interest in a
Global Note or transfer such Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in a Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee
shall cancel the applicable Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Global Notes.
(ii) Issuance of Global Note. If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected pursuant to Section
2.06(d)(i) above at a time when a Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Global Notes in an aggregate principal amount equal to the principal
amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such
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registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Definitive Notes to Definitive Notes. A Holder of Definitive Notes
may transfer such Notes to a Person who takes delivery thereof in the form
of a Definitive Note. Upon receipt of a request to register such a
transfer, the Registrar shall register the Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Global Note Legend. The face of each Global Note issued under this
Indenture shall bear a legend (comprising two paragraphs) in substantially the
following form:
"Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary
or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name
of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL in as much as the registered owner hereof, Cede & Co.,
has an interest herein.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE OR CAUSE TO BE MADE SUCH
NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV)
THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF NEXTWAVE TELECOM INC."
(g) Cancellation or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a
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beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.06 and 4.08 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
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(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; provided, however, Notes held by the Company or a
Subsidiary of the Company shall not be deemed to be outstanding for purposes of
Section 3.07 hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
Secondary Notes shall be deemed outstanding commencing as of the Interest
Payment Date with respect to which they are authenticated and delivered in lieu
of cash interest.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, including, without
limitation, for purposes of
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Section 9.02, Notes owned by the Company, or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that the Trustee
knows are so owned shall be so disregarded.
SECTION 2.10 TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the Company
may prepare, and the Trustee, upon receipt of an Authentication Order, shall
authenticate, temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall, as soon as practicable upon receipt of an Authentication Order,
authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
SECTION 2.13 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon a written request or order signed in the name of
the Company by its chairman, its president, any vice president, its treasurer or
any assistant treasurer, and delivered to the Trustee, cease to be of further
effect as to all outstanding Notes (except as to
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surviving rights of exchange of the Notes, as expressly provided for herein or
pursuant hereto) and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
when:
(a) either
(A) all Notes theretofore authenticated and delivered (other than (i)
Notes which have been destroyed, lost or stolen and which have been
replaced or repaid as provided in Section 2.07 and (ii) Notes for whose
payment money has theretofore been deposited in trust with the Trustee or
any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided
in Section 8.06) have been delivered to the Trustee for cancellation; or
(B) all Notes not theretofore delivered to the Trustee for
cancellation (other than Notes which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.07)
(1) have become due and payable, or
(2) will become due and payable at their Stated Maturity within
one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company, and the Company, in the case of (i), (ii) and (iii) above,
has irrevocably deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose in an amount sufficient to
pay and discharge the entire Indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal,
premium, if any and accrued interest on the Notes to the date such
deposit (in the case of Notes which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be, together
with irrevocable written instructions from the Company directing the
Trustee to apply such funds to the payment thereof at Stated Maturity
or redemption, as the case may be;
(b) the Company has paid or cause to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to compensate the Trustee under Section 7.07 and, if
money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (a) of this Section 2.13, the obligations of the
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Trustee to hold money in trust for the benefit of the holders of the Note,
including, without limitation, pursuant to Section 8.05 shall survive such
satisfaction and discharge.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01 NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03 NOTICE OF REDEMPTION.
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part only,
the notice of redemption that relates to such Note shall state the portion of
the principal amount thereof to be redeemed. A new Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. Notes called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 30 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related Interest Payment Date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not
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paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon receipt of the Company's written request, the Trustee shall as soon as
practicable authenticate for the Holder at the expense of the Company a new Note
equal in principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole or in part, at any time at the
option of the Company, upon not less than 30 nor more than 60 days' notice, in
cash at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest, if any, thereon to the applicable
redemption date, if redeemed during the twelve month period (or, with respect to
years (i) 1999, such shorter period beginning on the Original Issuance Date, and
(ii) 2009, such shorter period ending on the Maturity Date) beginning on April 1
of the years indicated below:
Year Percentage
---- ----------
1999............................................... 100.000%
2000............................................... 100.000%
2001............................................... 102.000%
2002............................................... 103.000%
2003............................................... 104.000%
2004............................................... 105.000%
2005............................................... 104.000%
2006............................................... 103.000%
2007............................................... 102.000%
2008............................................... 101.000%
2009............................................... 100.000%
Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08 MANDATORY REDEMPTION.
Except as provided in Section 4.07, the Company is not required to make
mandatory redemption of, or sinking fund payments with respect to, the Notes.
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ARTICLE 4
COVENANTS
SECTION 4.01 PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
(i) holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due and (ii) is not prohibited
from paying such money to the Holders pursuant to the terms of this Indenture or
the Notes; provided, that any interest paid in Secondary Notes in lieu of cash
pursuant to Section 2.02 hereof shall be considered paid on the date due if such
Secondary Notes are executed, authenticated and delivered, and any cash payment
therein provided for is [paid] [deposited with the Paying Agent in immediately
available funds], in accordance with such Section 2.02.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
SECTION 4.03 REPORTS.
The Company shall file with the Trustee, within 15 days after it files them
with the Commission, copies of any information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
("SEC Reports"). The Company will furnish copies of the SEC Reports to the
Holders of Notes at the time the Company is required to file the same with the
Trustee and will make such information available to investors who request it in
writing and who execute a confidentiality agreement in form and substance
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satisfactory to the Company. The Company and any obligor on the Notes shall also
comply with the other provisions of Section 314(a) of the TIA.
SECTION 4.04 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest on the Notes is prohibited
or if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements when, and if, delivered pursuant to Section 4.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (which shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
SECTION 4.05 STAY, EXTENSION AND USURY LAWS.
The Company covenants that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
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SECTION 4.06 RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned Restricted
Subsidiary of the Company); (b) purchase, redeem, retire or otherwise acquire
for value any Equity Interests of the Company or any of its Restricted
Subsidiaries (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company); (c) make any principal payment on or with
respect to, or purchase, redeem, defease, retire or otherwise acquire for value,
any Indebtedness of the Company that is subordinated in right of payment to the
Notes, except in accordance with the mandatory redemption or repayment
provisions set forth in the original documentation governing such Indebtedness;
or (d) make any Restricted Investment (all such payments and other actions set
forth in clauses (a) through (d) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to such
Restricted Payment:
(i) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(ii) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Original Issuance Date (excluding Restricted
Payments permitted by clauses (a) (to the extent that the declaration of
any dividend referred to therein reduces amounts available for Restricted
Payments pursuant to this clause (ii)), (b) through (i), (l), (m), and (o)
of the next succeeding paragraph), is less than the sum, without
duplication, of (A) (x) the Consolidated EBITDA of the Company for the
period (taken as one accounting period) from the Original Issuance Date to
the last day of the last full fiscal quarter prior to the date of the
proposed Restricted Payment (the "Computation Period") minus (y) the
Consolidated Interest Expense of the Company for the Computation Period,
plus (B) 100% of the Qualified Proceeds received by the Company on or after
the Original Issuance Date from contributions to the Company's capital or
from the issue or sale on or after the Original Issuance Date of Equity
Interests (other than Disqualified Stock) of the Company or of Disqualified
Stock or convertible debt securities of the Company to the extent that they
have been converted into such Equity Interests (other than Equity
Interests, Disqualified Stock or convertible debt securities sold to a
Subsidiary of the Company and other than Disqualified Stock or convertible
debt securities that have been converted into Disqualified Stock), plus (C)
the amount equal to the net reduction in Investments in Persons after the
Original Issuance Date who are not Restricted Subsidiaries (other than
Permitted Investments) resulting from (x) Qualified Proceeds received as a
dividend, repayment of a loan or advance or other transfer of assets
(valued at the Fair Market Value thereof) to the Company or any Restricted
Subsidiary from such Persons, (y) Qualified Proceeds received upon the sale
or liquidation of such Investment and (z) the redesignation of Unrestricted
Subsidiaries (excluding any increase in the amount available for Restricted
Payments pursuant to clause (k) below arising from the redesignation of
such Unrestricted Subsidiary) whose assets are used or useful in, or which
is engaged in, one or more Permitted Businesses as Restricted Subsidiaries
(valued
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(proportionate to the Company's Equity Interest in such Subsidiary) at the
Fair Market Value of the net assets of such Subsidiary at the time of such
redesignation).
The foregoing provisions will not prohibit:
(a) the payment of any non-cash dividend or other non-cash payment or
distribution;
(b) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness or Equity Interests of the Company in exchange
for, or out of (i) the net cash proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of, other Equity Interests of the
Company (other than any Disqualified Stock) or (ii) a reserve, sinking fund or
other fund established for such purpose as part of the issuance, provided that
the amount of any such net cash proceeds or such sinking fund(s) or reserve(s)
that are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (ii)(B) of the preceding
paragraph;
(c) the defeasance, redemption, repurchase, retirement or other acquisition
of subordinated Indebtedness of the Company with the net cash proceeds from an
incurrence of, or in exchange for, Permitted Refinancing Indebtedness;
(d) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company or held by any member of the Company's
(or any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement, provided that the
aggregate cash portion of the price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed (x) $5 million in any
calendar year (with unused amounts in any calendar year being carried over to
succeeding calendar years subject to a maximum of $10 million in any calendar
year), plus (y) the aggregate net cash proceeds received by the Company during
such calendar year from any issuance of Equity Interests by the Company to
members of management of the Company and its Restricted Subsidiaries (provided
that the amount of any such net cash proceeds that are used to permit an
acquisition or retirement for value pursuant to this clause (d) shall be
excluded from clause (ii)(B) of the preceding paragraph) and (ii) no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction;
(e) payments and transactions in connection with the Plan, the Offering,
any Vendor Financing Facility, Capital Lease Obligations or similar obligations
(including, without limitation, commitment, syndication and arrangement fees
payable thereunder) and the application of the proceeds thereof, and the payment
of fees and expenses with respect thereto;
(f) the payment of dividends by a Restricted Subsidiary on any class of
common stock of such Restricted Subsidiary if (i) such dividend is paid pro rata
to all holders of such class of common stock and (ii) at least 51% of such class
of common stock is held by the Company or one or more of its Restricted
Subsidiaries;
(g) the repurchase of any class of common stock of a Restricted Subsidiary
if (i) such repurchase is made pro rata with respect to such class of common
stock and (ii) at least 51% of such class of common stock is held by the Company
or one or more of its Restricted Subsidiaries;
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(h) the declaration and payment of dividends to holders of any class or
series of Disqualified Stock of the Company or any Restricted Subsidiary issued
on or after the Original Issuance Date; provided that no Default or Event of
Default shall have occurred and be continuing immediately after making such
Restricted Payment;
(i) repurchases by the Company or any Subsidiary of Equity Interests deemed
to occur upon exercise of stock options if such Equity Interests represent a
portion of the exercise price of such options;
(j) the payment of dividends or distributions on the Company's common
stock, following the first underwritten public offering of the Company's common
stock after the Original Issuance Date, of up to 6.0% per annum of the net
proceeds received by the Company from such underwritten public offering of its
common stock or the net proceeds received by the Company from such underwritten
public offering of its common stock as common equity other than with respect to
public offerings with respect to the Company's common stock registered on Form
S-8; provided that no Default or Event of Default shall have occurred and be
continuing immediately after any such payment of dividends or distributions;
(k) any other Restricted Payment which, together with all other Restricted
Payments made pursuant to this clause (k) since the Original Issuance Date, up
to $10 million (determined from time to time by giving effect to all subsequent
reductions in the amount of any Restricted Investment made pursuant to this
clause (k) either as a result of (i) the repayment or disposition thereof for
cash or (ii) the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued proportionate to the Company's Equity Interest in such
Subsidiary at the time of such redesignation) at the Fair Market Value of the
net assets of such Subsidiary at the time of such redesignation), in the case of
clause (i) and (ii), not to exceed the amount of such Restricted Investment
previously made pursuant to this clause (k); provided that no Default or Event
of Default shall have occurred and be continuing immediately after making such
Restricted Payment;
(l) the pledge by the Company of the Capital Stock of an Unrestricted
Subsidiary of the Company to secure Non-Recourse Debt of such Unrestricted
Subsidiary;
(m) the purchase, redemption or other acquisition or retirement for value
of any Equity Interests of any Restricted Subsidiary issued after the Original
Issuance Date, provided that the aggregate price paid for any such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed the sum of (x)
the amount of cash and Cash Equivalents received by such Restricted Subsidiary
from the issue or sale thereof and (y) any accrued dividends thereon;
(n) any Investment in an Unrestricted Subsidiary that is funded by
Qualified Proceeds received by the Company on or after the Original Issuance
Date from contributions to the Company's capital or from the issue and sale on
or after the Original Issuance Date of Equity Interests of the Company or of
Disqualified Stock or convertible debt securities to the extent they have been
converted into such Equity Interests (other than Equity Interests, Disqualified
Stock or convertible debt securities sold to a Subsidiary of the Company and
other than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock) in an amount (measured at the time such
Investment is made and without giving effect to subsequent changes in value)
that does not exceed the amount of such Qualified Proceeds (excluding any such
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Qualified Proceeds to the extent utilized to permit a prior "Restricted Payment"
pursuant to clause (ii)(B) of the preceding paragraph); and
(o) distributions or payments of Receivables Fees.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default. For purposes of making such designation, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this Section 4.06. All such
outstanding Investments will be deemed to constitute Restricted Investments in
an amount equal to the greater of (i) the net book value of such Investments at
the time of such designation and (ii) the Fair Market Value of such Investments
at the time of such designation. Such designation will only be permitted if such
Restricted Investment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of (i) all Restricted Payments (other than cash) shall be the
Fair Market Value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment
and (ii) Qualified Proceeds (other than cash) shall be the Fair Market Value on
the date of receipt thereof by the Company of such Qualified Proceeds. The Fair
Market Value of any non-cash Restricted Payment shall be determined by the board
of directors of the Company whose resolution with respect thereto shall be
delivered to the Trustee. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.06 were computed.
SECTION 4.07 ASSET SALES.
(a) Except as otherwise provided in clauses (c) and (d) below, the Company
shall not, and shall not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless (a) the Company or such Restricted Subsidiary,
as the case may be, receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value (evidenced by a resolution of the board of
directors set forth in an Officers' Certificate delivered to the Trustee) of the
assets (excluding any Collateral) issued or sold or otherwise disposed of and
(b) at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of (i) cash or Cash Equivalents or (ii)
property or assets that are used or useful in a Permitted Business, or the
Capital Stock of any Person engaged in a Permitted Business if, as a result of
the acquisition by the Company or any Restricted Subsidiary thereof, such Person
becomes a Restricted Subsidiary.
(b) For purposes of this Section 4.07 each of the following shall be deemed
cash: (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Guarantee thereof) that are assumed by
the transferee of any such assets pursuant to a customary novation agreement
that releases the Company or such Restricted Subsidiary from further liability,
(y) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such
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transferee that are contemporaneously (subject to ordinary settlement periods)
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash or Cash Equivalents received), and (z)
any Designated Noncash Consideration received by the Company or any of its
Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market
Value, taken together with all other Designated Noncash Consideration received
pursuant to this clause (z) that is at that time outstanding, not to exceed 15%
of Total Assets at the time of the receipt of such Designated Noncash
Consideration (with the Fair Market Value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value); provided that the 75% limitation referred to in
clause (b) above will not apply to any Asset Sale in which the cash or Cash
Equivalents portion of the consideration received therefrom, determined in
accordance with subclauses (x), (y) and (z) above, is equal to or greater than
what the after-tax proceeds would have been had such Asset Sale complied with
the aforementioned 75% limitation.
(c) Notwithstanding anything to the contrary in this Indenture, and subject
only to the applicable requirements of the TIA, if any, the Company or any
Subsidiary of the Company may, at any time and from time to time, in its sole
and absolute discretion, without any other action whatsoever, effect and
consummate, or permit or cause to be effected and consummated, any Permitted
License Holding Subsidiary Transaction. In the event of the consummation of any
Permitted License Holding Subsidiary Transaction, the Company shall, except as
otherwise provided below, cause cash in an amount equal to the Net Proceeds from
such Permitted License Holding Subsidiary Transaction allocable to the
Collateral, if any, to be delivered and pledged to the Collateral Agent upon the
closing of such Permitted License Holding Subsidiary Transaction (i) for deposit
in the Cash Collateral Account pursuant to Section 11.01 or (ii) if the
consideration for any Permitted License Holding Subsidiary Transaction includes
Instruments, the Company shall cause such Instruments to be delivered and
pledged to the Collateral Agent on or prior to the third day after the closing
of such Permitted License Holding Subsidiary Transaction (or upon the closing
thereof, if the Capital Stock or Property disposed of therein is part of the
Collateral) for deposit in the Cash Collateral Account pursuant to Section
11.02, and pending such delivery, the Company shall hold such cash or
Instruments, as applicable, in trust for the Collateral Agent and the Holders;
provided, however, that notwithstanding the foregoing, the Company may promptly
apply (or cause to be applied), in its sole and absolute discretion, the Net
Proceeds of any one or more Permitted License Holding Subsidiary Transactions
allocable to the Collateral (as determined by the Board of Directors based upon
an opinion as to the fairness to the Holders from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; provided no such fairness opinion or valuation shall be required in
the event the value of the assets transferred does not exceed $10 million) to
either (i) redeem the Notes, provided that, in the event that the aggregate
principal amount of the Notes then outstanding exceeds the available Net
Proceeds of such Permitted License Holding Subsidiary Transaction(s), the
Trustee shall select the Notes to be purchased on a pro rata basis; (ii) invest
in any other assets, provided that such assets (or any other assets of
reasonably equivalent value as such assets) shall be or immediately become the
property of a License Holding Subsidiary and provision shall have been made to
create in favor of the Collateral Agent a pledge of the Capital Stock of such
License Holding Subsidiary in accordance with Section 4.13 hereof; or (iii) for
working capital and general corporate purposes, provided that provision shall
have been made to create in favor of the Collateral Agent a pledge of the
Capital Stock of such License Holding Subsidiary, which shall have acquired such
other assets of reasonably equivalent value, in
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accordance with Section 4.13 hereof (subclauses (i), (ii) and (iii) shall be
referred to herein as a "Allowable Investments").
To the extent the Permitted License Holding Subsidiary Transaction
constitutes or involves the issuance or sale of Capital Stock or high-yield debt
securities in a public or private transaction, each Issuing Subsidiary (as
defined in Section 4.14) shall be entitled to retain 50% of the gross proceeds
from such transaction, net of attorneys fees, finders' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of taxes
paid or payable as a result thereof, and the balance of such net proceeds shall
be used by the Company in accordance with subclauses (i) and (ii) of the
definition of Allowable Investments.
The Collateral Agent and the Trustee shall take, or cause to be taken, any
other action, including, without limitation, releasing any Liens in connection
with a Permitted License Holding Subsidiary Transaction, as may be reasonably
requested by the Company in connection with the consummation of a Permitted
License Holding Subsidiary Transaction.
(d) Notwithstanding anything to the contrary in this Indenture, the Company
may sell, lease, convey, dispose or transfer C-block licenses that are owned,
leased or otherwise held by License Holding Subsidiaries with a value up to 15%
of the Aggregate License Value (as defined below) to the Federal Communications
Commission ("FCC") or as otherwise directed by the FCC. Such 15% determination
shall be made by the Board of Directors and shall be based upon (i) the
aggregate value of the Company's C-block licenses, as determined by the
bankruptcy court by decision dated May 12, 1999, in Adversary Proceeding No.
98-5178A, as captioned NEXTWAVE PERSONAL COMMUNICATIONS INC. against FEDERAL
COMMUNICATIONS COMMISSION (the "Aggregate License Value") and (ii) valuation
reports prepared on behalf of the Company in connection with such adversary
proceeding.
The consent of fifty-one percent of the Holders shall be required for the
Company to sell, lease, convey, dispose or transfer C-block licenses with a
value exceeding 15% of the Aggregate License Value to the FCC or as otherwise
directed by the FCC.
(e) To the extent the Company or any of its Restricted Subsidiaries
forecloses on any of its assets and such foreclosure yields a surplus, the
Company or such Restricted Subsidiary shall apply such surplus to an Allowable
Investment.
SECTION 4.08 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or Guarantee with, or for the benefit
of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to the Company or such Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (b) the Company delivers to
the Trustee, with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10
million, either (i) a resolution of the Board of Directors set forth in
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an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (a) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors or (ii) an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided, further, that, if the Affiliate Transaction
involves the transfer of cash proceeds from one Restricted Subsidiary to another
Restricted Subsidiary, it shall be a condition precedent to such transfer that
the transferee Restricted Subsidiary is Solvent as determined by the Board of
Directors in its sole and absolute discretion.
Notwithstanding the foregoing, the following items shall not be deemed to
be Affiliate Transactions: (a) customary directors' fees, indemnification or
similar arrangements or any employment agreement or other compensation plan or
arrangement entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business (including, without limitation, loans made to
employees in the ordinary course of business) and consistent with the past
practice of the Company or such Restricted Subsidiary; (b) transactions between
or among the Company and/or its Restricted Subsidiaries; (c) any agreement as in
effect on the Original Issuance Date or any amendment thereto (so long as such
amendment is not disadvantageous to the Holders of the Notes in any material
respect) or any transaction contemplated thereby as more specifically set forth
on Schedule __ hereto; (d) payments and transactions in connection with the
Plan, and the Offering and the application of the proceeds thereof, and the
payment of the fees and expenses with respect thereto; (e) Restricted Payments
that are permitted by Section 4.06 hereof and any Permitted Investments; (f)
transactions that are permitted or implemented in accordance with the Plan; and
(g) any issuance of capital stock of the Company other than Disqualified Stock.
SECTION 4.09 LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien, other than a Permitted Lien; provided that, in any case
involving a Lien securing subordinated Indebtedness of the Company, such Lien is
subordinated to the Lien securing the Notes to the same extent that such
subordinated Indebtedness is subordinated to the Notes. With the exception of
Liens securing Senior Indebtedness, the Company shall grant no additional Liens
on Capital Stock of a License Holding Subsidiary that is pledged pursuant to a
License Holding Subsidiary Pledge Agreement without the prior consent of the
Holders, which consent shall not be unreasonably withheld.
SECTION 4.10 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) the
corporate, partnership or other existence of itself and each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of itself and any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
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SECTION 4.11 NO SENIOR SUBORDINATED INDEBTEDNESS.
The Company shall not incur any Indebtedness that is subordinate or junior
in right of payment to any Senior Indebtedness and senior in right of payment to
the Notes.
SECTION 4.12 PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.13 ESTABLISHMENT OF SUBSIDIARIES.
If any new License Holding Subsidiary is established or acquired, or the
Company designates a Subsidiary as a "License Holding Subsidiary" (in accordance
the definition of the term License Holding Subsidiary), or ownership of one or
more of the FCC licenses described in the definition of License Holding
Subsidiary is transferred from a License Holding Subsidiary to any Subsidiary
which is not then a party to a License Holding Subsidiary Pledge Agreement
[(other than in an Asset Sale complying with Section 4.07)], the Company shall[,
as a condition precedent to such establishment, acquisition, designation or
transfer,] execute and deliver to the Collateral Agent (or cause any Subsidiary
of the Company that holds of record all or part of the Capital Stock of any such
new License Holding Subsidiary or Subsidiary to execute and deliver) a License
Holding Subsidiary Pledge Agreement and to deliver and pledge to the Collateral
Agent pursuant to such License Holding Subsidiary Pledge Agreement all such
License Holding Subsidiary Shares, in the form required by the License Holding
Subsidiary Pledge Agreement, and free of all Liens other than the Lien of such
License Holding Subsidiary Pledge Agreement. [For purposes of this Section 4.13,
if the License Holding Subsidiary Shares being pledged are the Capital Stock of
a Subsidiary organized under the laws of a jurisdiction other than the United
States, a State thereof or the District of Columbia, the License Holding
Subsidiary Pledge Agreement with respect thereto shall be substantially in the
form of Exhibit ___ hereto, with such changes therein (which shall be
satisfactory to the Collateral Agent), as are required by the law of the
jurisdiction in which such License Holding Subsidiary is organized in order to
grant a security interest in such Capital Stock comparable to that provided for
in Exhibit ___ hereto, as evidenced by an Opinion of Counsel (which shall also
address the validity of such agreement and the creation, perfection and
enforceability of such security interest).]
SECTION 4.14 ISSUANCE OF SUBSIDIARY CAPITAL STOCK.
Except as provided in Section 4.07(c) and in the proviso to this sentence,
the Company will cause each License Holding Subsidiary not to issue any Capital
Stock in such License Holding Subsidiary or any debt securities exchangeable or
convertible for or into such Capital Stock, provided that (i) such License
Holding Subsidiary (the "Issuing Subsidiary") may issue additional Capital Stock
to the Company or a License Holding Subsidiary, which Capital Stock shall be
delivered and pledged to the Collateral Agent pursuant to Section 11.03(a) of
this Indenture or [Section ___ ] of the applicable License Holding Subsidiary
Pledge Agreement, as
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the case may be[, and (ii) if the Issuing Subsidiary is not a Wholly Owned
Subsidiary, the Issuing Subsidiary may also simultaneously issue additional
shares of Capital Stock of the same class to other shareholders of the Issuing
Subsidiary, provided that the issuance of Capital Stock pursuant to this clause
(ii), when combined with the issuance pursuant to clause (i), will not reduce
the percentage of Capital Stock of the Issuing Subsidiary which was owned
directly or indirectly by the Company immediately prior to such issuances].
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase (the "Change of Control
Payment"). Within 60 days following any Change of Control, the Company will (or
will cause the Trustee to) mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Indenture
relating to such Change of Control Offer, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations described in this Indenture by virtue thereof.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (a) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (b) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book-entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Prior to complying with the
provisions of this Section 4.15, but in any event within 90 days following a
Change of Control, the Company shall use commercially reasonable efforts to
obtain the requisite consents, if any, under all agreements governing
outstanding Senior Indebtedness to permit the repurchase of Notes required by
this Section 4.15. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Notwithstanding anything to the contrary in this Section 4.15, the Company
will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Indenture
applicable to a Change of Control Offer made by the
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Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
SECTION 4.16 GUARANTEES BY LICENSE HOLDING SUBSIDIARIES.
If any new License Holding Subsidiary is established, or the Company
designates a Subsidiary as a "License Holding Subsidiary" (in accordance the
definition of the term License Holding Subsidiary), or ownership of one or more
of the FCC licenses described in the definition of License Holding Subsidiary is
transferred from a License Holding Subsidiary to any Subsidiary which has not
executed a Guarantee in favor of the Holders, the Company shall[, as a condition
precedent to such establishment, designation or transfer, execute and deliver to
the Collateral Agent (or cause any Subsidiary of the Company that holds of
record all or part of the Capital Stock of any such new License Holding
Subsidiary or Subsidiary to execute and deliver) a Guarantee Agreement in
accordance with Article 12 of this Indenture; provided that the Company shall
have the option to designate from time to time any Subsidiary as a guarantor for
the purposes of Article 12 of this Indenture.
SECTION 4.17 CONSUMMATION OF PLAN OF REORGANIZATION.
No provision of this Indenture shall prevent the Company or any Subsidiary
of the Company from consummating the Plan and the transactions contemplated
thereby.
ARTICLE 5
SUCCESSORS
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions to, another Person, unless (a) the Company is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia, (b) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the Person to which
such sale, assignment, transfer, conveyance or other disposition shall have been
made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee and (c) immediately after such transaction no Default or Event of
Default exists. The foregoing will not prohibit the consummation of any
transaction(s) contemplated by the Plan or (i) a merger between the Company and
a Wholly Owned Restricted Subsidiary or (ii) a merger between the Company and an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another State of the United States so long as, in each case, the amount of
Indebtedness of the Company and its Restricted Subsidiaries is not increased
thereby. The Company shall not lease all or substantially all of its assets to
any Person.
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SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation of the Company with or any merger of the Company
into another Person, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01 hereof, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
(a) default for 10 days in the payment when due of interest on the Notes
(whether or not prohibited by Article 10 hereof); or
(b) default in payment when due of the principal of or premium, if any, on
the Notes (whether or not prohibited by Article 10 hereof) and such default
continues for a period of five Business Days; or
(c) failure by the Company for 60 days after notice from the Trustee or the
Holders of at least 33-1/3% in principal amount of the Notes then outstanding to
comply with any of its other agreements in this Indenture or the Notes; or
(d) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created
after the Original Issuance Date, which default results in the acceleration of
such Indebtedness prior to its stated final maturity and the principal amount of
any such Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which has been so accelerated, aggregates $50.0
million or more; or
(e) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $50.0 million (net of any amounts with
respect to which a reputable and creditworthy insurance company has acknowledged
liability in writing), which judgments are not paid, discharged or stayed for a
period of 60 days; or
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(f) the Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary:
(i) commences a voluntary case under any applicable Bankruptcy Law,
(ii) consents to the entry of an order for relief against it in an
involuntary case under any applicable Bankruptcy Law,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(g) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or for all or substantially
all of the property of the Company or any of its Restricted Subsidiaries
that is a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02 ACCELERATION.
If any Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 hereof with respect to the Company) occurs and is
continuing, the Holders of at least 25% in principal amount of the then
outstanding Notes may, only on the terms and subject to the conditions set forth
in the Collateral Agency Agreement, direct the Trustee to declare all the Notes
to be due and payable immediately; provided, that so long as any Senior
Indebtedness shall be outstanding, such acceleration shall not be effective
until five Business Days after receipt by the Company and the lender under any
Senior Indebtedness of written notice of such acceleration. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (f) or (g) of Section
6.01 hereof occurs with respect to the Company, (i) all outstanding Notes shall,
ipso facto, be due and payable immediately without further action or notice and
(ii) the Company shall promptly notify the Trustee of such Event of Default
(although the Notes shall become due and payable immediately upon the occurrence
of such Event of Default as specified in clause (i) regardless of whether the
Company so notifies the Trustee). The Holders of a majority in aggregate
principal amount of the then outstanding Notes by written notice to the Trustee
may on behalf of all of the Holders rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default (except nonpayment of principal, interest
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or premium, if any, that has become due solely because of the acceleration) have
been cured or waived, provided that, in the event of a declaration of
acceleration of the Notes because an Event of Default has occurred and is
continuing as a result of the acceleration of any Indebtedness described in
clause (d) of Section 6.01 hereof, the declaration of acceleration of the Notes
shall be automatically annulled if the holders of any Indebtedness described in
clause (d) of Section 6.01 hereof have rescinded the declaration of acceleration
in respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the Notes would not conflict
with any judgment or decree of a court of competent jurisdiction and (ii) all
existing Events of Default, except non-payment of principal or interest on the
Notes that became due solely because of the acceleration of the Notes, have been
cured or waived.
SECTION 6.03 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may, only on
the terms and subject to the conditions set forth in the Collateral Agency
Agreement, pursue any available remedy to collect the payment of principal,
premium, if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including, without limitation, in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including, without limitation, any related payment default that resulted from
such acceleration). Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may result in the incurrence of
liability by the Trustee.
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SECTION 6.06 LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 33-1/3% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Note, on or after the respective due dates expressed in the Note
(including, without limitation, in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest, if any, on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including, without limitation, the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including, without limitation, any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Notes allowed in any judicial proceedings
relative to the Company (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or
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other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including, without limitation, payment of all compensation,
expense and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to holders of Senior Indebtedness to the extent required by the
Collateral Agency Agreement and Article 10 hereof;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including, without limitation,
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
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ARTICLE 7
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture but need
not verify the contents thereof.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02, 6.04 or 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), (c), (e) and (f) of this Section 7.01 and Section 7.02 hereof.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
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(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(a), 6.01(b) and 4.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
(h) The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Trustee
may, in its discretion, make such further inquiry or investigation into such
facts or matters as it may see fit and if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company personally or by agent or attorney.
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(i) The Trustee shall not be required to give any bond or surety in respect
of the performance of its powers and duties hereunder.
(j) Delivery of reports, information and documents to the Trustee under
Section 4.03 is for informational purposes only and the Trustee's receipt of the
foregoing shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company with the same rights it would
have if it were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue as trustee or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 45 days after such Default or Event Default
becomes known to the Trustee. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each March 1 beginning with the March 1 following the
Original Issuance Date, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss. 313(b).
The Trustee shall also transmit by mail all reports as required by TIA ss.
313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are
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listed in accordance with TIA ss. 313(d). The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
SECTION 7.07 COMPENSATION AND INDEMNITY.
The Company shall pay the Trustee from time to time reasonable compensation
for its acceptance of this Indenture and services hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee and its agents, employees,
officers, directors and shareholders for, and hold the same harmless against,
any and all losses, liabilities or expenses (including, without limitation,
reasonable attorneys' fees and expenses) incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including, without limitation, the costs and expenses of enforcing
this Indenture against the Company (including, without limitation, this Section
7.07) and defending itself against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which it
may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim with counsel reasonably satisfactory to the Trustee, and the Trustee shall
cooperate in the defense at the Company's expense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
resignation or removal of the Trustee and/or the satisfaction and discharge or
termination of this Indenture.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation or removal
of the Trustee and/or the satisfaction and discharge or termination of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) hereof occurs, the expenses and the
compensation for the services (including, without limitation, the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
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SECTION 7.08 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10
hereof, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIAss. 310(a)(1), (2) and (5). The Trustee is subject to TIAss. 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder:
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(a) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest, if any, on such
Notes when such payments are due from the trust referred to below,
(b) the Company's obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust,
(c) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's obligations in connection therewith and
(d) the Legal Defeasance provisions of this Indenture.
SECTION 8.03 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.06, 4.07, 4.08, 4.09,
4.11 and 4.12 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(e) hereof shall not constitute Events of Default.
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance,
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding Notes on the stated maturity or on the applicable redemption date,
as
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the case may be, and the Company must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (ii) since the Original
Issuance Date, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, subject to customary assumptions and exclusions, the Holders
of the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit);
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company must have delivered to the Trustee an Opinion of Counsel to
the effect that, subject to customary assumptions and exclusions, after the
123rd day following the deposit, the trust funds will not be subject to the
effect of Section 547 of the United States Bankruptcy Code or any analogous New
York State law provision or any other applicable federal or New York bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel (which opinion may be subject to customary assumptions and
exclusions), each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
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SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including, without limitation, the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including, without limitation, the
Company acting as Paying Agent) as the Trustee may determine, to the Holders of
such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06 REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as a secured creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustees thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining,
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restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the Trustee
may amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including,
without limitation, the related definitions) in a manner that does not
materially adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to provide for Guarantees of the Notes and the execution of License
Holding Subsidiary Pledge Agreements in accordance with Section 4.13.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
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SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture (including, without limitation, Section
4.08 hereof) and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes (including,
without limitation, Secondary Notes, if any) then outstanding voting as a single
class (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, Secondary Notes, if any) voting as a single class (including,
without limitation, consents obtained in connection with the purchase of, or
tender offer or exchange offer for, the Notes). Sections 2.08 and 2.09 hereof
shall determine which Notes are considered to be "outstanding" for purposes of
this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes (including, without
limitation, Secondary Notes, if any) then outstanding voting as a single class
may waive compliance in a particular instance by the Company with any provision
of this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver,
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption or repurchase of the Notes
(other than Section 4.07 hereof),
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(c) reduce the rate of or extend the time for payment of interest on any
Note,
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration),
(e) make any Note payable in money other than that stated in the Notes,
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults,
(g) waive a redemption or repurchase payment with respect to any Note
(other than Section 4.07 hereof), or
(h) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement, waiver or other action permitted by this Indenture, which record
date shall be the date so fixed by the Company notwithstanding the provisions of
the TIA. If a record date is fixed, then notwithstanding the second sentence of
the immediately preceding paragraph, those Persons who were Holders at such
record date, and only those Persons (or their duly designed proxies), shall be
entitled to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Holder of a Note, unless it makes a change described in any of clauses (a)
through (h) of Section 9.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided that any such waiver shall not impair or
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affect the right of any Holder to receive payment of principal and premium of
and interest on a Note, on or after the respective dates set for such amounts to
become due and payable expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until its Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
13.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01 AGREEMENT TO SUBORDINATE AND PRIORITY.
The Company agrees, and each Holder by accepting a Note agrees, that the
Payment of Subordinated Note Obligations are subordinated in right of Payment,
to the extent and in the manner set forth in this Article 10, to the prior
Payment in full in cash or cash equivalents of all Senior Indebtedness, whether
outstanding on the Original Issuance Date or thereafter incurred and that the
subordination is for the benefit of the holders of Senior Indebtedness. The
provisions of this Article 10 shall constitute a continuing offer to all Persons
that, in reliance upon such provisions, become holders of, or continue to hold
Senior Indebtedness, and they or each of them may enforce the rights of holders
of Senior Indebtedness hereunder, subject to the terms and provisions hereof.
Each of the Trustee and each of the Holders agrees that, notwithstanding
any terms or rights in this Indenture or at equity or in law to the contrary,
the Trustee, for the benefit of the Holders, shall exercise no rights and
remedies against the Collateral except as expressly permitted in the Collateral
Agency Agreement.
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SECTION 10.02 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any Distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, (a) the holders of Senior Indebtedness will be entitled
to receive Payment in full in cash or cash equivalents of all Obligations due in
respect of such Senior Indebtedness (including, without limitation, interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Indebtedness) before the Holders of Notes will be entitled to
receive any Payment with respect to the Subordinated Note Obligations (except
that Holders of Notes may receive and retain Permitted Junior Securities and
Payments and other Distributions made from the trust described in Section 8.04
hereof), and (b) until all Obligations with respect to Senior Indebtedness are
paid in full in cash or cash equivalents, any Distribution to which the Holders
of Notes would be entitled but for this Article 10 shall be made to the holders
of Senior Indebtedness (except that Holders of Notes may receive and retain
Permitted Junior Securities and Payments and other Distributions made from the
trust described Section 8.04 hereof) as their interests appear; provided,
however, that nothing in this Section 10.02 shall prevent the issuance of
Secondary Notes in lieu of a cash payment of any or all interest due on any
Interest Payment Date.
SECTION 10.03 DEFAULT ON ANY SENIOR INDEBTEDNESS.
The Company may not make any Payment or Distribution to the Trustee or any
Holder upon or in respect of the Subordinated Note Obligations (except in
Permitted Junior Securities or from the trust described in Section 8.04 hereof)
until all principal and other obligations with respect to Senior Indebtedness
have been paid in full in cash or cash equivalents, if
(a) a default in the Payment of the principal (including, without
limitation, reimbursement obligations in respect of letters of credit) of,
premium, if any, or interest on or commitment, letter of credit or
administrative fees relating to, any other Senior Indebtedness occurs and is
continuing beyond any applicable period of grace in the agreement, indenture or
other document governing such Senior Indebtedness, or
(b) any other default occurs and is continuing with respect to the Senior
Indebtedness that permits holders of the Senior Indebtedness as to which such
default relates to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or the holders of
any Senior Indebtedness (or their Representative);
provided, however, that nothing in this Section 10.03 shall prevent the issuance
of Secondary Notes in lieu of a cash payment of any or all interest due on any
Interest Payment Date.
Payments on the Notes may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived and (b) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any Senior
Indebtedness has been accelerated. No new period of payment blockage may be
commenced unless and until 360 days have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default that existed or
was continuing on the
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date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been waived or cured for a period of not less than 90 days.
SECTION 10.04 ACCELERATION OF SECURITIES.
If Payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 10.05 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any Payment of any
Subordinated Note Obligations at a time when the Trustee or such Holder, as
applicable, has actual knowledge that such Payment is prohibited by Section
10.02 or 10.03 hereof, such Payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Indebtedness as their interests
may appear or their Representative under the indenture or other agreement (if
any) pursuant to which Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the Payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent Payment or Distribution to or for the holders of
Senior Indebtedness; provided, however, that nothing in this Section 10.05 shall
prevent the issuance of Secondary Notes in lieu of a cash payment of any or all
interest due on any Interest Payment Date.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness, and shall not be liable to any such
holders if the Trustee shall pay over or distribute to or on behalf of Holders
or the Company or any other Person money or assets to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article 10, except if
such Payment is made as a result of the willful misconduct or gross negligence
of the Trustee.
SECTION 10.06 NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a Payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Indebtedness as
provided in this Article 10.
SECTION 10.07 SUBROGATION.
After all Senior Indebtedness is paid in full in cash or cash equivalents
and until the Notes are paid in full, Holders of Notes shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Notes) to
the rights of holders of Senior Indebtedness to receive Distributions applicable
to Senior Indebtedness to the extent that Distributions otherwise payable to the
Holders of Notes have been applied to the Payment of Senior Indebtedness. A
Distribution
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made under this Article 10 to holders of Senior Indebtedness that otherwise
would have been made to Holders of Notes is not, as between the Company and
Holders, a Payment by the Company on the Notes.
SECTION 10.08 RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and holders
of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and holders of notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior
Indebtedness; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Indebtedness to receive
Distributions and Payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the subordination
of the Indebtedness evidenced by the Notes shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
SECTION 10.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a Distribution is to be made or a notice given to holders of
Senior Indebtedness, the Distribution may be made and the notice given to their
Representative.
Upon any Payment or Distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any Distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
Distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11 RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit
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the making of any Payment or Distribution by the Trustee, and the Trustee and
the Paying Agent may continue to make Payments on the Notes, unless the Trustee
shall have received at its Corporate Trust Office at least five Business Days
prior to the date of such payment written notice of facts that would cause the
Payment of any Obligations with respect to the Notes to violate this Article 10.
Only the Company or a Representative may give the notice. Nothing in this
Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee may hold Senior Indebtedness with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights.
SECTION 10.12 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative is hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.
SECTION 10.13 NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act by any such holder.
(b) Without in any way limiting the generality of paragraph (a) of this
Section 10.13, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or any Holder, without
incurring responsibility to any Holder and without impairing or releasing the
subordination provided in this Article 10 or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, any Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against either Company or any
other Person.
SECTION 10.14 AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Indebtedness.
SECTION 10.15 TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article 10 shall apply to amounts due to the Trustee pursuant to
other sections of this Indenture.
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ARTICLE 11
COLLATERAL AND SECURITY
SECTION 11.01 CASH COLLATERAL ACCOUNT.
(a) There is hereby established by the Trustee for the benefit of the
Collateral Agent and the Holders a cash collateral account, subject to such
applicable laws and such applicable regulations of the Board of Governors of the
Federal Reserve System and of any other appropriate banking or governmental
authority as may now or hereafter be in effect (the "Cash Collateral Account"),
in the name and under the sole dominion and control of the Collateral Agent. The
Company shall, except as provided in Section 4.07(c), deposit from time to time
into the Cash Collateral Account all Net Proceeds of any Permitted License
Holding Subsidiary Transaction allocable to the Collateral. Any income received
by the Collateral Agent with respect to the balance from time to time standing
to the credit of the Cash Collateral Account, including any interest or capital
gains on Permitted Investment Accounts or Instruments, shall remain, or be
deposited, in the Cash Collateral Account. All such income, interest or capital
gains which are received by the Company shall be received in trust for the
benefit of the Collateral Agent and the Holders and shall be paid over to the
Collateral Agent as Collateral in the same form as received (with any necessary
endorsement) to be released or disposed of only as specified in subsection (b),
and the Company shall deposit any such interest and other payments that are in
the form of cash into the Cash Collateral Account. All right, title and interest
in and to the cash amounts on deposit from time to time in the Cash Collateral
Account, together with any Permitted Investment Accounts from time to time made
pursuant to this Section 11.01 and any Instruments deposited therein, shall vest
in the Collateral Agent, shall constitute part of the Collateral hereunder and
shall not constitute payment of the Secured Obligations until applied thereto as
provided in the applicable Security Document(s).
(b) The balance from time to time standing to the credit of the Cash
Collateral Account shall be distributed to the Company entitled thereto only as
permitted under Section 4.07 or the Collateral Agency Agreement; provided that
the Collateral Agent shall not distribute to the Company or such other Person
any such funds upon the occurrence and continuation of a Default except pursuant
to the express terms of the Collateral Agency Agreement. If immediately
available cash on deposit in the Cash Collateral Account is not sufficient to
make any such permitted distribution, the Collateral Agent shall liquidate as
promptly as practicable Permitted Investment Accounts as required to obtain
sufficient cash to make such distribution and, notwithstanding any other
provision of Sections 4.07 and 6.01 or this Section 11.01 or any other Security
Document, such distribution shall not be made until such liquidation has taken
place.
(c) Amounts on deposit in the Cash Collateral Account shall be invested and
reinvested from time to time in such Permitted Investment Accounts as are
described in clauses (a), (b), (c) and (d) of the definition of such term, as
the Company shall instruct the Collateral Agent in writing, provided, however,
that if a Default shall have occurred and be continuing, the Collateral Agent
shall have the exclusive right to make investment decisions with respect to
amounts on deposit in the Cash Collateral Account. Such Permitted Investment
Accounts shall be held in the name and be under the sole dominion and control of
the Collateral Agent, subject to the right of the Trustee under Article 6 and
the Security Documents. In order to provide the Collateral Agent, for the
benefit of the Holders, with a perfected security interest therein, each such
Permitted Investment Account, or, in the case of the Permitted
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Investment Accounts described in clause (d) of the definition of that term, each
security which is the subject of a repurchase obligation, shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Collateral Agent, which (i)
are delivered (together with any appropriate instruments of transfer) to,
and held by, the Collateral Agent or an agent thereof (which shall not be
the Company or any of its Affiliates) in the State of ___________ or (ii)
held by or on behalf of DTC ("Clearing Corporation") and credited to a
securities account of the Collateral Agent maintained with such Clearing
Corporation; or
(ii) maintained in book-entry form on the records of a Federal Reserve
Bank and registered in the name of the Collateral Agent, as depositary, in
a book-entry securities account maintained with respect to such Permitted
Investment with the Federal Reserve Bank in the Federal Reserve District in
which the Corporate Trust Office is located.
SECTION 11.02 INSTRUMENTS.
(a) The Company and, if applicable, any License Holding Subsidiary will
within the time period specified in Section 4.07(c), deliver and pledge to the
Collateral Agent [or its nominee] each Instrument acquired by it [or any of its
License Holding Subsidiaries] at any time as part of the noncash consideration
for any Permitted License Holding Subsidiary Transaction, appropriately endorsed
to the Collateral Agent, provided that the Collateral Agent may, upon request of
the Company, make appropriate arrangements for making any Instrument pledged by
the Company available to it for purposes of presentation, collection or renewal
(any such arrangement to be effected, to the extent deemed appropriate to the
Collateral Agent, against trust receipt or like document); subject, however, to
the Lien on such Instruments and the proceeds thereof. All Instruments required
under this subsection (a) to be delivered to the Collateral Agent shall be so
delivered by the Company pursuant hereto endorsed in suitable form for transfer
by endorsement and delivery by the Collateral Agent, and accompanied by any
required transfer tax stamps, all in form and substance reasonably satisfactory
to the Collateral Agent.
(b) Except as otherwise provided in this subsection (b), the Company shall
continue to enforce, at its own expense, any and all obligations of any Persons
to it arising out of Instruments received as noncash consideration and shall
continue to collect, at its own expense, all amounts due, if any, or to become
due, that arise out of such Instruments; provided, however, that the Collateral
Agent shall have the right at any time, and from time to time, upon the
occurrence and during the continuance of a Default, to direct the obligors to
the Company under such Instruments to make payment of all amounts or other
property due or to become due to the Company thereunder directly to the
Collateral Agent and, at the expense of the Company, to enforce such
Instruments, and to adjust, settle or compromise the amount or payment thereof,
if any, in the same manner and to the same extent as the Company might have
done. Upon the occurrence and during the continuance of a Default, all property
received by the Company in respect of such Instruments shall be received in
trust for the benefit of the Collateral Agent hereunder, shall be segregated
from other property of the Company and shall be forthwith delivered to the
Collateral Agent in the same form as so received (with any necessary endorsement
or assignment) to be held
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as Collateral and either (i) released or disposed of according to Section 11.01,
so long as no Default shall be continuing, or (ii) if any Event of Default shall
have occurred and the Notes have been accelerated, applied as provided by
Section 6.02.
(c) Upon the occurrence and during the continuance of a Default, the
Company will promptly notify (and hereby authorizes the Trustee and the
Collateral Agent so to notify) each account debtor in respect of any Instrument
received as noncash consideration that such Collateral has been assigned to the
Collateral Agent hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the Collateral Agent or
its designee.
SECTION 11.03 PLEDGED SUBSIDIARY SHARES.
(a) The Company will, and as applicable, will cause its Restricted
Subsidiaries to, immediately deliver and pledge to the Collateral Agent
certificates acquired by it at any time representing License Holding Subsidiary
Shares. All certificates representing License Holding Subsidiary Shares listed
on Schedule ___ hereto or otherwise delivered to the Collateral Agent by the
Company pursuant hereto shall be accompanied by undated, duly executed stock
powers in blank, and accompanied by any required transfer tax stamps, all in
form and substance reasonably satisfactory to the Collateral Agent but subject
to the terms and conditions of the License Holding License Holding Subsidiary
Pledge Agreements.
(b) The Company will promptly give to the Collateral Agent copies of any
notices or other communications received by it with respect to License Holding
Subsidiary Shares registered in the name of the Company or any Subsidiary of the
Company and the Collateral Agent will promptly give to the Company copies of any
notices and communications received by the Collateral Agent with respect to
License Holding Subsidiary Shares registered in the name of the Collateral Agent
or its nominee.
(c) Unless a Default shall have occurred and be continuing and as provided
in the License Holding License Holding Subsidiary Pledge Agreements, the Company
shall have the right to receive any and all dividends permitted by Section 4.06
of this Indenture paid on the License Holding Subsidiary Shares other than any
dividends in the form of additional License Holding Subsidiary Shares, which
shall be immediately delivered and pledged to the Collateral Agent pursuant to
subsection (a); provided that until the Collateral Agent has received an
Officer's Certificate stating (i) the source, type and amount of such dividend
and (ii) that no Default has occurred and is continuing, any such cash dividend
(unless paid in the form of License Holding Subsidiary Shares) will be held by
the Company in trust for the benefit of the Collateral Agent and the Holders. If
a Default shall have occurred, the Company shall deposit any such cash dividends
with the Collateral Agent to be held as part of the Collateral.
(d) Unless and until (i) an Event of Default shall have occurred and be
continuing and (ii) written notice thereof shall have been given by the Trustee
to the Company, the Company shall have the right, from time to time, to vote and
give consents, ratifications and waivers with respect to the License Holding
Subsidiary Shares solely to the extent provided in the License Holding
Subsidiary Pledge Agreements. If an Event of Default shall have occurred, the
Collateral Agent shall have the right during the continuation of such Event of
Default, solely to the extent permitted by law and as provided in the License
Holding License Holding Subsidiary
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Pledge Agreements, and the Company shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to give
consents, ratifications or waivers and take any other action with respect to any
or all of the License Holding Subsidiary Shares with the same force and effect
as if the Collateral Agent were the sole and absolute owner thereof, including
without limitation, causing the registration thereof in the name of the
Collateral Agent. For purposes of subsection (a) of this Section 11.03, if the
License Holding Subsidiary Shares being pledged are the Capital Stock of a
Subsidiary organized under the laws of a jurisdiction other than the United
States, a State thereof or the District of Columbia, the Company shall (or shall
cause, as applicable, its Subsidiary to) execute and deliver to the Collateral
Agent a License Holding Subsidiary Pledge Agreement with respect thereto, which
shall be substantially in the form of Exhibit __ hereto, with such changes
therein (which shall be reasonably satisfactory to the Collateral Agent), as are
required by the law of the jurisdiction in which such subsidiary is organized in
order to grant a security interest in such Capital Stock comparable to that
provided for in Exhibit ____ hereto, as evidenced by an Opinion of Counsel
(which shall also address the validity of such agreement and the creation,
perfection and enforceability of such security interest).
SECTION 11.04 GENERAL AUTHORITY.
Each of the Company and the Trustee hereby irrevocably appoints the
Collateral Agent its true and lawful attorney (as provided in the License
Holding License Holding Subsidiary Pledge Agreements), with full power of
substitution, in the name of the Company, the Trustee, the Holders or otherwise,
for the sole use and benefit of the Trustee and the Holders, but at the
Company's expense, to the extent permitted by law to exercise, at any time and
from time to time while an Event of Default has occurred and is continuing, all
or any of the following powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due thereon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto;
(iii) if the Notes have been declared, or have become, due and payable
and such declaration and its consequences have not been rescinded and
annulled, to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof; and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral. The Company agrees that such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the Uniform Commercial Code.
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SECTION 11.05 LIMITATION ON DUTY OF TRUSTEE IN RESPECT OF COLLATERAL;
INDEMNIFICATION.
(a) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
diminution in the value of any of the Collateral, by reason of the act or
omission of any carrier, forwarding agency, or other agent or bailee selected by
the Collateral Agent in good faith.
(b) The Collateral Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder. The Collateral Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Indenture by the Company.
(c) In the event that the Company fails to comply with the provisions of this
Indenture such that the value of any Collateral or the validity, perfection,
rank or value of any Lien is thereby diminished or potentially diminished or put
at risk, the Collateral Agent may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the
Collateral Agent for the costs thereof on demand. All expenses of protecting,
storing, insuring, handling and shipping the Collateral, any and all excise,
property, sales and use taxes imposed by any state, federal or local authority
on any of the Collateral, or expenses in respect of (i) the sale or other
disposition thereof, (ii) the administration or enforcement of this Indenture,
(iii) the exercise by the Collateral Agent of any of the rights conferred upon
it hereunder, including, without limitation, the preservation of the validity,
perfection, rank or value of any Lien or (iv) any Default or Event of Default,
shall be borne and paid by the Company; and if the Company fails to promptly pay
any portion of such expenses when due, the Collateral Agent may, at its option,
but shall not be required to, pay the same and charge the Company's account
therefor, and the Company agrees to reimburse the Collateral Agent therefor on
demand. All sums so paid or incurred by the Collateral Agent for any of the
foregoing and any and all other sums for which the Company may become liable
hereunder and all costs and expenses (including attorneys' fees, legal expenses
and court costs) reasonably incurred by the Collateral Agent in enforcing or
protecting the Liens or any of its rights or remedies under this Indenture,
shall, together with interest thereon until paid [at the rate applicable to the
Notes], be additional Secured Obligations hereunder.
SECTION 11.06 SECURITY DOCUMENTS; PRIORITY.
Each Holder, by its acceptance of a Note, (i) consents and agrees to all of
the terms and conditions of the Security Documents and authorizes and directs
the Trustee and the Collateral Agent to enter into each of the Security
Documents and to perform its respective obligations and exercise its respective
rights thereunder in accordance therewith; provided, however, that if any
provision of the Security Documents limits, qualifies, or conflicts with the
duties imposed by the provisions of the TIA, the TIA controls, and (ii)
acknowledges that, as more fully set forth in the
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Collateral Agency Agreement and the License Holding Subsidiary Pledge Agreement,
the rights of the Holders in and to the Collateral shall be subordinate to the
rights of the creditors under any Senior Indebtedness existing from time to time
hereafter to the Collateral.
SECTION 11.07 CERTIFICATES OF THE COMPANY.
The Company will furnish to [the Trustee and the Collateral Agent] prior to
each proposed release of Collateral pursuant to this Indenture or any other
Security Document, (i) all documents required by Section 314(d) of the TIA, if
any, (ii) an Officers' Certificate requesting a release of Collateral and
describing the property to be so released and (iii) an Opinion of Counsel to the
effect that such accompanying documents constitute all documents required by
Section 314(d) of the TIA.
SECTION 11.08 MISCELLANEOUS.
(a) The Liens are granted as security only and not a transfer of title and
shall not subject the Collateral Agent, Trustee or any Holder to, or transfer or
in any way affect or modify, any obligation or liability of the Company or any
Subsidiary of the Company with respect to any of the Collateral or any
transaction in connection therewith.
(b) The Company will not effect any Permitted License Holding Subsidiary
Transaction with respect to any Collateral except as permitted under Section
4.07 of this Indenture.
(c) The Trustee and the Collateral Agent shall take, or cause to be taken,
any action reasonably requested by the Company to release any and all Liens in
connection with a Permitted License Holding Subsidiary Transaction in accordance
with the terms and conditions of the Security Documents.
(d) The Company will, promptly upon request, provide to the Trustee all
information and evidence it may reasonably request concerning the Collateral and
any other information the Trustee may reasonably request to enable the Trustee
to enforce the provisions of this Indenture.
(e) The Company shall comply, in all material respects, with all acts,
rules, regulations, orders, decrees and directions of any court or governmental
instrumentality applicable to the Collateral.
(f) The Company will deliver to the Collateral Agent a copy of each
material demand, notice or document received by it relating in any way to the
Collateral if failure to so deliver might adversely affect the Collateral
Agent's ability to safeguard the Lien on such Collateral.
ARTICLE 12
NOTE GUARANTEES
SECTION 12.01 GUARANTEE.
Subject to this Article 12, the Guarantors hereby unconditionally guarantee
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee (a) the full and punctual payment of principal of and interest on the
then outstanding Notes when due (taking into
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account all applicable grace periods provided hereunder), whether at maturity,
by acceleration, by redemption or otherwise, and all other amounts payable by
the Company under this Indenture and the Notes, and (b) the full and punctual
performance of all other obligations of the Company under this Indenture and the
Notes (all the foregoing described in (a) and (b) being hereafter collectively
called the "Guarantee Obligations"). The Guarantors further agree that the
Guarantee Obligations may be extended or renewed, in whole or in part, without
notice or further assent from each of the Guarantors, and that the Guarantors
will remain bound under this Article 12 notwithstanding any extension or renewal
of any Guarantee Obligation.
Each Guarantor further agrees that the Guarantee herein constitutes a
guarantee of payment, performance and compliance when due (and not a guarantee
of collection) and waives any right to require that any resort be had by any
Holder, the Trustee or the Collateral Agent to any security held for payment of
the Guarantee Obligations.
The Guarantors waive presentation to, demand of payment from and protect to
the Company of any of the Guarantee Obligations and also waive notice of any
default under the Obligations not provided for herein. The obligations of the
Guarantors hereunder, subject to Article 8, shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guarantee Obligations or otherwise.
Without limiting the generality of the foregoing, except as provided in
Article 8, the obligations of the Guarantors hereunder shall not be discharged
or impaired or otherwise affected by (a) the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any right or remedy against
the Company or any other person under this Indenture and the Notes; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Indenture and the Notes
(except as to the Guarantees or this Article 12); (d) the release of any
security held by any Holder, the Trustee or the Collateral Agent for the
Guarantee Obligations or any of them; (e) the failure of any Holder or Trustee
to exercise any right or remedy against any other guarantor of the Guarantee
Obligations; (f) any change in the ownership of the Guarantors; (g) any default,
failure of delay, willful or otherwise, in the performance of the Guarantee
Obligations; or (h) by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of the Guarantors or would otherwise operate as a discharge of the
Guarantors as a matter of law or equity.
The Guarantors further agree that if at any time payment, or any part
thereof, of principal of or interest on any Guarantee Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company and or the Restricted Subsidiaries or otherwise,
its Guarantees herein as to each such amount shall continue to be effective or
be reinstated, as the case may be.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against the Guarantors
by virtue hereof, upon the failure of the Company and or the Restricted
Subsidiaries to pay the principal of or interest on any Guarantee Obligation
when and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Guarantee
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Obligation (in each case taking into account all applicable grace periods
provided hereunder), the Guarantors hereby promise to and will, upon receipt of
written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to
the Holders or the Trustee such amount not so paid.
Notwithstanding any provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee, or the taking of any other
action by the Trustee, until three Business Days after a trust officer of the
Trustee shall have actually received written notice thereof from the Company,
the Guarantors, any Holder of the Notes, any Paying Agent or any bank.
The Guarantors agree that they shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Guarantee Obligations
guaranteed hereby. The Guarantors further agree that, as between the Guarantors,
on the one hand, and the Holders and the Trustee, on the other hand, (a) the
maturity of the Guarantee Obligations guaranteed hereby may be accelerated as
provided in Article 6 for the purposes of the Guarantors' Guarantees herein, and
(b) in the event of any declaration of acceleration of such Guarantee
Obligations as provided in Article 6 and if the Guarantee Obligations thereby
become due and payable, such Guarantee Obligations shall forthwith become due
and payable by the Guarantors for the purpose of this Section.
SECTION 12.02 NO WAIVER, ETC.
Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article 12 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege. The
rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Article 12 at law, in equity, by
statute or otherwise.
SECTION 12.03 SUBORDINATION OF NOTE GUARANTEES.
Each Guarantor agrees, and each Holder by accepting a Note agrees, that the
Guarantee Obligations of the Guarantors pursuant to this Article 12 shall be
junior and subordinated to the rights of any Senior Indebtedness of the Company
or any Guarantor existing from time to time hereafter in the Collateral on the
same basis as the Notes are junior and subordinated to the rights of any Senior
Indebtedness as provided in Articles 10 and 11 hereof and in the Collateral
Agency Agreement. For the purposes of the foregoing sentence, the Trustee and
the Holders shall have the right to receive and/or retain payments by any such
Guarantor only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture.
SECTION 12.04 LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor and, by its acceptance of the Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Guarantee
Obligations not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state laws to the extent applicable to
the Guarantee Obligations. To effectuate the foregoing intention, the Trustee,
the Holders and each of the Guarantors hereby irrevocably agree that the
obligations of each of the
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Guarantors under the Guarantee Obligations and this Article 12 shall be limited
to the maximum amounts as will, after giving effect to such maximum amount and
all other contingent and fixed liabilities of the Guarantors that are relevant
under such laws, result in the obligations of the Guarantors under the Guarantee
Obligations not constituting a fraudulent transfer or conveyance.
SECTION 12.05 EXECUTION AND DELIVERY OF NOTE GUARANTEES.
To evidence the Guarantee Obligations set forth in Section 12.01, each
Guarantor hereby agrees that this Indenture shall be executed on its behalf by
the president or one of its vice presidents.
If an officer whose signature is on this Indenture no longer holds that
office at the time the Trustee authenticates the Notes, the Guarantee
Obligations shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee Obligations set forth
in this Indenture on behalf of the Guarantor.
SECTION 12.06 RELEASES FOLLOWING SALE FOR ASSETS.
In the event a Guarantor sells or otherwise disposes of all of its License
Holding Subsidiary Shares by way of merger, consolidation or otherwise, then
such Guarantor in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of its License Holding Subsidiary Shares
shall be released and relieved of any obligations under the Guarantee
Obligations; provided that the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of this Indenture,
including, without limitation, Section 4.07 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the applicable provisions of this Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of the Guarantor
from its obligations under the Guarantee Obligations.
SECTION 12.07 NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS OR
DIRECTORS.
No direct or indirect stockholder, partner, employee, officer or director,
as such, past, present or future of any Guarantor or any successor entity shall
have any personal liability in respect of the obligations of any Guarantor or
any successor entity under this Agreement by reason of his or its status as such
stockholder, partner, employee, officer or director.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
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SECTION 13.02 NOTICES.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address.
If to the Company or to the Guarantors:
NextWave Telecom Inc.
3 Skyline Drive
Hawthorne, New York 10532
Telecopier No.: (914) 345-1141
Attention: Frank A. Cassou, Esq.
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopier No.: (212) 310-8007
Attention: Michael F. Walsh, Esq.
If to the Trustee:
[Name]
[Address]
Telecopier No.: __________
Attention: [Corporate Trust Administration]
With a copy to:
[Name]
[Address]
Telecopier No.: ______________
Attention: _______________, Esq.
[If to the Collateral Agent:
[Name]
[Address]
Telecopier No.: __________
Attention: _______________, Esq.]
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
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All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 13.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 13.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 13.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 13.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read
such covenant or condition;
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(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 13.06 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No member, director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes or this Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 13.08 GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10 SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 13.11 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 13.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
NEXTWAVE TELECOM INC., as Issuer
By: _________________________________________________
Name: ____________________________________________
Title: __________________________________________
NEXTWAVE PERSONAL COMMUNICATIONS INC., as Guarantor
By: _________________________________________________
Name: ____________________________________________
Title:___________________________________________
NEXTWAVE POWER PARTNERS INC., as
Guarantor
By: _________________________________________________
Name: ____________________________________________
Title:___________________________________________
[NAME OF TRUSTEE]
By: _________________________________________________
Name: ____________________________________________
Title: __________________________________________
[[NAME OF COLLATERAL AGENT]
By: _________________________________________________
Name: ____________________________________________
Title: _________________________________________]
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EXHIBIT A
(Face of Global or Definitive Note)
================================================================================
CUSIP ____________
12% Senior Secured Subordinated Notes due 2009
No. _____ $___________
NEXTWAVE TELECOM INC.
promises to pay to _______________, or registered assigns, the principal sum of
___________ Dollars on _____________, 2009.
Interest Payment Dates: __________ and __________
Record Dates: __________ and __________
[Insert the Global Note Legend, if applicable, pursuant to Section 2.06(f) of
the Indenture]
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Dated:
NEXTWAVE TELECOM INC.
By: _________________________________
Name: _________________________
Title: ________________________
This is one of the Notes referred to
in the within-mentioned Indenture:
[NAME],
as Trustee
By: _________________________________
Name: _________________________
Title: ________________________
================================================================================
A-F-1
<PAGE>
(Back of Note)
12% Senior Secured Subordinated Notes due 2009
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. Security Interest. The Notes are secured by the Collateral subject to
the Lien of the Security Documents and subject to the terms and the conditions
of the Collateral Agency Agreement.
2. Interest. NextWave Telecom Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 12% per annum
from __________, 1999 until maturity. The Company will pay interest
semi-annually on __________ and __________ of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each, an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; and provided further
that the first Interest Payment Date shall be _____________. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
On each Interest Payment Date, the Company shall, in lieu of a payment in
cash, execute and deliver to the Trustee for authentication, together with an
Authentication Order given not less than 15 nor more than 45 days prior to such
Interest Payment Date for the authentication and delivery thereof, additional
Notes ("Secondary Notes") in an aggregate principal amount equal to such
interest due and payable on the Notes on such Interest Payment Date in
accordance with Section 2.01(b) of the Indenture. The Trustee, in accordance
with such Authentication Order, shall so authenticate and deliver to the Holders
of record on such record date such Secondary Notes requested in such
Authentication Order (such duly executed and authenticated Secondary Notes being
of the same series as the Notes), and the due issuance of such Secondary Notes
shall constitute full payment of such interest; provided, however, the Company
may, at its option, duly authorize the payment in cash of all or a portion of
any interest due on any such Interest Payment Date, in lieu of a payment in
Secondary Notes, by giving notice to the Holders and the Trustee not less than
15 nor more than 45 days prior to the record date for such Interest Payment
Date; provided further, however, that in lieu of the issuance of any Secondary
Note the principal amount of which (x) would be less than $1,000 or (y) would
exceed the largest integral multiple of $1,000 which is less than or equal to
such principal amount (in each case, a "Fractional Secondary Note"), the Company
shall, in the case of clause (y), issue a Secondary Note with a principal amount
equal to such largest integral multiple and shall, in the case of clauses (x)
and (y), in its sole discretion, either (1) on behalf of and for the accounts of
all Holders of Notes who would be entitled to Fractional Secondary Notes,
aggregate all such Fractional Secondary Notes and, on or before the tenth
Business Day following the applicable Interest Payment Date, sell such
aggregated Fractional Secondary Notes and, within six Business Days of such
sale, pay each such Holder its proportionate share of the net proceeds of such
sale, or (2) pay (on the Interest Payment Date) each such Holder, with respect
to any Fractional Secondary Note that such Holder would otherwise be entitled to
receive, an amount in cash equal to the average closing price per $1,000
principal amount of Notes for the ten trading days preceding the Business Day
immediately preceding the applicable Interest Payment Date multiplied by a
fraction, the numerator of which is the principal amount of such Fractional
Secondary Note otherwise issuable to such Holder and the denominator of which is
$1,000. Each issuance of Secondary Notes in lieu of the payment of all or any
portion of interest in cash on the Notes shall be made pro rata with respect to
the outstanding Notes.
3. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the __________ or __________ next preceding the Interest
Payment Date, even if such Notes are cancelled after such record
A-R-1
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date and on or before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The Notes will be
payable as to principal, premium, if any, and interest at the office of the
Paying Agent and Registrar. Holders of Notes must surrender their Notes to the
Paying Agent to collect principal payments, and the Company may pay principal
and interest, if any, by check and may mail checks to a Holder's registered
address; provided that all payments with respect to Global Notes will be paid by
wire transfer of immediately available funds to the account of the Depositary.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
4. Paying Agent and Registrar. Initially, _____________________, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
5. Indenture. The Company issued the Notes under an Indenture dated as of
________, 1999 ("Indenture"), between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
Notes are obligations of the Company limited in aggregate principal amount to
$225,000,000 plus the aggregate principal amount of any Secondary Notes issued
pursuant to Section 2.02 of the Indenture.
6. Optional Redemption.
(a) The Company may redeem the Notes, in whole or in part, at any time at
the option of the Company, upon not less than 30 nor more than 60 days' notice,
in cash at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period (or, with
respect to years (i) 1999, such shorter period beginning on the Original
Issuance Date, and (ii) 2009, such shorter period ending on the Maturity Date)
beginning on April 1 of the years indicated below:
Year Percentage
---- ----------
1999............................................... 100.000%
2000............................................... 100.000%
2001............................................... 102.000%
2002............................................... 103.000%
2003............................................... 104.000%
2004............................................... 105.000%
2005............................................... 104.000%
2006............................................... 103.000%
2007............................................... 102.000%
2008............................................... 101.000%
2009............................................... 100.000%
(b) Any redemption pursuant to this subparagraph 6 shall be made pursuant
to the provisions of Section 3.01 through 3.06 of the Indenture.
7. Notice of Redemption. Notice of redemption will be mailed by first class
mail at least 30 days but not more than 60 days before the redemption date to
each Holder of Notes to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
A-R-2
<PAGE>
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be treated as
its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding Notes
and any existing Default or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes. Without the consent of any
Holder of a Note, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes in a manner that does not
materially adversely affect any Holder, to provide for the assumption of the
Company's obligations to Holders of the Notes by a successor to the Company in
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to provide
for guarantees of the Notes.
11. Defaults and Remedies. Each of the following constitutes an "Event of
Default": (a) default for 30 days in the payment when due of interest on the
Notes (whether or not prohibited by Article 10 of the Indenture); (b) default in
payment when due of the principal of or premium, if any, on the Notes (whether
or not prohibited by Article 10 of the Indenture); (c) failure by the Company
for 60 days after notice from the Trustee or the Holders of at least 33-1/3% in
principal amount of the Notes then outstanding to comply with any of its other
agreements in the Indenture or the Notes; (d) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such Indebtedness or
guarantee now exists, or is created after the Original Issuance Date, which
default results in the acceleration of such Indebtedness prior to its stated
final maturity and the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness the maturity of which has
been so accelerated, aggregates $50.0 million or more; (e) failure by the
Company or any of its Restricted Subsidiaries to pay final judgments aggregating
in excess of $50.0 million (net of any amounts with respect to which a reputable
and creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days; and (f)
certain events of bankruptcy or insolvency as described in the Indenture.
If any Event of Default (other than certain events of bankruptcy or
insolvency) occurs and is continuing, the Holders of at least 25% in principal
amount of the then outstanding Notes may, only on the terms and subject to the
conditions set forth in the Collateral Agency Agreement, direct the Trustee to
declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately, provided, that
so long as any Senior Indebtedness shall be
A-R-3
<PAGE>
outstanding, such acceleration shall not be effective until five Business Days
after receipt by the Company and the lender under any Senior Indebtedness of
written notice of such acceleration. Notwithstanding the foregoing, in the case
of an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Notes shall be due and payable immediately without further
action or notice. The Holders of a majority in aggregate principal amount of the
then outstanding Notes by written notice to the Trustee may on behalf of all of
the Holders rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium, if any, that has become
due solely because of the acceleration) have been cured or waived. The Company
is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default to deliver to the Trustee a statement specifying
such Default or Event of Default.
12. Subordination. The payment of Subordinated Note Obligations will be
subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full in cash or cash equivalents of all Senior Indebtedness, whether
outstanding on the Original Issuance Date or thereafter incurred. The Company
agrees, and each Holder by accepting a Note agrees, that the payment of
principal of, premium and interest, if any, on the Notes is subordinated in
right of payment, to the extent and in the manner provided in the Indenture, to
the prior payment in full in cash or cash equivalents of all Senior Indebtedness
(whether outstanding on the date hereof or thereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Indebtedness.
13. Defeasance. The Indenture contains provisions for defeasance at any
time of (i) the entire indebtedness of the Notes or (ii) certain restrictive
covenants and Events of Default with respect to the Notes, in each case upon
compliance with certain conditions set forth therein.
14. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. No member, director, officer, employee or
incorporator of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the Notes.
16. Authentication. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
A-R-4
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
NEXTWAVE TELECOM INC.
3 Skyline Drive
Hawthorne, New York 10532
Telecopier No.: (914) 345-1141
Attention: Frank A. Cassou, Esq.
A-R-5
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No:__________________________
Signature Guarantee.
A-R-6
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or a Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note following authorized officer
Principal Amount Principal Amount of such decrease (or of Trustee or Note
Date of Exchange of this Global Note this Global Note increase) Custodian
---------------- ------------------- ---------------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A-R-7
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C> <C>
310 (a)(1).................................................................................7.10
(a)(2) ................................................................................7.10
(a)(3).................................................................................N.A.
(a)(4).................................................................................N.A.
(a)(5).................................................................................7.10
(b)....................................................................................7.10
(c)....................................................................................N.A.
311 (a)....................................................................................7.11
(b)....................................................................................7.11
(c)....................................................................................N.A.
312 (a)....................................................................................2.05
(b)...................................................................................13.03
(c)...................................................................................13.03
313 (a)....................................................................................7.06
(b)....................................................................................7.06
(b)(1).................................................................................N.A.
(b)(2)...........................................................................7.06; 7.07
(c)...................................................................................13.02
(d)....................................................................................7.06
314 (a).............................................................................4.03; 13.05
(b)....................................................................................N.A.
(c)(1)................................................................................13.04
(c)(2)................................................................................13.04
(c)(3).................................................................................N.A.
(d)....................................................................................N.A.
(e)...................................................................................11.05
(f)....................................................................................N.A.
315 (a)....................................................................................7.01
(b)....................................................................................7.05
(c)....................................................................................7.01
(d)....................................................................................7.01
(e)....................................................................................6.11
316 (a)(last sentence).....................................................................2.09
(a)(1)(A)..............................................................................6.05
(a)(1)(B)..............................................................................6.04
(a)(2).................................................................................N.A.
(b)....................................................................................6.07
(c)....................................................................................2.12
317 (a)(1).................................................................................6.08
(a)(2).................................................................................6.09
(b)....................................................................................2.04
318 (a)...................................................................................13.01
(b)....................................................................................N.A.
(c)...................................................................................13.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...................................................2
SECTION 1.01 DEFINITIONS ......................................................................2
SECTION 1.02 OTHER DEFINITIONS................................................................18
SECTION 1.03 INCORPORATION OF TIA PROVISIONS..................................................19
SECTION 1.04 RULES OF CONSTRUCTION............................................................19
ARTICLE 2 THE NOTES ..................................................................................20
SECTION 2.01 FORM AND DATING..................................................................20
SECTION 2.02 EXECUTION AND AUTHENTICATION.....................................................21
SECTION 2.03 REGISTRAR AND PAYING AGENT.......................................................23
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST..............................................23
SECTION 2.05 HOLDER LISTS ....................................................................23
SECTION 2.06 TRANSFER AND EXCHANGE............................................................24
SECTION 2.07 REPLACEMENT NOTES................................................................28
SECTION 2.08 OUTSTANDING NOTES................................................................28
SECTION 2.09 TREASURY NOTES...................................................................28
SECTION 2.10 TEMPORARY NOTES..................................................................29
SECTION 2.11 CANCELLATION ....................................................................29
SECTION 2.12 DEFAULTED INTEREST...............................................................29
SECTION 2.13 SATISFACTION AND DISCHARGE OF INDENTURE..........................................29
ARTICLE 3 REDEMPTION AND PREPAYMENT...................................................................31
SECTION 3.01 NOTICES TO TRUSTEE...............................................................31
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED................................................31
SECTION 3.03 NOTICE OF REDEMPTION.............................................................31
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION...................................................32
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE......................................................32
SECTION 3.06 NOTES REDEEMED IN PART...........................................................33
SECTION 3.07 OPTIONAL REDEMPTION..............................................................33
SECTION 3.08 MANDATORY REDEMPTION.............................................................33
ARTICLE 4 COVENANTS ..................................................................................34
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 4.01 PAYMENT OF NOTES.................................................................34
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY..................................................34
SECTION 4.03 REPORTS .........................................................................34
SECTION 4.04 COMPLIANCE CERTIFICATE...........................................................35
SECTION 4.05 STAY, EXTENSION AND USURY LAWS...................................................35
SECTION 4.06 RESTRICTED PAYMENTS..............................................................36
SECTION 4.07 ASSET SALES .....................................................................39
SECTION 4.08 TRANSACTIONS WITH AFFILIATES.....................................................41
SECTION 4.09 LIENS ...........................................................................42
SECTION 4.10 CORPORATE EXISTENCE..............................................................42
SECTION 4.11 NO SENIOR SUBORDINATED INDEBTEDNESS..............................................43
SECTION 4.12 PAYMENTS FOR CONSENT.............................................................43
SECTION 4.13 ESTABLISHMENT OF SUBSIDIARIES....................................................43
SECTION 4.14 ISSUANCE OF SUBSIDIARY CAPITAL STOCK.............................................43
SECTION 4.15 [OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................................44
SECTION 4.16 GUARANTEES BY LICENSE HOLDING SUBSIDIARIES.......................................45
SECTION 4.17 CONSUMMATION OF PLAN OF REORGANIZATION...........................................45
ARTICLE 5 SUCCESSORS .................................................................................45
SECTION 5.01 MERGER, CONSOLIDATION, OR SALE OF ASSETS.........................................45
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED................................................46
ARTICLE 6 DEFAULTS AND REMEDIES.......................................................................46
SECTION 6.01 EVENTS OF DEFAULT................................................................46
SECTION 6.02 ACCELERATION ....................................................................47
SECTION 6.03 OTHER REMEDIES...................................................................48
SECTION 6.04 WAIVER OF PAST DEFAULTS..........................................................48
SECTION 6.05 CONTROL BY MAJORITY..............................................................48
SECTION 6.06 LIMITATION ON SUITS..............................................................49
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT....................................49
SECTION 6.08 COLLECTION SUIT BY TRUSTEE.......................................................49
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.................................................49
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 6.10 PRIORITIES ......................................................................50
SECTION 6.11 UNDERTAKING FOR COSTS............................................................50
ARTICLE 7 TRUSTEE ....................................................................................51
SECTION 7.01 DUTIES OF TRUSTEE................................................................51
SECTION 7.02 RIGHTS OF TRUSTEE................................................................52
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE.....................................................53
SECTION 7.04 TRUSTEE'S DISCLAIMER.............................................................53
SECTION 7.05 NOTICE OF DEFAULTS...............................................................53
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES ......................................53
SECTION 7.07 COMPENSATION AND INDEMNITY.......................................................54
SECTION 7.08 REPLACEMENT OF TRUSTEE...........................................................55
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.................................................56
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION....................................................56
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY................................56
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE....................................................56
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.........................56
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE...................................................56
SECTION 8.03 COVENANT DEFEASANCE..............................................................57
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.......................................57
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS ........................................59
SECTION 8.06 REPAYMENT TO COMPANY.............................................................59
SECTION 8.07 REINSTATEMENT....................................................................59
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER............................................................60
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES..............................................60
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES.................................................61
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT..............................................62
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS................................................62
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES.................................................63
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC..................................................63
ARTICLE 10 SUBORDINATION..............................................................................63
SECTION 10.01 AGREEMENT TO SUBORDINATE AND PRIORITY..........................................63
SECTION 10.02 LIQUIDATION; DISSOLUTION; BANKRUPTCY...........................................64
SECTION 10.03 DEFAULT ON ANY SENIOR INDEBTEDNESS.............................................64
SECTION 10.04 ACCELERATION OF SECURITIES.....................................................65
SECTION 10.05 WHEN DISTRIBUTION MUST BE PAID OVER............................................65
SECTION 10.06 NOTICE BY COMPANY..............................................................65
SECTION 10.07 SUBROGATION ...................................................................65
SECTION 10.08 RELATIVE RIGHTS................................................................66
SECTION 10.09 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY...................................66
SECTION 10.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................66
SECTION 10.11 RIGHTS OF TRUSTEE AND PAYING AGENT.............................................66
SECTION 10.12 AUTHORIZATION TO EFFECT SUBORDINATION..........................................67
SECTION 10.13 NO WAIVER OF SUBORDINATION PROVISIONS..........................................67
SECTION 10.14 AMENDMENTS ....................................................................67
SECTION 10.15 TRUSTEE'S COMPENSATION NOT PREJUDICED..........................................67
ARTICLE 11 COLLATERAL AND SECURITY....................................................................68
SECTION 11.01 CASH COLLATERAL ACCOUNT........................................................68
SECTION 11.02 INSTRUMENTS ...................................................................69
SECTION 11.03 PLEDGED SUBSIDIARY SHARES......................................................70
SECTION 11.04 GENERAL AUTHORITY..............................................................71
SECTION 11.05 LIMITATION ON DUTY OF TRUSTEE IN RESPECT OF COLLATERAL; INDEMNIFICATION........72
SECTION 11.06 SECURITY DOCUMENTS; PRIORITY...................................................72
SECTION 11.07 CERTIFICATES OF THE COMPANY....................................................73
SECTION 11.08 MISCELLANEOUS..................................................................73
ARTICLE 12 [NOTE GUARANTEES...........................................................................73
SECTION 12.01 GUARANTEE .....................................................................73
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 12.02 NO WAIVER, ETC.................................................................75
SECTION 12.03 SUBORDINATION OF NOTE GUARANTEES...............................................75
SECTION 12.04 LIMITATION ON GUARANTOR LIABILITY..............................................75
SECTION 12.05 EXECUTION AND DELIVERY OF NOTE GUARANTEES......................................76
SECTION 12.06 RELEASES FOLLOWING SALE FOR ASSETS.............................................76
SECTION 12.07 NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS OR DIRECTORS.........76
ARTICLE 13 MISCELLANEOUS..............................................................................76
SECTION 13.01 TRUST INDENTURE ACT CONTROLS...................................................76
SECTION 13.02 NOTICES .......................................................................77
SECTION 13.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES..................78
SECTION 13.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.............................78
SECTION 13.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................78
SECTION 13.06 RULES BY TRUSTEE AND AGENTS....................................................79
SECTION 13.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......79
SECTION 13.08 GOVERNING LAW..................................................................79
SECTION 13.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................79
SECTION 13.10 SUCCESSORS ....................................................................79
SECTION 13.11 SEVERABILITY ..................................................................80
SECTION 13.12 COUNTERPART ORIGINALS..........................................................80
SECTION 13.13 TABLE OF CONTENTS, HEADINGS, ETC...............................................80
</TABLE>
v
<PAGE>
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- --------------------------------------------x
: Chapter 11
In re:
:
NEXTWAVE PERSONAL COMMUNICATIONS INC., Case No. 98 B 21529 (ASH)
NEXTWAVE POWER PARTNERS INC., : Case No. 98 B 21530 (ASH)
NEXTWAVE PARTNERS INC., Case No. 98 B 21531 (ASH)
NEXTWAVE WIRELESS INC., and : Case No. 98 B 21532 (ASH)
NEXTWAVE TELECOM INC., Case No. 98 B 23303 (ASH)
:
Debtors. Jointly Administered Under
: Case No. 98 B 21529 (ASH)
- --------------------------------------------x
FIRST AMENDED DISCLOSURE STATEMENT
ACCOMPANYING THE FIRST AMENDED JOINT PLAN
OF REORGANIZATION OF NEXTWAVE PERSONAL
COMMUNICATIONS INC., NEXTWAVE POWER
PARTNERS INC., NEXTWAVE PARTNERS INC., NEXTWAVE
WIRELESS INC. AND NEXTWAVE TELECOM INC.
---------------------------------------
Deborah L. Schrier-Rape Michael F. Walsh (MW 8000)
Texas State Bar No. 00785635 WEIL, GOTSHAL & MANGES L.L.P.
ANDREWS & KURTH L.L.P. 767 Fifth Avenue
1717 Main Street, Suite 3700 New York, New York 10153
Dallas, Texas 75201 Telephone: (212) 310-8000
Telephone: (214) 659-4400 Facsimile: (212) 310-8007
Facsimile: (214) 659-4401
SPECIAL CORPORATE AND FINANCE COUNSEL
COUNSEL FOR THE DEBTORS FOR THE DEBTORS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
I. INTRODUCTION.............................................................................................4
II. BACKGROUND AND EVENTS LEADING UP TO CHAPTER 11...........................................................5
III. THE BANKRUPTCY FILINGS...................................................................................6
A. POST-FILING ISSUES AND ACTIVITIES......................................................6
1. The Debtors' Employment of Professionals......................................6
2. The Adversary Proceeding......................................................7
3. The FCC's Motion to Lift Stay.................................................8
4. The FCC's Appeal of the Avoidance Decision....................................8
5. Plan-Related Motions..........................................................9
6. Debtor-in-Possession Financing................................................9
7. Severance and Holiday Bonus Program..........................................10
IV. GOALS AND ELEMENTS OF THE REORGANIZATION................................................................10
V. CORPORATE STRUCTURE.....................................................................................10
A. ELIGIBILITY TO PARTICIPATE IN AUCTIONS AND HOLD
LICENSES..............................................................................10
B. CONTROL GROUP REQUIREMENTS............................................................11
C. NEXTWAVE CORPORATE FAMILY.............................................................15
D. CURRENT EXECUTIVE OFFICERS AND DIRECTORS..............................................16
VI. REORGANIZED NEXTWAVE BUSINESS...........................................................................18
A. MARKET OPPORTUNITY....................................................................18
1. Telecommunications Bundling..................................................19
2. Wireless Internet and Mobile Commerce........................................19
3. Enhanced Wireless Internet Opportunities.....................................21
B. NATIONAL FOOTPRINT AND SUMMARY OF NEXTWAVE'S
MARKETS...............................................................................22
C. OPERATIONAL PLAN......................................................................24
1. PCS System Configuration and Network Build-Out...............................24
2. Network Equipment Procurement................................................24
VII. THE PLAN................................................................................................25
A. CLASSIFICATION AND TREATMENT OF CLAIMS AND
EQUITY INTERESTS UNDER THE PLAN.......................................................25
1. Summary of Classification and Treatment......................................25
2. Senior Claimants.............................................................27
3. General Unsecured Claimants..................................................30
4. FCC..........................................................................30
i
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
----
5. Other Secured Claimants......................................................31
6. Intercompany Claims..........................................................31
7. Priority Non-Tax Claims......................................................31
8. Administrative Convenience Claims............................................32
9. Equity Interests.............................................................32
10. Confirmation Bonus Pool for Current Active Employees.........................34
11. Management Incentive Options.................................................34
12. Exercise of Conversion Rights................................................34
13. Administrative Claims and Priority Tax Claims................................35
14. DIP Financing................................................................35
B. DESCRIPTION OF PLAN SECURITIES........................................................35
1. NTI Series A Convertible Preferred Stock.....................................36
2. NTI Senior Subordinated Notes................................................36
3. NTI Senior Redeemable Preferred Stock........................................37
4. NTI Series B Warrants........................................................37
VIII. FINANCING THE RESTRUCTURING.............................................................................37
A. VENDOR FINANCING......................................................................37
B. WORKING CAPITAL.......................................................................38
IX. CERTAIN RISK FACTORS....................................................................................39
A. BUSINESS RISKS........................................................................39
1. Development Stage Company....................................................39
2. Substantial Debt Obligations to the FCC; Implications of
Accounting Treatment.........................................................39
3. Need for Additional Financing Status
as a Going Concern...........................................................40
4. PCS System Implementation and Operational Risks..............................40
5. Competition..................................................................41
6. Government Regulation........................................................42
7. Dependence on Key Management.................................................43
B. RISKS OF NON-CONFIRMATION.............................................................43
C. LITIGATION RISKS......................................................................44
1. Appeal of Avoidance Judgment.................................................44
2. Appeal of Confirmation Order.................................................44
X. LIQUIDATION ANALYSIS....................................................................................45
XI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN.....................................................46
A. TAX CONSEQUENCES TO THE DEBTORS.......................................................47
ii
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
----
B. TAX CONSEQUENCES TO CREDITORS.........................................................47
XII. OVERVIEW OF CHAPTER 11..................................................................................49
A. GENERAL INFORMATION CONCERNING CHAPTER 11
PROCEEDINGS...........................................................................49
B. GENERAL INFORMATION CONCERNING TREATMENT OF
CLAIMS AND INTERESTS..................................................................50
C. CLASSES IMPAIRED UNDER A PLAN.........................................................51
XIII. VOTING AND CONFIRMATION OF THE PLAN.....................................................................51
A. VOTING PROCEDURES AND REQUIREMENTS....................................................52
1. Persons Entitled to Vote on the Plan.........................................52
2. Voting Instructions..........................................................53
3. Confirmation Hearing.........................................................54
B. CONFIRMATION..........................................................................55
1. Confirmation Requirements....................................................55
2. Acceptance of the Plan.......................................................55
3. Confirmation Without Acceptance By All Impaired Classes......................56
4. Best Interests Test..........................................................57
5. Feasibility..................................................................58
C. ALTERNATIVES TO THE PLAN AND BEST INTERESTS OF
CREDITORS.............................................................................58
D. COMPLIANCE WITH APPLICABLE PROVISIONS OF THE
BANKRUPTCY CODE.......................................................................59
XIV. ADDITIONAL PROVISIONS AND EFFECT OF THE PLAN............................................................59
A. LEGAL EFFECT OF THE PLAN..............................................................59
1. Injunction...................................................................59
2. Limitation of Liability in Connection With the Plan,
Disclosure Statement and Related Documents; Indemnity........................60
3. Release of Liens.............................................................60
B. RETENTION OF CAUSES OF ACTION.........................................................60
1. Preference Claims............................................................60
2. Potential Fraudulent Transfer Causes of Action...............................61
C. RELEASES UNDER THE PLAN; RELATED INJUNCTION...........................................64
1. Releases By Holders of Claims or Interests...................................64
2. Injunction Related to Releases...............................................65
D. CONDITIONS PRECEDENT TO CONFIRMATION AND
EFFECTIVE DATE........................................................................65
1. Conditions to Confirmation...................................................65
iii
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
----
2. Conditions to Effective Date.................................................65
3. Waiver of Conditions to Confirmation
and Effective Date...........................................................66
4. Modification or Revocation of the Plan; Severability.........................66
E. RETENTION OF BANKRUPTCY COURT JURISDICTION............................................66
F. EXECUTORY CONTRACTS AND UNEXPIRED LEASES..............................................68
1. Rejection of Executory Contracts.............................................68
2. Bar Date for Rejection Damages...............................................68
G. DISTRIBUTIONS UNDER THE PLAN..........................................................69
1. General: Distributions for Claims and Interests Allowed as of
the Effective Date...........................................................69
2. Timing and Calculation of Amounts to be Distributed..........................69
3. Prosecution of Objections to Claims..........................................69
4. Disputed Claims; Reserve and Estimations.....................................69
5. Setoffs......................................................................70
6. Unclaimed Distributions......................................................71
XV. SECURITIES LAW MATTERS..................................................................................71
A. AVAILABILITY OF SECTION 1145 OF THE BANKRUPTCY
CODE..................................................................................71
B. PARTIES WHO ARE UNDERWRITERS..........................................................72
C. PRIVATE PLACEMENT.....................................................................73
D. AVAILABILITY OF SEC RULE 144
FOR AFFILIATE RESALES.................................................................73
XVI. CONCLUSION AND RECOMMENDATION...........................................................................74
</TABLE>
LIST OF EXHIBITS
Exhibit A - First Amended Plan of Reorganization
Exhibit B - Liquidation Analysis
Exhibit C - Balance Sheets
Exhibit D - Monthly Operating Report for the Period June 1 through
June 30, 1999
Exhibit E - Form of Confidentiality Agreement
iv
<PAGE>
FIRST AMENDED DISCLOSURE STATEMENT DATED JULY 27, 1999
------------------------------------------------------
SOLICITATION OF VOTES WITH RESPECT TO THE FIRST AMENDED
JOINT PLAN OF REORGANIZATION OF NEXTWAVE PERSONAL
COMMUNICATIONS INC., NEXTWAVE POWER PARTNERS INC.,
NEXTWAVE PARTNERS INC., NEXTWAVE WIRELESS INC.
AND NEXTWAVE TELECOM INC.
THIS PLAN IS PROPOSED BY THE DEBTORS WHO STRONGLY URGE YOU TO
VOTE TO ACCEPT IT. THE PLAN ALSO HAS THE OVERWHELMING
SUPPORT OF THE CREDITORS' COMMITTEE, WHO ALSO
STRONGLY URGE YOU TO VOTE TO ACCEPT IT. THE
DIP LENDER, AND CERTAIN OF THE DEBTORS'
LARGEST SHAREHOLDERS AND CREDITORS
ARE ALSO SUPPORTERS OF THE PLAN
AND RECOMMEND ITS
ACCEPTANCE.
THIS FIRST AMENDED DISCLOSURE STATEMENT (THE "DISCLOSURE STATEMENT")
SOLICITS ACCEPTANCES OF THE FIRST AMENDED JOINT PLAN OF REORGANIZATION (THE
"PLAN" OR "JOINT PLAN") OF NEXTWAVE PERSONAL COMMUNICATIONS INC., NEXTWAVE POWER
PARTNERS INC., NEXTWAVE PARTNERS INC., NEXTWAVE WIRELESS INC. AND NEXTWAVE
TELECOM INC., AS DEBTORS AND DEBTORS-IN-POSSESSION (COLLECTIVELY, THE "DEBTORS")
FROM HOLDERS OF CERTAIN CLAIMS AND EQUITY INTERESTS UNDER THE PLAN. THE PLAN IS
BEING PROPOSED JOINTLY BY THE DEBTORS.
THE PURPOSE OF THIS DISCLOSURE STATEMENT IS TO ENABLE YOU, IF YOU ARE A
CREDITOR OR EQUITY SECURITY HOLDER WHOSE CLAIM OR INTEREST IS IMPAIRED AND WHO
WILL RECEIVE A DISTRIBUTION UNDER THE PLAN, TO MAKE AN INFORMED DECISION IN
EXERCISING YOUR RIGHT TO VOTE TO ACCEPT OR REJECT THE PLAN.
THE DEBTORS BELIEVE THAT THE PLAN IS IN THE BEST INTERESTS OF HOLDERS
OF CLAIMS AND EQUITY INTERESTS. ACCORDINGLY, HOLDERS OF IMPAIRED CLAIMS AND
EQUITY INTERESTS WHO ARE ENTITLED TO VOTE ARE URGED TO VOTE IN FAVOR OF THE
PLAN. VOTING INSTRUCTIONS ARE SET FORTH AT PAGE 53 OF THIS DISCLOSURE STATEMENT.
TO BE COUNTED, YOUR BALLOT MUST BE FULLY COMPLETED, EXECUTED AND ACTUALLY
RECEIVED NO LATER THAN 5:00 P.M. (EASTERN TIME) ON AUGUST 27, 1999.
THE CONFIRMATION AND EFFECTIVENESS OF THE PLAN ARE SUBJECT TO
MATERIAL CONDITIONS PRECEDENT. SEE ARTICLE XIII AND SECTION XIV(D)
<PAGE>
HEREOF. THERE CAN BE NO ASSURANCE THAT THOSE CONDITIONS WILL BE SATISFIED OR
WAIVED.
HOLDERS OF IMPAIRED CLAIMS OR EQUITY INTERESTS SHOULD READ CAREFULLY
THE DISCLOSURE STATEMENT, INCLUDING THE MATTERS DESCRIBED HEREIN UNDER ARTICLE
IX - "CERTAIN RISK FACTORS," AND THE PLAN IN THEIR ENTIRETY PRIOR TO VOTING ON
THE PLAN.
EACH HOLDER OF AN IMPAIRED CLAIM OR EQUITY INTEREST SHOULD CONSULT ITS
INDIVIDUAL ATTORNEY, ACCOUNTANT AND/OR FINANCIAL ADVISOR AS TO THE EFFECT OF THE
PLAN ON SUCH HOLDER.
FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND EQUITY INTERESTS, THE
DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN BUT THE PLAN ITSELF,
INCLUDING ANY EXHIBITS THERETO AND THE PLAN DOCUMENTS, QUALIFIES ALL SUMMARIES.
IF ANY INCONSISTENCIES EXIST BETWEEN THE PLAN AND THE DISCLOSURE STATEMENT, THE
TERMS OF THE PLAN ARE CONTROLLING.
THE DISCLOSURE STATEMENT MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER
THAN TO DETERMINE WHETHER TO VOTE IN FAVOR OF OR AGAINST THE PLAN, AND NOTHING
CONTAINED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY
PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER
PARTY, OR BE DEEMED CONCLUSIVE EVIDENCE OF THE LEGAL EFFECT OF THE
REORGANIZATION OF THE DEBTORS ON HOLDERS OF CLAIMS OR EQUITY INTERESTS. CERTAIN
OF THE INFORMATION CONTAINED IN THE DISCLOSURE STATEMENT IS, BY ITS NATURE,
FORWARD LOOKING, CONTAINS ESTIMATES, FORECASTS AND ASSUMPTIONS WHICH MAY PROVE
TO BE WRONG OR MAY BE MATERIALLY DIFFERENT FROM ACTUAL RESULTS.
THE STATEMENTS CONTAINED IN THE DISCLOSURE STATEMENT ARE MADE AS OF THE
DATE HEREOF UNLESS ANOTHER TIME IS SPECIFIED, AND NEITHER DELIVERY OF THE
DISCLOSURE STATEMENT NOR ANY EXCHANGE OF RIGHTS MADE IN CONNECTION WITH THE PLAN
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE THE DISCLOSURE
STATEMENT AND THE MATERIALS RELIED UPON IN PREPARATION OF THE DISCLOSURE
STATEMENT WERE COMPILED.
THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN
SUBJECT TO A CERTIFIED AUDIT OR INDEPENDENT VERIFICATION. THE INFORMATION
CONTAINED HEREIN AND THE RECORDS KEPT BY THE DEBTORS ARE NOT WARRANTED OR
REPRESENTED TO BE WITHOUT INACCURACY, ALTHOUGH GREAT EFFORT HAS BEEN MADE TO BE
ACCURATE.
2
<PAGE>
NO REPRESENTATIONS OR ASSURANCES CONCERNING THE DEBTORS OR THEIR
BUSINESSES OR THE PLAN ARE AUTHORIZED BY THE DEBTORS OTHER THAN AS SET FORTH IN
THIS DISCLOSURE STATEMENT AND THE EXHIBITS ATTACHED HERETO OR INCORPORATED BY
REFERENCE OR REFERRED TO HEREIN. ANY REPRESENTATIONS OR INDUCEMENTS MADE BY ANY
PERSON TO SECURE YOUR VOTE OTHER THAN THOSE HEREIN CONTAINED SHOULD NOT BE
RELIED UPON IN ARRIVING AT ANY DECISION, AND SUCH ADDITIONAL REPRESENTATIONS OR
INDUCEMENTS SHOULD BE REPORTED TO COUNSEL FOR THE DEBTORS.
NEITHER THE SECURITIES OFFERED UNDER THE PLAN NOR THE PLAN ITSELF HAVE
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION APPROVED OR DISAPPROVED THIS DISCLOSURE
STATEMENT OR PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
HEREIN.
ATTACHED AS EXHIBIT "C" ARE CONSOLIDATED BALANCE SHEETS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998. ATTACHED AS EXHIBIT "D" IS THE DEBTORS' MONTHLY
OPERATING REPORT FOR THE PERIOD JUNE 1 THROUGH JUNE 30, 1999. ANY HOLDER OF A
CLAIM OR EQUITY INTEREST THAT WANTS TO REVIEW THE BUSINESS PLAN SOLELY FOR THE
PURPOSE OF DETERMINING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN MAY OBTAIN
THE SAME BY EXECUTING THE FORM OF CONFIDENTIALITY AGREEMENT ATTACHED AS EXHIBIT
"E" AND RETURNING THE SAME TO COUNSEL FOR THE DEBTORS. NEITHER THE PROJECTIONS
NOR THE BUSINESS PLAN HAVE BEEN ATTACHED DUE TO THE SENSITIVE AND CONFIDENTIAL
NATURE OF THE BUSINESS PLAN.
THE DISCLOSURE STATEMENT AND THE PLAN ALSO DISCUSS CERTAIN PLAN
DOCUMENTS INCLUDING, BUT NOT LIMITED TO: NTI SERIES A CONVERTIBLE PREFERRED
STOCK; NTI SENIOR REDEEMABLE PREFERRED STOCK; NTI SENIOR SUBORDINATED NOTES AND
THE INDENTURE RELATED THERETO; NTI SERIES B WARRANTS; FCC C BLOCK NOTES; FCC F
BLOCK NOTES; VENDOR FINANCING DOCUMENTS; AND THE AMENDED AND RESTATED
CERTIFICATES OF INCORPORATION AND BYLAWS FOR EACH OF THE REORGANIZED DEBTORS.
THESE PLAN DOCUMENTS WILL BE FILED WITH THE BANKRUPTCY COURT FIFTEEN (15) DAYS
BEFORE THE HEARING ON CONFIRMATION OF THE PLAN WHICH IS CURRENTLY SCHEDULED TO
COMMENCE ON SEPTEMBER 8, 1999, AT 11:30 A.M. (EASTERN TIME). IF YOU WOULD LIKE A
COPY OF THE PLAN DOCUMENTS WHEN THEY ARE FILED PLEASE CONTACT DEBTORS' COUNSEL,
DEBORAH L. SCHRIER-RAPE, AT (214) 659-4520.
ALL CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE
THE MEANING ASCRIBED TO THEM IN THE PLAN.
3
<PAGE>
I. INTRODUCTION
After one year in bankruptcy and intensive litigation with the Federal
Communications Commission (the "FCC"), NextWave Personal Communications Inc.
("NPCI"), NextWave Power Partners Inc. ("NPPI"), NextWave Partners Inc. ("NPI"),
NextWave Wireless Inc. ("NWI") and NextWave Telecom Inc. ("NTI"), the debtors
and debtors-in-possession in the above-captioned jointly administered Chapter 11
cases (collectively, the "Debtors", "NextWave", or the "Company") hereby present
this first amended disclosure statement (the "Disclosure Statement") pursuant to
section 1125 of title 11 of the United States Code (the "Bankruptcy Code") with
respect to the First Amended Joint Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code of NextWave Personal Communications Inc., NextWave Power
Partners Inc., NextWave Partners Inc., NextWave Wireless Inc. and NextWave
Telecom Inc. (the "Plan"). This Disclosure Statement provides relevant
information about the Debtors, the Plan, the Debtors' business plan, and the
means for its implementation and the Debtors' successful emergence from Chapter
11.
The Plan, which is attached hereto as Exhibit "A", provides for a
capital infusion of between a minimum of $225 million and $750 million into the
Debtors. As of July 20, 1999, NTI had received commitments to purchase over
$320,000,000 of NTI Series A Convertible Preferred Stock. The Plan also provides
for the issuance of new debt and equity securities to holders of unsecured and
certain secured claims in satisfaction of such claims. The FCC's claims against
NPPI and NPCI will be governed by F block and C block installment plan notes and
security agreements on terms generally consistent with the terms of the original
notes issued to the FCC, subject to the fact that NPCI's C block notes shall be
in the principal amount established by a judgment on a fraudulent conveyance
claim by NPCI against the FCC. In addition, all unsecured creditors will be
given the opportunity to "cash out" any and all claims asserted against the
Debtors for a one-time cash payment of $20,000 in full satisfaction of such
claims. For a fuller explanation of the various claims against and interests in
the Debtors, as well as their classification and treatment under the Plan, see
sections VII(A), of this Disclosure Statement and Articles III, IV and V of the
Plan.
This Disclosure Statement then discusses the Debtors' business plan and
the ways in which it will be executed so as to achieve the NextWave vision of
becoming the first wireless "carrier's carrier." In effect, the Debtors plan to
use the latest wireless technology in conjunction with their carrier's carrier
strategy to provide state-of-the-art high speed wireless Internet access and
voice services to a broad range of customers. In this manner, the Debtors will
not only achieve significant penetration into the competitive wireless market,
but also provide an unrivaled opportunity for current retail wireless providers
to offer traditional and cutting edge wireless services to customers under their
own brand names. The different attributes of the Debtors' business plan and the
means for its implementation, including the infusion of $225,000,000 to
$750,000,000 in new capital into NextWave under the Plan, are discussed in
Articles VII and VIII of this Disclosure Statement.
The Disclosure Statement also discusses the Debtors' Chapter 11 cases,
significant events that have occurred therein, and generally explains the
workings and operations of Chapter 11 of the Bankruptcy Code.
4
<PAGE>
The Debtors believe that the Plan is in the best interests of their
creditors, their estates and their equity security holders, and allows for
significant recoveries by all constituencies, as they share in the Debtors'
success and the enhanced value the business will generate. As a result, THE
DEBTORS STRONGLY ENCOURAGE CREDITORS TO VOTE IN FAVOR OF THE PLAN. THE PLAN ALSO
HAS THE FINANCIAL SUPPORT OF SIGNIFICANT INVESTORS, THE OVERWHELMING SUPPORT OF
THE CREDITORS' COMMITTEE, AS WELL AS THE DIP LENDER AND CERTAIN LARGE CREDITORS
AND SHAREHOLDERS.
II. BACKGROUND AND EVENTS LEADING UP TO CHAPTER 11
NTI is a start-up telecommunications company, formed in May 1995 to
build and operate personal communications services ("PCS") systems in
geographical areas referred to as Basic Trading Areas ("BTAs"), and to provide
wireless Internet access and voice services to a broad range of distribution
partners. NTI owns 100% of the stock of its direct subsidiaries, NPCI, NPI, NWI
and TELE*Code Inc. ("TC"). NPPI is a wholly-owned subsidiary of NPI.
NPCI participated in the auction conducted by the FCC for C block PCS
licenses and was ultimately declared high bidder for C block PCS licenses
covering 63 BTAs representing 110 million potential wireless customers ("POPs"),
with an aggregate bid price of $4.74 billion. Pursuant to FCC rules and
regulations in effect at the time, NPCI deposited a total of $474 million (10%
of the purchase price) with the FCC to be applied to the purchase price of the
licenses upon grant thereof and concurrently executed promissory notes in favor
of the FCC for the remaining $4.26 billion. Shortly thereafter, NPPI
participated in the FCC's auction of D, E and F block PCS licenses and was
declared high bidder for D, E and F block licenses covering 32 BTAs representing
52.6 million POPs, with an aggregate bid price of approximately $129 million.
NPPI deposited a total of $24.6 million which, when combined with promissory
notes in favor of the FCC for $98.6 million, paid for the licenses upon grant
thereof. Together, NPCI and NPPI hold licenses covering approximately 163
million POPs. NextWave's service area is national in scope and includes most of
the top 30 metropolitan markets.
Once the C block auction closed in May 1996, NextWave made every effort
to raise financing and access the public high yield and equity capital markets.
The financial markets, however, became hesitant to supply capital to C block
licensees due to, among other things, the FCC's delay in granting C block
licenses (for example, NPCI's licenses were not granted until February 1997,
nine months after the close of the C block auction), and the fact that the DEF
block auction unexpectedly provided the market with additional spectrum at
dramatically lower prices than those bid for C block licenses. Thus, when the
FCC indefinitely suspended C and F block installment payments on March 31, 1997
to consider restructuring alternatives, the concern of the financial markets
regarding the viability of these new entrepreneurial carriers was further
crystallized, virtually sealing the inaccessibility of C block start-up
companies such as NextWave to the public and private capital markets. As a
result, most of the high bidders for C block licenses were in serious financial
peril. Two of the top bidders filed for bankruptcy - one in March 1997 and
another in October 1997. Due to these fundamental problems in the C block and
the resulting quagmire, NPCI, NPI, NPPI and NWI filed for Chapter 11 to
restructure their various financial obligations on June 8, 1998. Although
5
<PAGE>
NTI did not originally file for bankruptcy with NPCI, NPI, NPPI and NWI, NTI
later filed for Chapter 11 on December 23, 1998, in order to participate in the
overall corporate restructuring.
III. THE BANKRUPTCY FILINGS
The Chapter 11 cases of NPCI, NPPI, NPI and NWI were commenced with the
filing of a voluntary Chapter 11 petition for each entity on June 8, 1998 (the
"Subsidiary Petition Date"). On December 23, 1998 (the "NTI Petition Date",
together with the Subsidiary Petition Date, the "Petition Dates"), NTI filed its
voluntary Chapter 11 petition (NTI's Chapter 11 case, together with the Chapter
11 cases of NPCI, NPPI, NPI and NWI are hereafter referred to as the "Chapter 11
Cases"). The Chapter 11 Cases are pending before the Honorable Adlai S. Hardin,
Jr., United States Bankruptcy Court for the Southern District of New York (the
"Bankruptcy Court"), under Jointly Administered Case No. 98 B 21529 (ASH).
A. POST-FILING ISSUES AND ACTIVITIES
1. THE DEBTORS' EMPLOYMENT OF PROFESSIONALS
The Debtors originally retained Weil, Gotshal & Manges LLP ("WGM") as
bankruptcy counsel, by order dated June 8, 1998. The FCC objected to WGM's
continued representation of NPCI in the Adversary Proceeding (defined below) due
to a purported conflict of interest. The FCC then objected to WGM's
representation of NPCI, NPPI, NPI and NWI in the Chapter 11 Cases. To avoid
prolonged litigation with the FCC and a possible delay of the reorganization
process, NPCI, NPPI, NPI and NWI decided to retain Andrews & Kurth L.L.P.
("A&K") as general bankruptcy and litigation counsel and keep WGM as special
corporate and finance counsel. By order dated November 3, 1998 (the "First WGM
Order"), WGM was approved as special corporate and finance counsel for NPCI,
NPPI, NPI and NWI for the purpose of advising and assisting these debtors with
respect to, inter alia, corporate governance and finance matters. On January 14,
1999, NTI sought to employ WGM as special corporate and finance counsel. By
order dated February 11, 1999 (together with the First WGM Order, the "WGM
Retention Orders"), NTI's retention of WGM was approved. By order dated March
17, 1999, the Bankruptcy Court further amended the WGM Retention Orders to
permit WGM to engage in lobbying activities on behalf of the Debtors.
NPCI, NPPI, NPI and NWI sought to employ A&K as general bankruptcy and
litigation counsel by application dated October 16, 1998, nunc pro tunc to
September 29, 1998. By order dated November 13, 1998, A&K's retention was
approved. On December 23, 1998, NTI sought to employ A&K as general bankruptcy
and litigation counsel, which application was approved, by order dated January
7, 1999.
Since the commencement of the Chapter 11 Cases, the Bankruptcy Court
has authorized the Debtors to employ the following professionals: Dewey
Ballantine LLP as special legislative counsel to the Debtors; Lukas, Nace,
Gutierrez & Sachs as special regulatory FCC counsel to the Debtors; Willkie Farr
& Gallagher as special strategic FCC counsel to the Debtors; Knobbe, Martens,
Olson & Bear, LLP as special patent and intellectual property counsel to the
Debtors; and Arthur Andersen LLP, to perform tax and accounting services for the
Debtors with respect to the filing of certain tax
6
<PAGE>
returns and completion of the statement audit. The Bankruptcy Court has also
authorized Arthur Andersen to perform certain valuation services for the Debtors
in connection with the Adversary Proceeding (defined below) and Plan
confirmation.
An Official Committee of Unsecured Creditors (the "Committee") was
appointed by the United States Trustee for the Southern District of New York on
June 25, 1998, for the NPCI, NPI, NPPI and NWI Chapter 11 cases. On February 26,
1999, the Committee membership was amended due to the commencement of NTI's
Chapter 11 case. The members of the Committee as it is currently constituted are
LG InfoComm, Inc.; Hughes Network Systems, Inc.; Resurgence Asset Management,
LLC; Cerberus Partners, L.P.; Continental Casualty Company; CIBC WG Argosy
Merchant Fund 2, L.L.C.; Network Building & Consulting, Inc.; Sony Electronics,
Inc.; and Rhonda McKenzie on behalf of McKenzie Telecommunications GR.
By order dated July 17, 1998, the Committee was authorized to employ
Kasowitz, Benson, Torres & Friedman LLP as its general counsel, and by order
dated October 21, 1998, the Committee was authorized to employ Skadden, Arps,
Slate, Meagher & Flom LLP as special FCC regulatory counsel. By application
dated July 14, 1999, the Committee sought to employ Lazard Freres & Co. L.L.C.
to act as investment banker for the Committee in connection with evaluating the
Plan and the Plan Securities to be issued thereunder.
2. THE ADVERSARY PROCEEDING
On June 8, 1998, NPCI initiated an adversary proceeding captioned
NextWave Personal Communications Inc. v. Federal Communications Commission,
Adversary No. 98-5178A (the "Adversary Proceeding") by the filing of its
original complaint in the Bankruptcy Court. The complaint, as twice subsequently
amended, asserted causes of action against the FCC pursuant to section 544 of
the Bankruptcy Code to avoid NPCI's obligation to the FCC with respect to its C
block licenses as a constructive fraudulent conveyance, on the grounds that the
obligation NPCI incurred exceeded the value of the licenses when they were
granted. In its original complaint, NPCI also sought equitable subordination of
the FCC's claims under section 510 of the Bankruptcy Code. The FCC responded by
filing a motion with the United States District Court for the Southern District
of New York (the "District Court") to (i) withdraw the reference of the case
from the Bankruptcy Court and (ii) dismiss the Adversary Proceeding. The
District Court denied the FCC's request to withdraw the reference, leaving the
Adversary Proceeding to be resolved by the Bankruptcy Court. The Bankruptcy
Court then granted the FCC's motion to dismiss with respect to NPCI's claim for
equitable subordination and denied the motion to dismiss with respect to NPCI's
fraudulent transfer claim on December 4, 1998. Prior to trial, the FCC moved for
partial summary judgment regarding the date on which NPCI's obligation to the
FCC was incurred. On February 16, 1999, the Bankruptcy Court issued its Decision
on Partial Summary Judgment Motion, finding, inter alia, that the obligation was
incurred on January 3, 1997, at the earliest, the date the FCC announced the
conditional grant of NPCI's licenses. An order denying the motion for partial
summary judgment was entered on March 4, 1999. On March 24, 1999, the FCC then
moved for judgment on the pleadings alleging, inter alia, that NPCI had failed
to state a claim upon which relief could be granted. That motion was denied by
the Bankruptcy Court by order dated April 15, 1999.
7
<PAGE>
A trial of the Adversary Proceeding took place from April 19 to April
27, 1999. On May 12, 1999, the Bankruptcy Court issued its Decision on
Constructive Fraudulent Conveyance Claim (the "Adversary Ruling"), ruling that
NPCI did not receive reasonably equivalent value for $3.72 billion of its $4.74
billion purchase price obligation. In the Adversary Ruling, the Bankruptcy Court
reserved decision on the appropriate remedy for the fraudulent conveyance in
order to conduct a further hearing. On May 26, 1999, the Bankruptcy Court held a
hearing on remedy, at which time it found that the entirety of NPCI's $4.74
billion purchase price obligation to the FCC would be avoided, but that the FCC
would be allowed to enforce the obligation up to the value of the consideration
it had provided to NPCI - a total of $1.023 billion. On June 22, 1999, the
Bankruptcy Court issued its written Decision on Remedy (the "Remedy Ruling",
together with the Adversary Ruling, the "Avoidance Decision"), which
encapsulated and set forth the Bankruptcy Court's reasoning for its ruling at
the May 26, 1999 hearing. Accordingly, pursuant to the Avoidance Decision, after
application of the $474 million previously tendered by NPCI, the remaining
obligation to the FCC is approximately $549 million. A judgment in the Adversary
Proceeding was entered on June 14, 1999.
3. THE FCC'S MOTION TO LIFT STAY
On May 28, 1999, following the Bankruptcy Court's Remedy Ruling, the
FCC filed its Motion to Lift Automatic Stay (the "Stay Motion"), contending that
sufficient "cause" existed under the relevant provisions of the Bankruptcy Code
for the Bankruptcy Court to lift the automatic stay to allow the FCC to reclaim
NPCI's C block licenses. The "cause" asserted by the FCC in the Stay Motion was
that, due to the Avoidance Decision, NPCI would not be paying the full bid price
for its C block licenses. The FCC argued that the FCC requires licensees to pay
the full bid price for their licenses as a condition to retaining them,
regardless of a court judgment to the contrary. Thus, the FCC requested relief
from the automatic stay to cancel the licenses despite the Avoidance Decision.
NPCI filed its response to the Stay Motion on June 9, 1999, contending
that the FCC had not, in fact, shown any cause for the automatic stay to be
lifted. Among other things, NPCI argued that the FCC was merely attempting to
relitigate the Adversary Proceeding and that in the Chapter 11 Cases, it is the
FCC's capacity as creditor not as a regulator that is at issue. By decision
dated June 16, 1999, the Bankruptcy Court denied the Stay Motion finding that
there was no "cause" to lift the automatic stay and that the FCC, as creditor,
is subject to the provisions of the Bankruptcy Code, including, but not limited
to, the Avoidance Decision. An order denying the Stay Motion was entered on July
20, 1999.
4. THE FCC'S APPEAL OF THE AVOIDANCE DECISION
On June 10, 1999, the FCC filed a Notice of Appeal, appealing the
Bankruptcy Court's Avoidance Decision (the "Avoidance Appeal"). Therewith, the
FCC filed an Order to Show Cause accompanied by a Motion to Expedite the
Avoidance Appeal. After determining that an expeditious resolution of the
Avoidance Appeal was in the best interests of NPCI, its estate and its
creditors, NPCI consented to the FCC's request. As a result, the Avoidance
Appeal has been fully submitted and oral argument took place before the District
Court on July 15, 1999. A decision by the District
8
<PAGE>
Court on the Avoidance Appeal affirming the Bankruptcy Court's Avoidance
Decision and the decision denying the Stay Motion on all counts was issued on
July 27, 1999.
5. PLAN-RELATED MOTIONS
A. EXCLUSIVITY
On September 18, 1998, January 15, March 16 and May 14, 1999, the
Debtors filed Motions Pursuant to section 1121(d) of the Bankruptcy Code for
Orders Extending the Exclusive Periods During Which the Debtors May File and
Solicit Acceptances for a Plan of Reorganization (the "Exclusivity Motions"). By
orders dated October 1, 1998, February 16, April 2, and May 26, 1999, the
Bankruptcy Court granted the relief requested in the Exclusivity Motions and
eventually extended the Debtors' exclusivity period for the filing of a plan to
July 15, 1999, and the exclusivity period for soliciting acceptances thereof to
September 13, 1999.
On June 25, 1999, the Debtors filed their Plan with the Bankruptcy
Court.
B. BAR DATES
On November 5, 1998, NPCI, NPI, NPPI and NWI filed a motion (the "Bar
Date Motion") to set the last date (the "Bar Date") to file proofs of claim. On
November 13, 1998, the Bankruptcy Court signed an order setting December 18,
1998 as the Bar Date for NPCI, NPI, NPPI and NWI. On January 15, 1999, NTI filed
its own Bar Date Motion. On January 26, 1999, the Bankruptcy Court signed an
order (i) setting March 15, 1999 as the Bar Date for general creditors of NTI
and (ii) June 21, 1999, as the Bar Date for governmental units.
6. DEBTOR-IN-POSSESSION FINANCING
By order dated July 23, 1998, the Bankruptcy Court approved up to $25
million of financing ("DIP Financing") to be provided by Cellexis International,
Inc. ("Cellexis"). The DIP Financing has priority over all administrative
expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy
Code, subject and subordinate only to Permitted Liens and Permitted Expenses as
defined in the DIP Financing documents. Such loans are secured pursuant to
sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code and to the extent
permitted by applicable FCC rules and regulations, by (a) first priority
security interests in the D and E block licenses held by NPPI and all proceeds
from the sale or disposition of such licenses, (b) second priority security
interests in the F block licenses held by NPPI and all proceeds from the sale or
disposition of such licenses, and (c) junior security interests in all other
property of the Debtors as defined in the DIP Financing documents under the
terms set forth therein. At Cellexis' option, each $1.00 in Principal Amount of
DIP Financing drawn down by the Debtors is convertible into $2.00 of stock or
high yield debt issued by the Debtors under a confirmed plan of reorganization,
which shall constitute a full repayment of all amounts so converted. Cellexis is
exercising this option under the Plan. See section VII(A)(14) hereof. By order
dated January 7, 1999, NTI was authorized to become a party to the DIP
Financing.
9
<PAGE>
As of July 23, 1999, $21,923,000 had been drawn down from the DIP
Financing, with $3,077,000 remaining to be drawn thereunder, and there was
approximately $6.1 million in cash on hand. The Debtors anticipate that the
amounts remaining under the DIP Financing will be sufficient to carry them
through confirmation of the Plan.
7. SEVERANCE AND HOLIDAY BONUS PROGRAM
On November 23, 1998, the Debtors filed their Motion to Approve
Severance Program and Holiday Incentive Payment (the "Program") with the intent
of retaining key employees and maintaining employee morale, as the departure of
any key employees during the pendency of the Chapter 11 Cases would be extremely
detrimental to the reorganization effort. The Program provided for a holiday
bonus to employees of up to $5,000, based upon an employee's position and
performance. Additionally, the Program called for a severance payment to
employees terminated without cause prior to April 30, 1999 or confirmation of
the Plan, whichever was earlier. By order dated December 9, 1998, implementation
of the Program was authorized by the Bankruptcy Court. By order dated April 26,
1999, the Program was extended until September 30, 1999. In the aggregate,
severance payments may not exceed $1.2 million. To date, $122,120 has been paid
as holiday bonuses and $16,153.84 has been paid as severance to terminated
employees. Cellexis and the Committee did not oppose the implementation or
extension of the Program.
IV. GOALS AND ELEMENTS OF THE REORGANIZATION
NextWave's ultimate goal is to become a nationwide provider of wireless
telecommunications services, which vision was well on its way to being
implemented when the deterioration of the value of C block licenses took place.
Consequently, NextWave's future success is dependent upon securing the requisite
resources to implement its business plan. The fundamental keys to NextWave's
success are: (a) a corporate structure consistent with FCC regulations; (b)
qualified and experienced management appropriately incentivized; (c) a sound
business and operational plan; (d) vendor financing; and (e) working capital and
the healthy balance sheet necessary to obtain and service the same.
The remainder of this Disclosure Statement is devoted to describing the
current status of each of these fundamental elements and how the Plan modifies,
enhances and secures each of these elements to facilitate maximizing Reorganized
NextWave's success, with the concurrent participation of all of NextWave's
constituencies in the resulting value which will be created.
V. CORPORATE STRUCTURE
A. ELIGIBILITY TO PARTICIPATE IN AUCTIONS AND HOLD LICENSES
The FCC designated the C and F blocks for small start up companies and
entrepreneurs and set certain financial requirements that had to be met before a
company could qualify to participate in the C and F block auctions and/or hold C
and F block licenses. The FCC required (and still requires) that all C and F
block bidders fall within certain maximum revenue and asset size parameters, as
measured by gross revenues and total assets. In order to acquire C or F block
10
<PAGE>
licenses, the applicant and persons or entities that hold interests in the
applicant and their affiliates, had to have gross revenues of not more than $125
million in each of the preceding two (2) years and total assets of not more than
$500 million at the time the applicant's Short-Form (FCC Form 175) was filed
with the FCC prior to the applicable auctions. NextWave was formed under the "25
Percent Equity Exception" to this rule. This exception provides that the
applicant is qualified so long as a "control group," whose members and
affiliates together hold 25% of the applicant's equity on a fully-diluted basis,
meet certain requirements (as described more fully in section V(B) below).
Furthermore, under this exception, a non-qualifying investor could hold up to
25% of NextWave's equity on a fully-diluted basis.
Under the FCC's rules, NextWave also qualified as a "Small Business."
That is, an entity who, with all affiliates holding an interest in such entity
and their affiliates, has average annual gross revenues of not more than $40
million for the three (3) calendar years prior to the date that the Short Form
was filed. As a result of its classification as a Small Business for the C block
auctions, NPCI was eligible for both a 25% bidding credit and for installment
payments of interest only for the first six (6) years of the license, and
payments of interest and principal amortized over the remaining four (4) years
of the initial 10-year license term.
For the F block auction, the FCC created a new category, "Very Small
Business," defined as an applicant who, with all affiliates holding an interest
in such entity and their affiliates, had average annual gross revenues of not
more than $15 million for the three (3) calendar years prior to the date the
Short Form was filed. NextWave met this requirement through the Control Group
described in section V(B) below. As a result of its classification as a Very
Small Business for the F block auction, NPPI was eligible for both a 25% bidding
credit and interest-only payments for the first two (2) years of the license
term and payments of interest and principal amortized over the remaining eight
(8) years of the initial 10-year license term.
The FCC does not impose penalties on licensees for losing their Small
Business or Very Small Business status through corporate growth. However, any
attempt by NextWave to transfer control to an entity that would not otherwise
have been entitled to as large a bidding credit would result in NextWave having
to repay to the FCC the difference between (i) all savings it achieved by using
the bidding credit and (ii) the savings the transferee entity would have
qualified for under FCC rules and regulations. Furthermore, within five (5)
years of a license grant, NextWave cannot transfer control to an entity that
would not otherwise be eligible to hold C or F block licenses. NextWave can
transfer the licenses to a non-designated entity after five (5) years, with FCC
approval, but would, at that time, have to pay the FCC in full for the licenses.
NextWave believes the Plan is consistent with maintaining its status as a Small
Business and Very Small Business under the C and F block requirements,
respectively.
B. CONTROL GROUP REQUIREMENTS
FCC rules enable an entity to hold C or F block licenses, obtain
bidding credits and qualify for installment financing by maintaining a "control
group" organizational structure. Under the FCC's "25% Equity Structure," a
control group must have the following characteristics during the first three (3)
years after the license is granted: (a) one (1) or more "Qualifying Investors"
must own
11
<PAGE>
at least 15% of the entity's total equity on a fully diluted basis and hold at
least 50.1% of its voting stock; and (b) another 10% of the entity's total
equity on a fully diluted basis must be held by "Additional Control Group
Members." Such additional members must be either: (x) institutional investors;
(y) individuals who are part of the entity's management; or (z) Qualifying
Investors. Commencing with the fourth year of the initial 10-year license term,
the FCC's rules eliminate the requirement that Additional Control Group Members
hold 10% of the licensee's equity. At that time, the rules also permit the
amount of a licensee's total equity that must be held by Qualifying Investors to
be reduced from 15% to 10%. Under this structure, a non-qualifying investor can
hold up to 25% of NextWave's equity on a fully diluted basis.
12
<PAGE>
The following chart diagrams the Control Group Requirements and how
they are currently satisfied by NextWave's capital structure:
CAPITAL STRUCTURE
NEXTWAVE TELECOM INC.
CONTROL GROUP OWNERSHIP
[GRAPHIC OMITTED]
[PIE CHART]
The Control Group of NTI holds over 25% of the outstanding securities of NTI on
a fully-diluted basis. Such securities consist of Series A Common Stock, Series
B Common Stock, Warrants exercisable into Series B Common Stock and Options
exercisable into Series B Common Stock.
QUALIFYING INVESTORS OWNERSHIP
[GRAPHIC OMITTED]
[PIE CHART]
The Qualifying Investors of NextWave hold 22.5% of the outstanding securities of
NextWave on a fully-diluted basis.
The Control Group membership is a matter of public record. See FCC Form
600 Amendment filed by NPCI on December 16, 1996 (on file with the FCC). The
record of the licensing proceeding demonstrates that NPCI's Control Group, on a
fully diluted basis, holds in excess of 25% of the equity of NPCI and in excess
of 50.1% of the voting stock of NPCI, and is fully in compliance with the FCC's
C block licensing policies and rules. Nothing in the Plan takes NPCI out of
compliance with such policies and rules. Set forth below is the identity of the
Qualifying Investors:
Navation Inc.
Freedom Mobility Inc.
Good News Comm. Co. LLC
A failure by NextWave to maintain the control group requirements would
subject it to FCC penalties, including monetary fines and forfeitures, and the
possible revocation of the licenses.
13
<PAGE>
Moreover, until five (5) years after license grant, NextWave will continue to be
subject to mandatory "unjust enrichment" penalties if the control group
organizational structure is modified in ways that alter its status as a "Small
Business" or "Very Small Business," since that status was the basis upon which
NextWave was granted bidding credits in the FCC's C and F block auctions. As set
forth above, unjust enrichment payments are also required whenever control over
a C or F block license changes hands and the transferee entity does not qualify
for as large a bidding credit as the transferor.
NextWave believes the Plan is consistent with maintaining its status as
a "Small Business" or "Very Small Business" and that the Plan will not result in
a change of control requiring unjust enrichment payouts.
14
<PAGE>
C. NEXTWAVE CORPORATE FAMILY
NTI is a holding company with five wholly-owned subsidiaries, NPCI,
NPI, NWI, NPPI and TC. NPCI was formed to acquire PCS licenses in the FCC's C
block auctions. NPPI was formed to acquire PCS licenses in the FCC's D, E and F
block auctions. NPI was formed to hold NTI's interest in NPPI. TC was formed to
develop Code Division Multiple Access ("CDMA")-based products and provide
engineering services to NextWave and others. NWI was formed to act as an
operating company and to eventually form subsidiaries for each of NextWave's
ultimate operating regions.
The following chart details the NextWave corporate family as of June 1,
1999:
<TABLE>
<S> <C> <C> <C>
---------------------
NextWave Telecom Inc.
(debtor-reorganized
under plan)
---------------------
|
|
----------------- ---------------------- ---------------------- --------------
NextWave Personal NextWave Partners Inc. NextWave Wireless Inc. TELE*Code Inc.
Communications Inc. Inc. Inc.
(C block licenses (debtor-reorganized (debtor-reorganized
(debtor-reorganized under plan) under plan)
under plan)
----------------- ---------------------- ---------------------- --------------
|
|
----------------------
NextWave Power
Partners Inc.
(DEF block licenses)
(debtor-reorganized
under plan)
----------------------
</TABLE>
15
<PAGE>
D. CURRENT EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of NextWave, and their ages as of
June 1, 1999, are as follows:
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Allen B. Salmasi 44 Chairman of the Board, Chief Executive Officer and President
Frank A. Cassou 42 Executive Vice President, Corporate Development and General
Counsel; Secretary
Raymond P. Dolan 41 Chief Operating Officer
Kevin M. Finn 58 Senior Vice President, Special Projects, Director
Roy D. Berger 41 Senior Vice President and Chief Marketing Officer
James S. Madsen 39 Senior Vice President, Sales & Business Development
R. Andrew Salony 47 Senior Vice President, Strategic Relations and Chief Human
Resources Officer
Michael Regan, Jr. 40 Senior Vice President, External Affairs
Edward M. Knapp 38 Senior Vice President, Chief Technical Officer
William H. Webster 75 Director
Allan E. Puckett 79 Director
</TABLE>
ALLEN B. SALMASI has been the Chairman of the Board, Chief Executive
Officer and President of NextWave since its founding. Immediately prior to
founding NTI in 1995, Mr. Salmasi served as a member of the Board of Directors,
President of the Wireless Telecommunications Division and Chief Strategic
Officer of QUALCOMM Incorporated. He joined QUALCOMM as a member of the Board of
Directors and Vice President of Planning & Development in 1988, as a result of
the merger of QUALCOMM and Omninet Corporation. Mr. Salmasi founded Omninet in
1984. At various times, through August 1988, he served as Chairman of the Board,
President and Chief Executive Officer of Omninet. From 1979 to 1984, Mr. Salmasi
held various technical and management positions at the National Aeronautics and
Space Administration Jet Propulsion Laboratory. Navation Inc., a corporation
owned and controlled by Mr. Salmasi and his wife, is a member of the Control
Group and Mr. Salmasi holds his shares of NTI Series A and B Common Stock
through Navation. Mr. Salmasi is also a QUALCOMM stockholder.
FRANK A. CASSOU has been Executive Vice President, Corporate
Development and General Counsel of NWI and the Secretary of NPCI, NPPI, NPI and
NTI since February 1996. Prior to joining NextWave, Mr. Cassou was a partner at
the law firm of Cooley Godward Castro Huddleson and Tatum, where he practiced
corporate law representing telecommunications and technology companies. He was
outside corporate counsel to QUALCOMM from June 1991 through February 1996.
RAYMOND P. DOLAN has been Chief Operating Officer of NWI since May
1996. From July 1995 to May 1996, Mr. Dolan was Executive Vice President of
Marketing of Bell Atlantic NYNEX Mobile Communications. From May 1988 to June
1995, Mr. Dolan served in numerous technical and marketing positions for NYNEX
Mobile.
16
<PAGE>
KEVIN M. FINN has been Senior Vice President, Special Projects of NWI
and a Director of NTI since their founding. From early 1992 until July 1995, Mr.
Finn was President of Marin-Finn Industries, Inc. From August 1988 to early
1992, Mr. Finn was Vice President and General Manager of Densitron. From
September 1986 to August 1988, Mr. Finn served as Executive Vice President of
Omninet Corporation. From 1983 to 1987, Mr. Finn served as Vice President of the
Sony Corporation of America and General Manager of its Component Products
Division.
ROY D. BERGER joined NWI as Senior Vice President and Chief Marketing
Officer in June 1996. Prior to joining NextWave, Mr. Berger had held the
position of Managing Director-Retail Strategy for the NYNEX Corporation since
December 1995. During his ten (10) years at NYNEX, Mr. Berger served in a number
of different roles in both the telecommunications and computer
retailing/distribution sectors. His positions included Vice President-Channel
Strategy for NYNEX's residential business, Vice President-Personal
Communications Service, and Vice President Marketing for NYNEX Mobile
Communications. Prior to joining NYNEX, Mr. Berger held senior positions with
several leading companies in the personal computer retailing and distribution
industry.
JAMES S. MADSEN has been Senior Vice President, Sales and Business
Development of NWI since its founding. From 1993 until 1995, Mr. Madsen was
Director of PCS Marketing and Business Development in the Wireless
Telecommunications Division of QUALCOMM. Mr. Madsen managed all PCS business
development, marketing and sales planning for QUALCOMM. From 1992 until 1993,
Mr. Madsen was Director of Marketing for the OmniTRACS business at QUALCOMM
focusing on the cable TV market. After joining QUALCOMM in 1989, Mr. Madsen
assumed responsibility for QUALCOMM's worldwide VLSI components business
development and marketing.
R. ANDREW SALONY has been Senior Vice President, Strategic Relations
and Chief Human Resources Officer of NWI since May 1996. For three (3) years
prior to joining NextWave he served the executive search firm of Warren Morris &
Madison, Inc. as Managing Partner of its wireless telecommunications division.
From May 1983 to September 1993, Mr. Salony was General Manager for US West's
Cellular Telephone division in Southern California.
R. MICHAEL REGAN, JR. joined NWI in July 1996 and is Senior Vice
President, External Affairs. From 1991 until 1996, he served as Senior
Telecommunications Counsel to the U.S. House Committee on Commerce, the
Committee with primary legislative and oversight jurisdiction over
telecommunications law and policy in the House of Representatives. He was senior
staff for the Committee in negotiating the 1993 spectrum auction authorization
law and the 1996 Telecommunications Act, the first major overhaul and rewrite of
the Communications Act of 1934. From 1987 until 1991, he was in private practice
at Verner, Liipfert, Bernhard, McPherson & Hand, specializing in
telecommunications law.
EDWARD M. KNAPP has been Senior Vice President and Chief Technical
Officer of NWI since July 1995. From March 1994 to June 1995, Mr. Knapp was the
Executive Director of Technical Services for NYNEX Mobile Communications. At
NYNEX Mobile he was responsible for the planning, engineering, design, site
development and operation of the New York cellular
17
<PAGE>
system. From October 1990 to August 1994, Mr. Knapp held various technical,
engineering and operations positions at NYNEX Mobile. Prior to NYNEX Mobile, he
held various positions with Siemens Transmissions Systems and Sperry Defense
Products Group.
WILLIAM H. WEBSTER has been a Director of NTI since 1996. Mr. Webster
has been a partner with the law firm of Milbank, Tweed, Hadley & McCloy in its
Washington, D.C. office since September 1991. From May 1987 to September 1991,
Mr. Webster served as the Director of the Central Intelligence Agency. From
February 1978 to May 1987, Mr. Webster served as Director of the Federal Bureau
of Investigation. Mr. Webster is also an advisory member of the Board of
Directors of Anheuser Busch Companies Inc.
ALLAN E. PUCKETT has been director of NTI since March 1997. Prior to
his retirement, Mr. Puckett was the Chairman and CEO of Hughes Aircraft Company.
Mr. Puckett is also a member of the advisory boards of New Perspective Fund,
Capital Group, and of Investment Company of America, Capital Group. Mr. Puckett
is also a director of Lone Star Industries.
VI. REORGANIZED NEXTWAVE BUSINESS
As indicated previously, NextWave intends to be a leading provider of
wireless Internet access and voice communication services, and plans to build
and operate the first nationwide wireless packet-switched network specifically
designed to offer a combination of untethered high speed wireless Internet
access and voice-over-Internet Protocol ("IP") service. NextWave will be
providing its wireless Internet access and voice services to a broad range of
distribution partners, who are well-positioned to market NextWave's wireless
Internet access and voice services. By purchasing wireless Internet access and
voice services from NextWave, companies will be able to offer competitively
priced wireless services under their own brand names without substantial capital
investment.
A. MARKET OPPORTUNITY
Demand for wireless telecommunications services has grown dramatically
since the commercial introduction of U.S. cellular telephony in October 1983.
This demand is largely attributable to the widespread availability and
increasing affordability of mobile telephony, paging and other emerging wireless
telecommunications services. Technological advances and a regulatory environment
more favorable to competition have also served to stimulate market growth.
While it is expected that the demand for voice-centric wireless
telecommunications will continue to grow rapidly, NextWave believes that the
greatest opportunity lies in providing data-centric wireless communications,
specifically wireless Internet access services to both business and consumer
market segments. NextWave believes that the same insatiable demand for Internet
access that exists on wireline networks will soon trigger explosive growth of
Internet-related traffic on wireless networks. By utilizing NextWave's wireless
packet-switched network, users will be able to access the Internet, read/send
e-mails, conduct e-commerce, download/upload computer files, and access
corporate intranet applications without a fixed connection. According to the
Strategis Group, an independent marketing research group, the number of wireless
e-mail and wireless Internet users
18
<PAGE>
will grow from two (2) million in 1998 to almost 30 million by 2003, a 1500%
increase in only five (5) years. By building a third generation ("3G")
packet-switched network, NextWave will be in a unique position to capture a
significant share of this emerging market.
In addition to wireless Internet access, NextWave believes that
wireless voice will remain an important element of its business and that the
wireless voice market will continue to enjoy rapid growth. At the end of 1998,
wireless voice subscriber penetration in the United States was estimated to be
25%, with annual revenues of $34 billion. NextWave's view is that current
penetration rates will more than double and annual revenues will more than
triple over the next nine (9) years. For example, according to Donaldson, Lufkin
& Jenrette, industry penetration is expected to be approximately 70% by 2008.
1. TELECOMMUNICATIONS BUNDLING
Wireless services have become an important part of the bundled
telecommunications services offered by numerous service providers. These bundles
often include a wireline component such as long distance, a wireless component,
and an Internet service component. While some national telecommunications
players such as AT&T and Sprint have the capability of offering such bundles
using their own networks and facilities, many other service providers will
require access to a wireless network on a wholesale basis in order to
effectively compete. Without such access these companies may be at a significant
competitive disadvantage relative to AT&T and Sprint, and will be at risk of
losing market share. For these players, the competitive solution will be the
ability to purchase wireless service on a wholesale basis so that the purchased
wireless service may be bundled with their own core product offerings. However,
unlike wireline long distance, where multiple wholesale networks emerged to
support a vibrant industry of long distance resellers, there are few nationwide
wireless networks and all of them are and will remain dedicated to supporting
the retail service strategies of the network operator. NextWave intends to fill
the void in the wireless marketplace for wholesalers.
2. WIRELESS INTERNET AND MOBILE COMMERCE
Because of a unique convergence of factors, including the market's
seemingly insatiable demand for Internet access, NextWave believes that the
market for wireless Internet access services, while relatively small today, is
on the verge of erupting, similar to the trend that has been seen on wireline
networks. Internet usage in the United States exploded to 79.4 million users by
the fourth quarter of 1998 according to Intelliquest and is estimated to jump to
132.3 million Internet users in the year 2000. Ovum, an international research
and consulting firm, projects the number of wireless data subscribers in North
America to grow to 72 million by 2007.
NextWave believes that there are a number of factors that will lead to
a rapid expansion of the wireless Internet access market:
19
<PAGE>
A. DATA APPLICATIONS ARE MORE PREVALENT AND BETTER
UNDERSTOOD
Web browsing and e-mail are now mainstream applications that are used
across all business and consumer market segments. NextWave believes that these
represent the "killer applications" of wireless Internet access and that the
provision of access to these applications on an untethered basis is the next
logical step in the natural evolution of the Internet. Other applications that
are expected to generate substantial traffic on NextWave's wireless IP network
include corporate intranet access, e-commerce, and customized access to news,
stock, entertainment, and business information.
B. DEVELOPMENT OF NEW DEVICE-BASED SOFTWARE STANDARDS
The unique input/output attributes of portable wireless devices has led
to the development of new variants of Hypertext Markup Language ("HTML"), and
micro-browser software protocols that convert Internet information into a format
optimized for portable and handheld communication/computing devices. Wireless
Application Protocol ("WAP") is an example of an emerging standard that enjoys
broad support from the wireless vendor and service provider community and is
designed to support the type of end-user applications that NextWave believes
will drive mainstream acceptance of wireless Internet access.
C. RAPID EVOLUTION OF END-USER TECHNOLOGY
The highly successful 3Com Palm device is testament to how an
inexpensive but ergonomically sound hand-held computing device can find rapid
market acceptance. The recent announcements by 3Com that it will embed digital
wireless communication capabilities into next generation models demonstrates how
wireless will soon become a key feature in the handheld computing sector. In
addition, the major wireless phone manufacturers have all announced plans to
offer PCS phones and/or end-user devices capable of supporting various levels of
e-mail and web access applications.
D. WIRELESS ACCESS COSTS WILL CONTINUE TO DECLINE
NextWave believes that 3G digital wireless networks, utilizing a
packet-switched architecture, which provide higher bandwidth at far less cost
than analog or existing second generation ("2G") digital networks, will bring
the cost of wireless Internet access within the range required for mass market
acceptance.
E. ACCESS SPEEDS HAVE DRAMATICALLY IMPROVED
Wireless Internet access throughput speeds have increased by an order
of magnitude. Unlike the slow throughput speeds supported by current nationwide
wireless networks (e.g. Cellular Digital Pocket Data ("CDPD") - 14.4kbps),
NextWave's next generation wireless packet-switched network is designed to
initially provide peak throughput speeds of 144kbps or greater.
20
<PAGE>
F. WIRELESS NETWORK SECURITY HAS VASTLY IMPROVED
Spread spectrum digital wireless networks can now provide highly secure
communications for wireless data applications such as corporate e-mail and
intranet access, as well as the rapidly expanding suite of e-commerce
applications.
NextWave believes that by deploying the only nationwide 3G wireless
network, designed specifically to support high speed wireless Internet access,
it will be uniquely positioned to capture market share in the emerging wireless
data market.
3. ENHANCED WIRELESS INTERNET OPPORTUNITIES
NextWave plans on exploring new wireless network technologies that
could allow it to provide fixed and/or nomadic wireless Internet access and data
networking services. These new packet-switched wireless data technologies such
as QUALCOMM's High Data Rate ("HDR") service, are specifically designed to
handle high levels of data traffic at very high speeds and, therefore, may offer
a competitive alternative to fixed wireline Internet access service. NextWave
believes that an attractive feature of offering fixed and nomadic, high speed
Internet access is that the deployment of enabling network infrastructure is
highly scalable in that only a small number of highly targeted cell sites
equipped with the appropriate technology would need to be deployed initially in
order to begin providing service.
21
<PAGE>
B. NATIONAL FOOTPRINT AND SUMMARY OF NEXTWAVE'S MARKETS
NextWave's 163 million POP CDEF-block footprint represents the third
largest in the United States and the only national PCS footprint other than
those of Sprint and AT&T. NPCI holds sixty-three (63) C block 30MHz PCS licenses
clustered in eleven (11) geographic regions throughout the United States. NPPI
holds thirty-two (32) D, E or F Block 10MHz licenses, providing coverage in most
of the remaining large markets in the country as well as corridor and/or
complementary coverage to the licenses held by NPCI. NextWave believes that its
clustered markets will provide operational efficiencies, lower infrastructure
costs, more efficient network build-out and, ultimately, lower wholesale prices
for NextWave's wireless services.
[GRAPHIC OMITTED]
[Graphic of map of United States, indicating areas
described in the above paragraph]
22
<PAGE>
<TABLE>
<CAPTION>
BTA 1996 Population PCS Block BTA 1996 Population PCS Block
- -------------------------------------------------------------- | -----------------------------------------------------------
<S> <C> <C> | <C> <C> <C>
New York 18,400,203 C | El Paso 754,934 C
Los Angeles 15,679,293 C | Worcester 722,407 C
Chicago 8,467,720 F | Allentown 715,191 C
San Francisco 6,842,466 F | Harrisburg 685,936 F
Philadelphia 5,984,423 F | Scranton 680,311 C
Dallas 4,828,566 F | Roanoke 644,394 C
Detroit 4,785,173 D | Madison 643,605 E
Houston 4,598,155 C | Columbia 618,397 F
Washington D.C. 4,410,587 C | Springfield, MO 600,376 C
Boston 4,177,962 C | Manchester 564,985 C
Atlanta 3,763,994 F | Sarasota 563,016 C
Minneapolis 3,063,561 C | Asheville 549,969 C
Seattle 3,055,225 C | McAllen 543,624 C
Cleveland 2,940,521 C | Corpus Christi 541,452 F
St. Louis 2,807,363 F | Evansville 515,387 C
San Diego 2,679,864 C | Portland, ME 489,045 C
Baltimore 2,552,338 C | Daytona Beach 456,938 F
Pittsburgh 2,517,972 C | Lancaster 454,432 F
Tampa 2,394,524 C | Melbourne 450,744 C
Denver 2,386,290 C | York-Hanover 448,997 F
Cincinnati 2,091,774 C | Lakeland 436,578 C
Portland, OR 1,945,500 C | Poughkeepsie 433,907 C
Kansas City 1,930,633 C | New London 355,074 C
Charlotte 1,861,677 C | Reading 352,204 F
Sacramento 1,832,812 F | Hagerstown 347,982 C
Milwaukee 1,799,556 F | Temple 343,016 C
Norfolk 1,785,196 C | Atlantic City 336,738 F
San Antonio 1,728,049 C | Brownsville 334,767 C
Columbus, OH 1,574,030 C | Olympia 322,527 C
Providence 1,505,903 C | Provo 316,483 F
Salt Lake City 1,497,885 F | Hickory 314,730 C
Orlando 1,447,059 C | Tyler 292,394 F
Louisville 1,428,320 C | Dover 282,991 F
Indianapolis 1,420,258 C | Gainesville 282,711 C
Oklahoma City 1,368,004 C | Lafayette 258,941 C
Greensboro 1,330,742 C | Ocala 234,556 F
Dayton 1,218,672 C | Bloomington 233,015 C
Jacksonville 1,208,139 C | Janesville 230,017 F
Richmond 1,191,504 C | Las Cruces 229,629 C
Las Vegas 1,145,084 F | Joplin 227,313 C
Austin 1,074,621 C | Salisbury 178,973 F
Albany 1,057,180 C | Bryan 171,794 C
New Haven 976,729 C | Bellingham 153,686 C
Tulsa 894,787 F | Columbus, IN 149,130 C
Lexington 876,111 C | El Centro 145,033 D
Greenville 845,335 F | Kankakee 131,992 F
Pittsfield/Springfield 803,009 E | Longview 96,036 C
- -------------------------------------------------------------- | -----------------------------------------------------------
</TABLE>
NextWave intends to expand the footprint of its wireless networks
throughout the United States by a combination of potential affiliations,
strategic alliances and acquisitions. To cover those areas not served by
NextWave's markets, NextWave expects to enter into roaming agreements with other
major PCS and cellular carriers.
23
<PAGE>
C. OPERATIONAL PLAN
1. PCS SYSTEM CONFIGURATION AND NETWORK BUILD-OUT
NextWave is committed to ultimately deploying 3G wireless technology
for the provision of IP-centric, integrated voice and data services. NextWave's
network architecture will be based on products that provide at launch or can
evolve post-launch toward next generation IP-based networks. The network will
consist of a radio access network that supports integrated voice and data access
at the base transceiver station ("BTS"). The BTS backhaul will be IP over any
media to provide the most efficient transport toward the radio controller server
for mobility management and flow control. The radio controller server will
provide for integrated packet access to gateway network elements that support
both data and voice services as well as interface to wireless signaling/switch
networks.
In a packet-switched network, information (voice and data) is
transmitted in discrete units called "packets" rather than in a continuous
stream as with a modem using a circuit-switched line. The packets travel along
any number of alternative paths and are reassembled into the proper order when
they arrive at their destination. Because a dedicated circuit is not established
between the sender and the receiver, network capacity is used only when data
packets are being transmitted. In a circuit-switched network, a dedicated
connection must be established which can severely limit total network capacity.
In addition, by building a packet-switched network, NextWave will avoid the high
costs associated with the large switching facilities that are required in a
circuit-switched network. For these reasons, the capital costs associated with
the deployment of NextWave's 3G packet-switched network are expected to be
significantly lower than that of the older wireless network infrastructure
deployed by other wireless operators.
NextWave's network and service offering to its Service Distribution
Partners ("SDPs") is designed to permit full interconnection to its operating
platforms for facilities based resellers upon launch. This is one of the key
differentiating elements of the network and is a direct result of NextWave's
focus on a carrier's carrier strategy. Nationally, the network will utilize
multiple infrastructure vendors with requirements to provide a common set of
standardized products/services subject to vendor specific timing and
availability. The multi-vendor network design will utilize common platforms
pursuant to NextWave technical specifications for CDMA or GSM technology.
2. NETWORK EQUIPMENT PROCUREMENT
On May 14, 1999 NextWave released a comprehensive Request for Proposal
("RFP") to twelve (12) major suppliers of wireless infrastructure equipment, as
a manner by which to efficiently qualify the subset of vendors best able to meet
NextWave's requirements for an IP-centric 3G national wireless network in the
most cost effective manner. The proposal solicited information such as 3G
infrastructure pricing, product specifications and availability for a turnkey
implementation of NextWave's PCS markets.
On June 14, 1999, at the close of the proposal period, NextWave
received eight (8) proposals from seven (7) suppliers of wireless infrastructure
indicating that the RFP was well received in the vendor community, as
significant resource commitments by the vendors were required to prepare
24
<PAGE>
such high quality responses within the thirty (30) day accelerated response
period. Proposals were received from Ericsson, LG InfoComm, Lucent Technologies,
Nokia, Nortel Networks, Motorola, and Siemens. NextWave will be working
diligently prior to the hearing on confirmation of the Plan not only to evaluate
these proposals and to seek a complete understanding of the commitments set
forth in the responses, but also to evaluate the responses in connection with
the requirements of its business plan.
By the end of July 1999, NextWave expects to have reduced the set of
potential suppliers to a select few and complete detailed negotiations to
conclude a procurement contract to supply equipment and services for its initial
network deployment prior to Plan confirmation.
On May 25, 1999, NextWave issued a second RFP to tower companies for
site acquisition and construction services. In the past several years a number
of tower companies have provided the wireless industry with cost effective
cell-site leases on a national basis where real estate is owned and operated by
the tower companies. On June 25, 1999, at the close of the proposal period,
NextWave had received proposals from eight (8) tower companies, including AAT,
American Tower, Crown Castle, McKenzie Telecom Group, Microcell, Pinnacle
Towers, SBA and SpectraSite Communications. NextWave will be evaluating the
tower company responses in connection with the requirements of network build-out
plan and in conjunction with its infrastructure vendor RFPs. The infrastructure
vendor or the tower company will act as the prime contractor responsible for RF
design, site acquisition, zoning, permitting, construction and system testing of
the network and its related systems according to NextWave's requirements.
VII. THE PLAN
The Plan provides the mechanism by which to simplify NextWave's
existing capital structure so as to secure the new financing required to
build-out its PCS network. With the above-mentioned business plan and goals in
mind, the following sections speak to their implementation and execution.
A. CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY
INTERESTS UNDER THE PLAN
A sound capital structure is critical to NextWave's future success.
Accordingly, the Plan simplifies and streamlines NextWave's existing capital
structure. The proposed Plan Securities, the terms of which are summarized below
and described in detail in the certificates of designation of preferred stock
and the forms of FCC F Block Notes, FCC C Block Notes, NTI Senior Subordinated
Notes, and NTI Series B Warrants which will be submitted to the Bankruptcy Court
for approval as Plan Documents, allow existing creditors to participate in the
value which will be created by the operation of reorganized NextWave.
1. SUMMARY OF CLASSIFICATION AND TREATMENT
The principal creditors or creditor groups under NextWave's existing
capital structure fall into four main categories: Senior Claimants, General
Unsecured Claimants, Other Secured Claimants and the FCC. Senior Claimants
include Hanareum Banking Corporation ("Hanareum"),
25
<PAGE>
the holders of NTI's Convertible Senior Subordinated Notes due 2002 (the "Bridge
Noteholders"), LG InfoComm, Inc. ("LG InfoComm"), Hughes Network Systems, Inc.
("Hughes") and CDMA California Partners. As a group, the Senior Claimants have
asserted claims in the principal amount of approximately $245,545,419 against
the Debtors, not accounting for interest or duplicate claims. The claims of the
Senior Claimants are allegedly secured by the stock of NTI's subsidiaries and
other assets.
The General Unsecured Claimants include Sony Corporation, LG TeleComm,
LCC International, Carlson Technologies, and various other parties. As a group,
the General Unsecured Claimants have asserted claims of approximately
$80,000,000 against the Debtors, not including duplicate or patently incorrect
claims. The FCC has asserted a secured claim of approximately $98,500,000 in
principal amount against NPPI (the "FCC NPPI Claim"). Moreover, as a result of
the Avoidance Decision, the principal amount of the FCC's secured claim against
NPCI is $548,846,194 (the "FCC NPCI Claim"). In addition, a number of parties
have asserted claims secured by equipment delivered to NWI (the "Other Secured
Claimants"). The approximate amount of the currently asserted claims of the
Other Secured Claimants is $25,000,000, not including duplicate or patently
incorrect claims. The following chart summarizes these categories and the
corresponding classes designated under the Plan:
<TABLE>
<CAPTION>
APPROXIMATE CLASS UNDER
CATEGORY CLAIM AMOUNT CLAIM AGAINST THE PLAN
- -------- ------------ ------------- --------
<S> <C> <C> <C>
Senior Claimants
Hanareum $40,095,311.73 NTI, NPI, NPPI, NWI 1G, 3D, 4E, 5D
Bridge Noteholders 174,327,294.98 NTI, NPI, NPPI, NWI 1H, 3E, 4F, 5E
LG InfoComm 42,763,924.55 NTI, NPCI 1D, 2E
CDMA California 10,694,444.44 NTI 1F
Hughes 44,718,333.33 NTI, NPCI 1E, 2F
-------------
Total $312,599,309.03
(Allowed Amount
under Plan)
General Unsecured
Claimants $80,000,000 NTI, NPCI, NPI, NPPI, NWI 1I, 2G, 3F, 4G, 5F
FCC $98,551,806 NPPI 4D
$548,846,194 NPCI 2D
Other Secured Claimants $25,000,000 NTI, NPCI, NPI, NPPI, NWI 1C, 2C, 3C, 4C, 5C
</TABLE>
Other classes of claims under the Plan are as follows:
CLAIMANT CLASS
- -------- -----
Priority Non-Tax Claims 1A, 2A, 3A, 4A, 5A
Administrative Convenience Claims 1B, 2B, 3B, 4B, 5B
Intercompany Claims 1J, 2H, 3G, 4H, 5G
26
<PAGE>
The Plan designates the following classes for Equity Interests:
<TABLE>
<CAPTION>
EQUITY INTEREST CLASSES
- --------------- -------
<S> <C>
Existing NTI Series A Common Stock 1K
Existing NTI Series B Common Stock 1L
Existing Warrants and Options for NTI Series B Common Stock 1M
Common Stock of NPCI, NPI, NPPI, NWI 2I, 3H, 4I, 5H
</TABLE>
The following sections describe the various Claims against and Equity
Interests in the Debtors in greater detail.
2. SENIOR CLAIMANTS
Except as set forth in this paragraph and in the Plan, Senior Claimants
shall receive NTI Senior Subordinated Notes having a face amount equal to the
amount of each such claimant's Allowed Claim. In addition, (i) the holders of
the Bridge Noteholders Claims shall each receive their pro rata portion of NTI
Series B Warrants to purchase up to 32,000,000 shares of NTI Series B Common
Stock and (ii) the holders of the Hanareum Claims shall each receive their pro
rata share of NTI Series B Warrants to purchase up to 3,500,000 shares of NTI
Series B Common Stock. Hughes will receive a cash payment of 75% of its Allowed
Claim on the Effective Date of the Plan in full satisfaction of such Claim. LG
InfoComm will receive a cash payment of 77% of its Allowed Claim on the
Effective Date of the Plan and 1,000,000 NTI Series B Warrants in full
satisfaction of such Claim. Senior Claimants are impaired and entitled to vote
to accept or reject the Plan.
A. HANAREUM
Hanareum has advised the Debtors that, by action of the government of
South Korea, it has succeeded to the claims of Samyang Merchant Bank and Hangil
Merchant Banking Corporation. These claims, which aggregate $34,916,666 in
outstanding principal amount, arise from five (5) separate loan agreements with
NTI. Hanareum's claims against NTI are allegedly secured by a pledge of all the
capital stock of NPI, NWI and TC. NPI, NPPI, NWI and TC have guaranteed the
payment of Hanareum's claims. In addition, Hanareum's guaranty claims against
NPI are secured by a pledge of the capital stock of NPPI. The documents
governing the claims of Hanareum are set forth in the Debtors' schedules and in
the definition of "Hanareum Claim" in the Plan.
The claims of Hanareum are designated as classes 1G, 3D, 4E and 5D
under the Plan. The Debtors scheduled the claims of Hanareum as disputed. See
section XIV(B)(2)(a) below. Hanareum filed secured claims in the amount of
$34,916,666 against NPI (claim 84) and NTI (claim 330). In addition, Hanareum
filed an unsecured claim for the same amount against NWI and NPPI (claim 87).
For purposes of the Plan only, and without prejudice to any party's rights to
contest the allowability, extent and validity of the Hanareum Claims if the Plan
is not confirmed or does not become effective, the Hanareum Claims will be
allowed in the aggregate amount of $40,095.311.73.
27
<PAGE>
B. BRIDGE NOTEHOLDERS
The aggregate outstanding principal amount of NTI's Convertible Senior
Subordinated Notes due 2002 (the "Bridge Notes") is $128,750,000. The proceeds
from the issuance of the Bridge Notes were deposited with the FCC upon the
announcement of the FCC's intent to conditionally grant NPCI the C block
licenses for which it had been previously named high bidder. In addition, the
Bridge Notes are convertible into Existing NTI Series B Common Stock. NTI's
obligations under the Bridge Notes are allegedly secured by a pledge of the
stock of NPI and NPPI. In addition, NTI's obligations have been guaranteed by
NPI, NWI and TC. The claims and liens of the Bridge Noteholders are
contractually subordinate to the claims of Hanareum and others. The documents
governing these claims are set forth in the Debtors' schedules and in the
definition of "Bridge Noteholders Claim" in the Plan. The following table lists
the holders of the largest principal amount of Bridge Notes:
BRIDGE NOTEHOLDER Principal Amount
- ----------------- ----------------
M.D. Sass/Resurgence et al. $30,000,000
Cerberus Partners 22,400,000
Continental Casualty 22,000,000
CIBC WG Argosy Merchant Fund 15,000,000
Bastion Capital 10,000,000
Triumph Capital 7,000,000
The claims of the Bridge Noteholders are designated as classes 1H, 3E,
4F and 5E under the Plan. The Debtors scheduled these claims as contingent,
unliquidated, and disputed. See section XIV(B)(2)(c) below. The Bridge
Noteholders have filed total claims against NTI of $145,722,238; against NPCI of
$16,115,986; against NPI of $136,792,427; against NPPI of $136,792,427; and
against NWI of $136,792,427, many of which claims also are actually asserted for
significantly higher amounts when all alleged interest is included. For purposes
of the Plan only, and without prejudice to any party's rights to contest the
allowability, extent and validity of the Bridge Noteholders Claims if the Plan
is not confirmed or does not become effective, the Plan provides for the Bridge
Noteholders to participate in a consensual Allowed Claim of $174,327,294.98 (the
"Allowed Bridge Noteholders' Claim") and to receive a full release of any
potential challenges to the terms, amount or priority of the Allowed Bridge
Noteholders' Claim.
C. LG INFOCOMM
The claims of LG InfoComm, which aggregate $36,795,419 in principal
amount, arise from two (2) separate loan agreements with NTI. The claims against
NTI are allegedly secured by a pledge of all the capital stock of NPCI and a
grant by NPCI of a security interest in its C block licenses and the proceeds
from the sale thereof, to the extent permitted by applicable FCC rules and
regulations. The documents governing these claims are set forth in the Debtors'
schedules and in the definition of "LG InfoComm Claim" in the Plan.
28
<PAGE>
The claims of LG InfoComm are designated as classes 1D and 2E under the
Plan. The Debtors scheduled the claims of LG InfoComm as disputed. See section
XIV(B)(2)(b) below. LG InfoComm filed a secured claim against NPCI, NPPI, NPI
and NWI for $11,552,113.82 (claim 196) and a secured claim against NTI for
$12,243,387.32 (claim 351). LG InfoComm has filed additional secured claims
against NPCI, NPPI, NPI and NWI in the amount of $29,240,730.19 (claim 183) and
against NTI in the amount of $31,071,164.77 (claim 350). Finally, LG InfoComm
has filed an unsecured claim against NTI for $10,535,784 (claim 349). For
purposes of the Plan only, and without prejudice to any party's rights to
contest the allowability, extent and validity of the LG InfoComm Claims if the
Plan is not confirmed or does not become effective, the LG InfoComm Claims will
be allowed in the aggregate amount of $42,763,924.55.
D. CDMA CALIFORNIA PARTNERS
The claim of CDMA California Partners LLC, which aggregates $10,000,000
in principal amount, arises out of a prepetition settlement and debt
restructuring agreement with NTI, in connection with which CDMA California
Partners was granted a subordinated security interest in all issued and
outstanding shares of stock of NPCI. CDMA California Partners' security interest
is subordinate to the interests of LG InfoComm, Hughes and the other Senior
Claimants. The documents governing the CDMA California Partners claim are set
forth in the Debtors' schedules and in the definition of "CDMA California
Partners Claim" in the Plan.
The CDMA California Partners Claim is designated as class 1F under the
Plan. The Debtors scheduled this claim disputed. CDMA California Partners has
filed a secured claim against NPCI for $10,671,232.88 (claim 191) and a secured
claim against NTI for $10,694,455 (claim 381). For purposes of the Plan only,
and without prejudice to any party's rights to contest the allowability, extent
and validity of the CDMA California Partners Claim if the Plan is not confirmed
or does not become effective, the CDMA California Partners Claim will be allowed
in the aggregate amount of $10,694,444.44.
E. HUGHES
Hughes' claim, which aggregates $35,000,000 in outstanding principal
amount, arises from a subscription agreement and convertible promissory note
with NTI. The Hughes claim against NTI is allegedly secured by essentially all
of NTI's assets, a pledge of the stock of NPCI, and a grant by NPCI of a
security interest in its C block licenses and the proceeds thereof, to the
extent permitted by applicable FCC rules and regulations. The pledge of the
stock and the security interest in the C block licenses and their proceeds are
also subject to the liens of LG InfoComm. The documents governing the Hughes
claim are set forth in the Debtors' schedules and in the definition of "Hughes
Claim" in the Plan.
The claim of Hughes is designated as classes 1E and 2F under the Plan.
The Debtors scheduled this claim as disputed. Hughes has filed a secured claim
against NPCI for $42,023,333 (claim 194) and a secured claim against NTI for the
same amount (claim 384). For purposes of the Plan only, and without prejudice to
any party's rights to contest the allowability, extent and validity
29
<PAGE>
of the Hughes Claim if the Plan is not confirmed or does not become effective,
the Hughes Claim will be allowed in the aggregate amount of $44,718,333.33.
3. GENERAL UNSECURED CLAIMANTS
General Unsecured Claimants shall receive NTI Senior Redeemable
Preferred Stock with a face amount equal to the amount of each such claimant's
Allowed Claim and NTI Series B Warrants to purchase their pro rata portion of
3,500,000 shares of NTI Series B Common Stock. General Unsecured Claimants are
impaired and entitled to vote to accept or reject the Plan.
The General Unsecured Claimants consist of several hundred holders of
general unsecured claims, principally against NTI, NPCI and NWI. These claims
represent unsecured investments in NTI, claims based upon consulting or other
services performed or goods delivered, and the unsecured portions of the claims
of the Other Secured Claimants. The approximate total claims for the General
Unsecured Claimants is $80,000,000. The following table lists the holders of
some of the largest claims in this category:
Approximate
GENERAL UNSECURED Principal Classes Under
CLAIMANT Amount of Claim Claim Against the Plan
Sony Electronics $10,000,000 NTI 1I
LG TeleComm 10,000,000 NTI 1I
LCC International 11,049,049 NTI 1I
Lindemann PCS 5,000,000 NTI 1I
RELTEC 5,000,000 NTI 1I
Yuyang Telecom 3,000,000 NTI 1I
Bay Harbour 4,950,000 NTI 1I
Korea Inf. & Comm. 2,000,000 NTI 1I
- --------------------------------------------------------------------------------
The claims of the General Unsecured Claimants are designated as classes
1I, 2G, 3F, 4G and 5F under the Plan.
4. FCC
The secured claims of the FCC are designated as classes 2D and 4D under
the Plan. The FCC's claims of $98,551,806 against NPPI and $548,846,194 against
NPCI, respectively, shall be paid in full pursuant to the Amended and Restated
Installment Payment Plan Notes (the "Notes") which will be executed by NPPI and
NPCI in the aggregate principal amounts of $98,551,806 and $548,846,194,
respectively, and the forms of which have been submitted to the FCC and will be
submitted to the Bankruptcy Court for approval as Plan Documents. The FCC shall
also receive postpetition interest on the FCC NPCI Claim at a rate of 6.5% and
at a rate of 6.25% on the FCC NPPI Claim from June 8, 1998 through the
Confirmation Date. The maturity date of the Notes shall remain the same as the
Original Notes executed by NPPI and NPCI. Following the Effective Date
30
<PAGE>
of the Plan, the Notes provide that NPPI and NPCI shall continue to make
payments to the FCC in accordance with the terms of the Notes and the Amended
Amortization Schedules to be attached thereto. The FCC shall retain its liens on
the C and F block licenses.
Alternatively, at the FCC's election which may be made prior to the
Voting Deadline, the FCC shall receive, in full and final satisfaction and
settlement of all claims against NPCI and in exchange for a dismissal with
prejudice of all pending litigation between NPCI and the FCC, whether on appeal
or otherwise, a lump sum cash payment of $548,846,194 on or before September 30,
2000. The FCC is unimpaired, presumed to accept the Plan and will not be
entitled to vote thereon.
5. OTHER SECURED CLAIMANTS
The Other Secured Claimants will receive, at the Debtors' option, their
collateral, cash equal to the value of their collateral, or have their original
claims reinstated. The Other Secured Claimants are unimpaired under the Plan,
presumed to accept the Plan and are not entitled to vote thereon. The unsecured
portions of the Other Secured Claimants' Allowed Claims will receive the same
treatment as the Allowed Claims of the General Unsecured Claimants.
Approximately $25,000,000 of claims against the Debtors have been
asserted by entities who have supplied PCS equipment or office equipment or
furniture. The holder of the largest claim in this category is Lucent
Technologies for the sale of BTS and related PCS infrastructure equipment to
NWI. The total amount of the claim asserted by Lucent is $10,735,217. Each of
the claims by the Other Secured Claimants, to the extent allowed, is a secured
claim to the extent of the value of the collateral securing such claim. At this
time the value of the collateral securing these claims has not been determined.
To the extent such claims are secured, they are designated as classes 1C, 2C,
3C, 4C and 5C under the Plan. To the extent such claims are unsecured, they will
be treated in the same manner as the General Unsecured Claimants and are
designated in the Plan accordingly.
6. INTERCOMPANY CLAIMS
All intercompany claims, classified as classes 1J, 2H, 3G, 4H and 5G,
are extinguished under the Plan. The holders of such claims will neither retain
nor receive any property under the Plan on account of such claims, are deemed to
reject the Plan and are not entitled to vote thereon.
7. PRIORITY NON-TAX CLAIMS
All Priority Non-Tax Claims, classified as classes 1A, 2A, 3A, 4A and
5A, will be paid in full on the Distribution Date, unless the holders of such
claims have agreed to a different treatment. The holders of Priority Non-Tax
Claims are unimpaired, deemed to accept the Plan, and not entitled to vote
thereon.
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<PAGE>
8. ADMINISTRATIVE CONVENIENCE CLAIMS
All unsecured creditors will have the option to reduce their claims to
the Administrative Convenience Claim limit of $20,000 in order to receive a cash
payment. However, as a condition to receiving such treatment, any creditor so
electing must (i) reduce all claims against all of the Debtors to $20,000 in the
aggregate (i.e., the creditor in question will receive a maximum distribution of
$20,000 in exchange for all claims against all Debtors); (ii) make such an
election on the Ballot provided for accepting or rejecting the Plan; and (iii)
vote to accept the Plan. A failure to meet all three requirements will result in
such an election being deemed invalid and such holder shall receive the
treatment accorded General Unsecured Claimants under the Plan. The holders of
Administrative Convenience Claims are impaired and entitled to vote on the Plan.
9. EQUITY INTERESTS
The Plan provides that holders of NTI Series A Common Stock and NTI
Series B Common Stock will retain their shares, subject to the rights,
privileges and preferences of the holders of Plan Securities. Holders of
Existing NTI Series A and B Common Stock are impaired and entitled to vote to
accept or reject the Plan. NTI will retain the common stock in its subsidiaries
which it presently owns and such interests are unimpaired. NTI is not entitled
to vote to accept or reject the Plan. Each holder of an Existing Option/Warrant
shall be entitled to exercise such Existing Option/Warrant prior to the
Effective Date in accordance with the procedures specified on the Ballot. From
and after the Effective Date, all Existing Options/Warrants will be extinguished
by the Plan. The holders of Existing Options/Warrants are impaired and entitled
to vote to accept or reject the Plan.
The following tables set forth, as of the NTI Petition Date, (i) the
amount and percentage ownership of Existing NTI Series A Common Stock
beneficially owned by parties owning more than 1,000,000 shares, (ii) the amount
and percentage of ownership of Existing NTI Series B Common Stock beneficially
owned by those holders of in excess of 2,000,000 shares and (iii) the amount and
percentage of ownership of Existing NTI Warrants exercisable into Existing NTI
Series B Common Stock beneficially owned by those holders of 1,000,000 or more
warrants. Except as otherwise indicated and subject to applicable community
property and similar laws, each of the persons named has sole voting and
investment power with respect to the Existing NTI Series A Common Stock or
Existing NTI Series B Common Stock shown as beneficially owned.
A. EXISTING NTI SERIES A COMMON STOCK
PERCENTAGE OF
AMOUNT AND NATURE OF OUTSTANDING SERIES A
NAME BENEFICIAL OWNERSHIP COMMON STOCK
Navation Inc. 19,091,435 52.7%
Good News Communications 11,960,866 33.0%
Freedom Mobility, Inc. 1,896,273 5.2%
- -------------------------------------------------------------------------------
32
<PAGE>
B. EXISTING NTI SERIES B COMMON STOCK
PERCENTAGE OF
AMOUNT AND NATURE OF OUTSTANDING SERIES B
NAME BENEFICIAL OWNERSHIP COMMON STOCK
Navation Inc. 20,058,308 12.88%
Good News Communications 12,879,868 8.27%
Korea Electric Power Corporation 6,666,666 4.28%
LG InfoComm, Inc. 6,666,666 4.28%
PECO Energy Company 6,666,666 4.28%
Pohang Steel America Corporation 6,666,666 4.28%
QUALCOMM Incorporated 6,666,666 4.28%
Bay Harbour 5,620,394 3.61%
Triumph-California, L.P. 5,520,000 3.54%
Triumph-Connecticut L.P. 5,520,000 3.54%
Cerberus Partners L.P. 5,240,667 3.36%
Sony Electronics 3,333,333 2.14%
ILJIN Diamond Ltd. 3,333,333 2.14%
ILJIN Corp. 3,333,333 2.14%
Freedom Mobility, Inc. 2,041,974 1.31%
- -------------------------------------------------------------------------------
C. WARRANTS EXERCISABLE INTO SHARES OF EXISTING NTI SERIES B
COMMON STOCK
PERCENTAGE OF
NAME NUMBER OF WARRANTS OUTSTANDING WARRANTS
MCI Telecommunications Corp. 23,673,284 44.72%
Samyang Merchant Bank (Hanareum) 5,983,333 11.30%
Pohang Steel America Corporation 4,419,583 8.35%
Sony Electronics Inc. 4,222,222 7.98%
Lucent Technologies, Inc. 2,000,000 3.78%
Comdisco, Inc. 1,500,000 2.83%
QUALCOMM Incorporated 1,111,111 2.10%
Hangil Merchant Bank (Hanareum) 1,000,000 1.89%
- --------------------------------------------------------------------------------
The holders of NTI Series A and B Common Stock and warrants exercisable
into NTI Series B Common Stock are set forth on NTI's Statement of Equity
Security Holders of NextWave Telecom Inc. filed with the Bankruptcy Court as
part of NTI's Schedules and Statements. Equity Interests in the Debtors are
designated as classes 1K, 1L, 1M, 2I, 3H, 4I and 5H under the Plan.
33
<PAGE>
10. CONFIRMATION BONUS POOL FOR CURRENT ACTIVE EMPLOYEES
As set forth in section V(C) hereof, NextWave attracted a highly
talented and experienced management group to lead its development. Despite the
strains and perils faced by NextWave over the past three years, this management
team has remained largely intact and, with a core group of employees, has led
NextWave through its litigation with the FCC and the restructuring proceedings
that have resulted in the attraction of new investments and the proposal of this
Plan. In addition to persevering through the uncertainties of litigation and
financial distress, NextWave employees have foregone other career opportunities
and resolutely maintained their commitment to salvaging and resurrecting value
for creditors and shareholders despite NextWave's financial inability to reward
and incentivize such performance. In recognition of the value created for the
estates by the NextWave team, the Plan provides for a pool of up to 6.9 million
shares of NTI Series B Common Stock (the "Confirmation Bonus") to be granted to
Current Active Employees or consultants. The allocation of the Confirmation
Bonus will be determined prior to the Confirmation Hearing by the Board of
Directors, in consultation with the Committee, Cellexis and the other major
constituencies who have been deeply involved in the reorganization process.
11. MANAGEMENT INCENTIVE OPTIONS
In order to encourage management to continue on with NextWave following
the reorganization and assist with implementing the business plan, as well as to
attract qualified individuals to work for Reorganized NextWave going forward, up
to eleven percent (11%) of the total shares of NTI Series B Common Stock
outstanding on the Effective Date of the Plan on a fully diluted basis shall be
reserved for management, consultants and/or employee incentive programs. Any and
all such programs shall be implemented by the Board of Directors of Reorganized
NTI, as it deems appropriate, pursuant to a stock option plan and/or stock
option agreement ("Incentive Options"). Incentive Options shall be exercisable
at $1.50 per share, or such other price as the Board of Directors of Reorganized
NTI may establish, and vest on a pro rata basis during the 48 months following
the Effective Date.
12. EXERCISE OF CONVERSION RIGHTS
The Plan provides that each holder of an Allowed Claim that has the
contractual right to convert all or any portion of its claim into shares of
Existing NTI Series B Common Stock may make such conversion at any time prior to
the Voting Deadline, to be effective on the Effective Date, in accordance with
the procedures specified on the Ballot; provided, however, that such conversion
rights shall be limited, by the Debtors in their sole discretion, to the extent
necessary to avoid any violation of FCC rules, regulations and requirements in
effect at the time of such conversion. Confirmation of the Plan is considered a
liquidity event under outstanding securities and instruments triggering, inter
alia, conversion or vesting. Shares of NTI Series B Common Stock received on
account of any such conversion shall be treated as an Equity Interest in Class
1L. Any portion of an Allowed Claim subject to conversion but not converted will
continue to be an Allowed Claim in the appropriate class for the amount not
converted, and will receive the treatment accorded to the other holders of
Allowed Claims in such class.
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13. ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS
The Bankruptcy Code requires that all Administrative Claims against the
Debtors' estates be paid in full in cash on the Effective Date of the Plan,
unless the holders of such claims agree to a different treatment. Administrative
Claims and Priority Tax Claims are not classified under the Plan. Except to the
extent the holders of such claims have agreed to a different treatment (i)
holders of Administrative Claims shall receive, on the Distribution Date, cash
in full payment of such claims and (ii) holders of Priority Tax Claims shall
receive, on account of such claims, deferred cash payments over a six (6) year
period having a value, as of the Effective Date, equal to the amount of such
claim. The Debtors anticipate a total of $2.21 million in Administrative Claims
(including professional fees) and $130,670.49 in Priority Tax Claims as of the
Confirmation Date. The Plan provides a detailed procedure for determining and
resolving administrative expense claims.
14. DIP FINANCING
In NextWave's case, the claims of Cellexis under the DIP Financing
constitute administrative expenses. As of July 23, 1999, approximately $22
million had been drawn down under the DIP Facility. In exchange for such claim,
Cellexis shall receive shares of NTI Series A Convertible Preferred Stock having
a stated value equal to two (2) times the aggregate principal amount outstanding
under the DIP Financing documents, with any interest, fees and charges thereon
to be paid in cash.
B. DESCRIPTION OF PLAN SECURITIES
NTI's revised capital structure will consist of four types of new
securities (collectively, the "Plan Securities") and the two existing series of
common stock. NTI Series A Convertible Preferred Stock will be issued to new or
existing investors in exchange for a minimum of $225,000,000 of working capital
and to Cellexis in full satisfaction of all Administrative Claims under the DIP
Financing, on the basis of two (2) shares of stock for every $100.00 drawn under
the DIP Financing. NTI Senior Redeemable Preferred Stock will be issued to
General Unsecured Claimants in full satisfaction of their claims against all of
the Debtors. NTI Senior Subordinated Notes will be issued to Senior Claimants in
full satisfaction of their claims against all of the Debtors. In addition, NTI
Series B Warrants will be issued to (i) new investors who subscribe to purchase
shares of NTI Series A Convertible Preferred Stock on or before the date that is
ten (10) business days following the date the Disclosure Statement is approved
and (ii) the Bridge Noteholders, Hanareum, LG InfoComm and General Unsecured
Creditors. The following is only a brief summary of the principal terms of the
NTI Series A Convertible Preferred Stock, the NTI Senior Redeemable Preferred
Stock, the NTI Senior Subordinated Notes and the NTI Series B Warrants, and is
qualified in its entirety by the forms of the certificates of designation of
preferred stock, form of Senior Subordinated Notes, form of Indenture and form
of NTI Series B Warrant Agreement submitted to the Bankruptcy Court for approval
as Plan Documents.
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1. NTI SERIES A CONVERTIBLE PREFERRED STOCK
The NTI Series A Convertible Preferred Stock will have a stated value
of $100.00 per share, to be issued and outstanding as of the Effective Date, and
shall be senior to all of the capital stock of NTI, other than the NTI Senior
Redeemable Preferred Stock. Dividends will accumulate at the annual rate of 10%,
payable quarterly in cash or in kind. NTI will have the obligation to redeem
such shares on the tenth (10th) anniversary of the Effective Date of the Plan.
NTI Series A Convertible Preferred Stock shall be convertible into NTI Series B
Common Stock at a price of $3.00 per share for such common stock upon the
occurrence of a qualifying initial public offering. Series A Convertible
Preferred Stock shall contain restrictive covenants which, inter alia, limit a
merger or acquisition unless certain target returns are achieved, and prevent
amendments to NTI's by-laws in a manner that adversely affects the rights of the
holders of such stock. Pursuant to and in accordance with the certificate of
preferences and designations for NTI Series A Convertible Preferred Stock, which
will be submitted to the Bankruptcy Court for approval as a Plan Document, the
holders of NTI Series A Convertible Preferred Stock shall be entitled to vote
with the holders of NTI Series B Common Stock on all matters that may properly
come before the holders of Series B Common Stock, with each share of Series A
Convertible Preferred Stock having such voting rights as it would have if such
share had been converted to Series B Common Stock immediately prior thereto.
2. NTI SENIOR SUBORDINATED NOTES
The aggregate face amount of the NTI Senior Subordinated Notes shall be
$225,000,000. The Senior Subordinated Notes shall have a maturity of ten (10)
years from the Effective Date, bear interest at 12% per annum (payable
semiannually in cash or additional NTI Senior Subordinated Notes) and contain
the following features:
o The Subordinated Notes will be secured by a lien on the stock
of the License Subsidiaries (the "Collateral"), which lien
will be subordinate as a silent second lien to any lien
provided in connection with the Vendor Financing or any
financing provided by vendors during the term of the Senior
Subordinated Notes. There will be no right of acceleration or
right to exercise remedies by the holders of Senior
Subordinated Notes absent an acceleration and the exercise of
remedies by the providers of vendor financing.
o The Indenture for the Senior Subordinated Notes will expressly
permit the sale, exchange, transfer, pledge or other
disposition of the Collateral, the execution of joint venture
agreements by the License Subsidiaries, the merger or other
business combination of a License Subsidiary with another
entity and other similar transactions (a "Permitted
Transaction") without the consent of the holders of the Senior
Subordinated Notes.
o The net proceeds from a Permitted Transaction involving the
Collateral (the "Proceeds") shall be used, at the option of
the Company, either (i) to redeem the Senior Subordinated
Notes, (ii) to invest in other assets so long as the Company
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provides the holders of the Senior Subordinated Notes with a
replacement lien on such assets or other assets of reasonably
equivalent value, or (iii) for working capital and general
corporate purposes so long as the Company provides the holders
of the Senior Subordinated Notes with a replacement lien on
other assets of equivalent value.
o The Senior Subordinated Notes will carry call protection,
permitting redemption of the Notes at par during the first
eighteen (18) months following the Effective Date and 102% of
par during the following twelve (12) months. Thereafter, the
call premium shall increase by 1% for each of the next three
12-month periods, up to a maximum of 105% of par, after which
the call premium shall decline by 1% for each succeeding
12-month period through maturity.
3. NTI SENIOR REDEEMABLE PREFERRED STOCK
The NTI Senior Redeemable Preferred Stock shall be senior to all of the
capital stock of NTI, and will have a stated value of $100.00 per share and an
aggregate face amount equal to the total amount of Allowed General Unsecured
Claims, to be issued and outstanding as of the Effective Date. Dividends will
accumulate at the annual rate of 10%, payable quarterly in cash or in kind at
the option of NTI. NTI may redeem the NTI Senior Redeemable Preferred Stock at
any time. NTI shall have the obligation to redeem the Senior Redeemable
Preferred Stock on the tenth (10th) anniversary of the Effective Date of the
Plan. The holders of such Stock shall not have any right to require a redemption
thereof prior to the tenth (10th) anniversary of the Effective Date of the Plan
and such Senior Redeemable Preferred Stock will not be traded on any public
exchange.
4. NTI SERIES B WARRANTS
NTI will issue warrants to purchase shares of NTI Series B Common Stock
(the "NTI Series B Warrants"), which shall be exercisable at $3.00 per share and
expire on the fifth (5th) anniversary of the Effective Date of the Plan.
VIII. FINANCING THE RESTRUCTURING
The success of the restructuring stems from NextWave's ability to
finance the build-out of its business plan and meet the capital requirements of
the Plan. The build-out will require significant amounts of vendor financing as
well as new cash investments to provide working capital through the point at
which NextWave becomes cash flow positive.
A. VENDOR FINANCING
NextWave's business plan requires approximately $1.0 billion in capital
expenditures through the initial phase of its network deployment, depending upon
whether NextWave ultimately decides to use GSM or CDMA technology. As discussed
in section VI(C)(2) above, NextWave has received RFPs from a number of
significant vendors requesting provision of equipment and related services and
expects to have arranged financing for the same prior to confirmation. The terms
of the vendor
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financing will be filed with the Bankruptcy Court fifteen (15) days prior to the
Confirmation Hearing for approval as a Plan Document. The vendor financing will
be used to cover both the "soft costs" (site acquisition, spectrum clearing,
construction and program management, etc.) as well as the "hard costs" (switch
hardware, switch software, base stations, etc.) for the initial build-out of
NextWave's network.
B. WORKING CAPITAL
Initial working capital will be raised through the sale of NTI Series A
Convertible Preferred Stock to new and/or existing investors. Prior to the
filing of this Disclosure Statement, NTI received offers to purchase the NTI
Series A Convertible Preferred Stock from numerous financial investors as well
as from potential strategic partners. As of July 20, 1999, NTI had received
commitments to purchase over $320,000,000 of NTI Series A Convertible Preferred
Stock. These commitments include a $100,000,000 commitment from BFD Capital (an
investment firm, affiliates of which are participants in the Debtors' existing
DIP Financing), a $50,000,000 commitment from Bay Harbour Management LC, an
investment fund that is also a Bridge Noteholder and a stockholder of NTI, a
$50,000,000 commitment from Triumph Capital, an investment fund that is also a
stockholder of NTI and a $50,000,000 commitment from affiliates of Allen B.
Salmasi, Chairman of the Board, Chief Executive Officer and President (and a
stockholder) of NTI. The Debtors have also received a $20,000,000 commitment
from Canyon Partners and a $50,000,000 commitment from Joseph, Littlejohn &
Levy, neither of which had any prepetition relationship with the Debtors. Each
of the foregoing investors has executed a subscription agreement committing the
investor to purchase shares of NTI Series A Convertible Preferred Stock in the
amounts set forth above, subject to certain conditions which include the entry
of an unstayed order confirming the Plan, (ii) the execution of mutually
acceptable documentation, and (iii) the aggregate amount of proceeds from the
sale of NTI Series A Convertible Preferred Stock totaling at least $225,000,000.
The remaining conditions are standard, such as the completion of due diligence
and the securing of necessary authorizations. NTI will accept additional
commitments to purchase shares of NTI Series A Convertible Preferred Stock up to
an aggregate amount of $750,000,000 (including the existing commitments of
$320,000,000) prior to the Confirmation Hearing. However, only commitments
received on or before the date that is ten (10) business days following the date
the order approving the Disclosure Statement is entered will be entitled to
receive NTI Series B Warrants in addition to NTI Series A Convertible Preferred
Stock, as set forth in section 7.2 of the Plan. NTI may, in its sole discretion,
increase the maximum amount of working capital commitments accepted, based upon,
inter alia, market conditions and/or the need for working capital. The identity
of and final documents from all of the purchasers of the NTI Series A
Convertible Preferred Stock will be provided at the Confirmation Hearing.
The working capital realized from the sale of NTI Series A Convertible
Preferred Stock will be used by NextWave to fund its ongoing operations as well
as the administrative and other "soft" costs associated with the build-out of
its PCS network.
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IX. CERTAIN RISK FACTORS
A. BUSINESS RISKS
The risk factors enumerated below assume the confirmation and
consummation of the Plan and all transactions contemplated therein, and do not
include matters that could prevent or delay confirmation.
1. DEVELOPMENT STAGE COMPANY
NextWave is at an early stage of development and, as of the date of
this Disclosure Statement, has had little commercial PCS operations and,
consequently, limited historical financial information. NextWave will incur
significant expenses in advance of generating revenues and is expected to
realize significant operating losses in its initial stages of operations.
NextWave is subject to all risks typically associated with a start-up entity.
NextWave believes that its future operating results over both the short
and long term will be subject to annual and quarterly fluctuations due to
several factors, some of which are outside its control. These factors include
the significant cost of building the PCS network, fluctuating market demand for
NextWave's services, pricing strategies for competitive services, new offerings
of competitive services, changes in the regulatory environment, the cost and
availability of PCS infrastructure and subscriber equipment, and general
economic conditions.
2. SUBSTANTIAL DEBT OBLIGATIONS TO THE FCC; IMPLICATIONS OF
ACCOUNTING TREATMENT
A. C BLOCK
In May and July 1996, NPCI was named the high bidder for 63 licenses in
the C block auctions with net bids totaling $4.74 billion. In January 1997, the
FCC issued a Public Notice of its intent to conditionally grant NPCI 63 C block
licenses. NPCI deposited $474 million with the FCC to be applied toward the
purchase of those licenses. As a result of the Avoidance Decision, the value of
NPCI's debt obligation to the FCC has been restated to an amount reasonably
equivalent to the value of NPCI's C block licenses at the time the obligation
was incurred, less a credit for NPCI's previous deposits. The face amount of the
FCC C Block Notes is $548,846,194, pursuant to the Avoidance Decision. As a
result, NPCI will incur average annual interest charges of $35.5 million through
year six of the 10-year term of the debt. Pursuant to the FCC C Block Notes,
immediately following the Effective Date of the Plan, NPCI will be required to
make payments of interest only for the first six (6) years of the initial term
of the C block licenses and payments of interest and principal over the
remaining four (4) years of the initial license term.
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B. F BLOCK
In January 1997, NPPI was named high bidder for 32 licenses in the F
block auction with net bids totaling $129 million and deposited $13.5 million
for those licenses. In April 1997, NPPI was granted 25 of the 32 licenses and
made an additional deposit with the FCC of $12.5 million in May 1997. In June
1997, NPPI was granted the remaining seven licenses and made another deposit of
$4.4 million. The remaining balance of $98.6 million is financed with the FCC.
The F block licenses are recorded on NPPI's consolidated financial statements at
their estimated fair market value of $68.6 million. As a result, NPPI will incur
average annual interest charges of $3 million during the remaining eight (8)
years of the 10-year term of the debt related to this debt discount. Pursuant to
the FCC F Block Notes, immediately following the Effective Date of the Plan,
NPPI will be required to make payments of interest only for the first two (2)
years of the initial term of the F block licenses and payments of interest and
principal over the remaining eight (8) years of the initial license term.
3. NEED FOR ADDITIONAL FINANCING STATUS AS A GOING CONCERN
NextWave estimates that it will require approximately $1.0 billion for
capital expenditures during the initial phase of its network build-out and up to
a total of $2.5 billion of capital expenditures through the full deployment of
its network. Approximately $400 million will be required in working capital to
finance the Company's operations into the first quarter of 2001. Sources of
additional capital may include additional vendor financing and public or private
debt and equity financings by NextWave or its subsidiaries. NextWave currently
has limited sources of income. There can be no assurance that additional
financing will be available. Failure to obtain such financing could result in
the delay or abandonment of some or all of NextWave's development and expansion
plans.
4. PCS SYSTEM IMPLEMENTATION AND OPERATIONAL RISKS
There can be no assurance that NextWave will be able to construct its
PCS network and billing and provisioning systems in any particular market in
accordance with its current construction plan and schedule. If NextWave is not
able to implement its entire construction plan, it may not be able to provide
services comparable to those provided by the cellular and other PCS operators in
its markets, and, as a result, NextWave's growth may be limited. In addition,
each of NextWave's C block licenses is subject to an FCC requirement that
NextWave construct network facilities that offer coverage to at least one-third
(1/3) of the population in each such market within five (5) years of the grant
of the applicable license or a showing of "substantial service" in such market.
Each of NextWave's D, E and F block licenses is subject to an FCC requirement
that it construct network facilities that offer coverage to at least one-quarter
(1/4) of the population in each such market within five (5) years of the grant
of the applicable license or a showing "substantial service" in such market.
Failure to comply with these requirements could result in the revocation or
forfeiture of NextWave's licenses or the imposition of fines by the FCC. The
construction of the PCS network is further subject to successful completion of
the design of the network, site and facility acquisitions, the purchase and
installation of the network's equipment, testing of the networks and
satisfactory relocation or other accommodation of microwave users currently
using the spectrum.
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The PCS industry is in its early stages and, as such, is experiencing
very rapid technological change. To remain competitive, NextWave must gain
access to new technologies in order to increase product performance and
functionality and increase cost-effectiveness. A transition from 2G technology
to 3G technology is now taking place. NextWave intends to use the most
up-to-date, state-of-the-art technology available at the time of implementation
of its full mobility PCS network. Current digital technologies being considered,
CDMA and GSM currently operate on 2G platforms. 3G technology is likely to
become a global standard that will offer superior capacity and operating
characteristics. If 3G equipment is available with the time frame required by
NextWave, the Company plans to utilize 3G equipment. If 3G equipment is not
available at the time of network construction, NextWave will deploy an interim
platform that supports highly targeted user segments.
5. COMPETITION
The Debtors and other PCS licensees will be competing with the more
established cellular industry, as well as other wireless communications
technologies, existing and future, with similar service offerings. Many of
NextWave's PCS and cellular telephone competitors, including joint ventures
involving the nation's largest local and long distance telephone carriers and
cable television companies, have substantially greater access to capital than
NextWave, substantially greater financial, technical, marketing, sales and
distribution resources than those of NextWave, and significantly more experience
than NextWave in providing wireless services. Several of NextWave's competitors
are expected to market other services, such as cable television service,
landline telephone service and Internet access with their wireless
communications service offerings. In addition, several competitors are
operating, or planning to operate, through joint ventures and affiliation
arrangements, wireless communications networks that cover most of the United
States.
NextWave will compete directly with up to eight (8) other wireless
providers in each of its markets. Providers holding the A block and B block PCS
licenses auctioned by the FCC will have an advantage over the C block licensees
because the A and B block licenses were granted on June 23, 1995, over twenty
(20) months prior to the grant of the C block licenses, giving these companies a
significant head start in building out and operating their PCS networks. In
addition, shortly after the grant of the majority of the C block licenses, on
January 14, 1997, the FCC concluded the D, E and F block auction. The licenses
in those auctions were for 10 MHz of spectrum. In addition, cellular operators
are upgrading their networks to provide comparable digital services in
competition with NextWave. Principal wireless providers in NextWave's PCS
markets are AT&T Wireless Services, Inc., Sprint PCS, AirTouch Communications,
Inc. and Bell Atlantic Mobile.
The success of NextWave's PCS service business will depend upon its
ability to compete, especially with respect to pricing, service, reliability and
availability of features, such as data and voice transmission, call waiting,
call forwarding and short messaging capability. In addition to PCS and cellular
operators, NextWave may also face competition from other existing communications
technologies, such as conventional mobile telephone services, SMR service, ESMR
service, paging services (including two-way digital paging), and domestic and
global mobile satellite service ("MSS"). As a result of advances in digital
technology, some ESMR service providers, such as
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Nextel, have deployed digital mobile networks that are competitive with those of
analog cellular, digital cellular and PCS networks.
In the future, cellular and PCS service will also compete more directly
with traditional landline telephone service operators, energy utilities, local
multi-point distribution service ("LMDS") providers, and cable and wireless
cable operators seeking to offer communications services by leveraging their
existing infrastructure. The FCC completed auctions for 30 MHz of spectrum in
the 2.3 GHz band for Wireless Communications Service ("WCS") on April 25, 1997.
The FCC has proposed that WCS providers be permitted to offer a broad range of
fixed, mobile, radio location and satellite broadcast services, some of which
could be in competition with NextWave's service offerings. NextWave may also
face competition from new technologies.
6. GOVERNMENT REGULATION
The licensing, construction, operation, sale and interconnection
arrangements of wireless telecommunications systems are regulated to varying
degrees by state regulatory agencies, the FCC, Congress and the courts. There
can be no assurance that the FCC, Congress, the courts or state agencies having
jurisdiction over NextWave's business will not adopt or change regulations or
take other actions that would adversely affect NextWave's financial condition or
results of operations. Many of the FCC's rules for its auctions and the PCS
licenses acquired thereunder have not been tested by the courts and are subject
to change by Congressional action. In addition, FCC PCS licenses are subject to
renewal and revocation. NextWave's PCS licenses have 10-year renewable terms.
Although FCC rules and regulations currently in effect provide a renewal
preference for current licensees upon a showing of the provision of "substantial
service" in the licensees' markets and compliance with FCC rules and
regulations, there can be no assurance that NextWave's licenses will be renewed.
During the application process, Antigone Communications Ltd.
Partnership and PCS Devco, Inc. (together, "Antigone-Devco"), filed a joint
petition with the Wireless Telecommunications Bureau (the "WTB") of the FCC
seeking to deny NextWave's C block PCS license applications on the grounds that
(i) NextWave was not qualified to participate in the C block auction and (ii)
NextWave's foreign ownership exceeded permissible limits. The WTB denied
Antigone-Devco's petition by order released on February 14, 1997. In March 1997,
Antigone-Devco filed an application with the FCC seeking a review of the WTB's
denial of their petition. Pursuant to a settlement agreement between NextWave
and Antigone-Devco (which has not yet been approved by the FCC) on June 1, 1999,
Antigone-Devco sought leave of the FCC to dismiss the application for review
with prejudice. This request has not yet been granted. Should the request for
leave to dismiss be denied by the FCC and the WTB's determination eventually
overruled, NextWave would be subject to penalties under FCC regulations,
including the possible revocation of its licenses.
Since the DEF block auction and the attendant C block financial crisis,
the FCC has repeatedly requested that Congress enact legislation that would
exempt FCC licenses from the jurisdiction of the bankruptcy courts. Although
previous efforts to obtain such legislation have failed, the current version of
the Senate Appropriations Bill includes a proposed amendment to the
Communications Act that, inter alia, purports to arguably retroactively impact
the Avoidance
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Decision. In the past, senior member of both the U.S. House of Representatives
and the Senate have publicly opposed similar legislation proposed by the FCC on
substantive and procedural grounds. That opposition continues. If enacted, the
proposed amendment, especially its retroactivity, will be subject to attack on
numerous grounds, including constitutionality. Further, if enacted, such an
amendment could result in, additional litigation with the FCC and there is no
guarantee that if upheld, it would not impact NPCI's C block licenses.
7. DEPENDENCE ON KEY MANAGEMENT
NextWave's future success depends in substantial part upon its ability
to attract and retain highly qualified technical managers and personnel and the
continued service of its experienced senior management team. Since the
conclusion of the C block auctions and the grant of its PCS licenses, and
continuing throughout the Chapter 11 Cases, NextWave has maintained an
experienced senior management team to make the most efficient use of its
resources. Going forward, NextWave plans to expand the senior management team
and other corporate staff significantly. In addition, NextWave expects to hire
field personnel in its various markets, including operations management, field
technicians, administrative staff, customer service representatives and sales
and marketing personnel. Competition for such personnel is intense, and there
can be no assurance that NextWave can attract and retain key technical,
managerial or other employees in the future. Consequently, the loss of the
services of one or more of the present members of the senior management team, or
the failure to attract other highly qualified employees, could have a negative
impact on NextWave.
B. RISKS OF NON-CONFIRMATION
There can be no assurance that the requisite acceptances to confirm the
Plan will be received. Even if the requisite acceptances are received, there can
be no assurance that the Bankruptcy Court will confirm the Plan. A non-accepting
creditor or equity interest holder of the Debtors might challenge the adequacy
of the disclosure or balloting procedures and results as not being in compliance
with the Bankruptcy Code and Bankruptcy Rules. Even if the Bankruptcy Court were
to determine that the disclosure and balloting procedures and results were
appropriate, the Bankruptcy Court could still decline to confirm the Plan if it
were to find that any statutory conditions to confirmation had not been met.
Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation
and requires, among other things, a finding by the Bankruptcy Court that
confirmation of the Plan is not likely to be followed by a liquidation or the
need for further financial reorganization and that the value of distributions to
non-accepting creditors and equity security holders will not be less than the
value of distributions such creditors and equity security holders would receive
if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code. While
there can be no assurance that the Bankruptcy Court will conclude that these
requirements have been met, the Debtors believe that the Plan will not be
followed by a need for further financial reorganization and that non-accepting
creditors and equity interest holders will receive distributions at least as
great as would be received following a liquidation pursuant to Chapter 7 of the
Bankruptcy Code.
The confirmation and consummation of the Plan are also subject to
certain conditions. See section XIII (B) hereof.
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If the Plan, or a subsequent plan determined not to require
re-solicitation of any classes of claims or interests by the Bankruptcy Court,
were not to be confirmed, it is unclear what distribution holders of claims and
interests ultimately would receive with respect to their claims and interests.
If an alternative plan could not be agreed to, it is possible that the Debtors
would have to liquidate their assets, in which case it is likely that holders of
claims and interests would receive significantly less than they would have
received pursuant to the Plan.
C. LITIGATION RISKS
1. APPEAL OF AVOIDANCE JUDGMENT
On June 14, 1999, the Bankruptcy Court entered the Avoidance Judgment.
Pursuant to 28 U.S.C. ss. 158(a) and Rule 8002 of the Federal Rules of
Bankruptcy Procedure, any party had ten days to file a notice of appeal of the
Avoidance Judgment. The FCC has already filed a timely appeal with the District
Court. Although the Debtors are confident that the Avoidance Judgment is correct
and well-supported by the facts and the law (and as such should be upheld on
appeal), there can be no assurance that the Avoidance Judgment will be upheld on
appeal, or that the FCC will not appeal the Avoidance Judgment past the District
Court or will not seek a stay of the Avoidance Judgment or any subsequent
judgment affirming the Avoidance Judgment pending appeal. In order to be granted
a stay, the FCC must satisfy four (4) criteria: (1) a likelihood that it will
prevail on the merits of its appeal or a serious question going to the merits
and a tipping of the equities in its favor; (2) that it will suffer irreparable
harm if the stay is not granted; (3) that other parties would not suffer
substantial harm if the stay is granted; and (4) that the public interest would
not be harmed if the stay is granted. Although the Debtors believe that any
request for a stay pending appeal of the Avoidance Judgment or a subsequent
judgment affirming the Avoidance Judgment should be denied, there can be no
assurances of the same.
Further, as previously discussed, the Plan contemplates paying the FCC
an amount that is less than NPCI's original high bid of $4.74 billion for its C
block licenses, based upon the Avoidance Judgment. The FCC has advised NPCI that
it vigorously opposes its proposed treatment under the Plan. As such, the FCC
has indicated that it intends to pursue all of its legal rights and remedies,
both contractual and statutory, to obtain a judicial determination that the FCC
is entitled to either payment in full by NPCI of the $4.74 billion high bid
price or a return of the licenses. In addition, should the ultimate outcome of
any and all appeals require NPCI to return its C block licenses to the FCC,
those licenses could not be utilized in any reorganization or liquidation of
NPCI.
2. APPEAL OF CONFIRMATION ORDER
If an order confirming the Plan (the "Confirmation Order") is entered
by the Bankruptcy Court, there can be no assurance that a creditor or other
party in interest will not appeal such Confirmation Order or that any creditor
or party in interest will not seek a stay of the Confirmation Order pending such
an appeal. In order to be granted a stay, an appealing creditor must satisfy the
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four criteria described in section IX (C)(1) above. In order for the Plan to
become effective, the request for a stay pending appeal must be denied.
X. LIQUIDATION ANALYSIS
The Debtors believe that a liquidation under Chapter 7 of the
Bankruptcy Code will result in holders of Claims and Equity Interests receiving
less than what they will receive under the Plan. This conclusion is based on an
analysis of several factors discussed below and the fact that the only real
assets of these estates are the C and F block PCS licenses that are encumbered
by the FCC's liens, governed by comprehensive FCC regulations, including
restrictions on any sale, and threatened by on-going litigation involving the
same secured party/governmental regulator. The Debtors cannot with certainty
evaluate what a Chapter 7 trustee may be able to recover and ultimately
distribute to creditors in a Chapter 7 case. However, the Debtors believe that
any Chapter 7 trustee will be faced with significant problems and obstacles
associated with the liquidation of the estates' primary asset, the licenses. The
Debtors believe a trustee would have significant difficulty finding a qualified
buyer interested in the Debtors' licenses, with the ability to obtain necessary
financing that satisfies FCC regulations and that could bid an amount in a range
acceptable to the FCC.
First, the Debtors anticipate that the FCC will continue to take the
position taken in the Adversary Proceeding that the Debtors' licenses should be
revoked unless the Debtors pay the "full bid price" for the licenses. Even if
the trustee could sell the licenses in an amount in excess of the FCC's current
secured lien, the FCC could continue to allege, via the appellate process, that
the FCC would have to be paid full bid price before a distribution could be made
to any other creditor. To prosecute the appeal of the FCC's claim would be
time-consuming and costly for the trustee, and the holders of Claims and Equity
Interests would not be paid until the FCC's appeal of the Avoidance Judgment is
complete. It is doubtful that the trustee could find a purchaser for the
licenses until after the conclusion of the Avoidance Appeal.
Moreover, the Debtors believe a trustee would be restricted in any sale
or assignment of the licenses to a third party. Any transfer of the licenses
would be subject to FCC approval of the proposed transferee of the licenses. The
Debtors believe that the FCC's "designated entity" rules would reduce the number
of potential qualified buyers, and restrictions on re-sale of the licenses would
also limit the number and amount of offers from those who choose to make them.
Because the FCC must approve any license transfer, the trustee would have to
obtain FCC approval for the price proposed to be accepted from any purchaser.
However, even if an acceptable buyer was found, there can be no assurance that
the FCC would approve the transfer of the licenses.
In addition, if an acceptable price was obtained and a sale approved by
the FCC, significant legal risks and delays would still face the buyer. For
example, the Debtors believe it is uncertain whether the FCC has the authority
to sell licenses outside of the auction process and any challenge to this
authority would face its own time consuming court test, which could delay
deployment of the licenses and diminish the value of the licenses purchased. In
addition, any price agreed to by the trustee for the licenses could be
challenged in legal proceedings by third parties. Resolution of such proceedings
could take an undetermined amount of time and would have an uncertain outcome.
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Given the legal and regulatory issues associated with a liquidation sale of the
Debtors' licenses, the Debtors do not believe that a liquidation sale is a
viable option or that it would result in amounts in excess of the FCC's $98
million claim as to the F block licenses and $549 million as to the C block
licenses.
Finally, a Chapter 7 trustee would likely not have sufficient resources
with which to undertake the substantial efforts required to market the licenses
and consummate a sale, or to pay the on-going debt service for the licenses. If
these amounts were not paid, the licenses could be revoked. Challenging the
FCC's revocation effort would require the trustee to expend tremendous
resources.
Even assuming the licenses could be sold by a trustee despite the
obstacles outlined above, until they were sold for more than the FCC's lien
amount of $98 million and $549 million, respectively, no other creditors would
receive any distribution. When the additional costs and expenses of a trustee,
counsel, and any experts or other professionals necessary to consummate the sale
are included, the recovery to unsecured creditors is further reduced.
Finally, in light of the recent C, D, E and F block reauction of
licenses by the FCC concluded in April of 1999, it would appear that the supply
of PCS licenses continues to outpace current demand and the market value for
licenses remains depressed. This would seem to make it even more unlikely that a
trustee could sell the PCS licenses for an amount in excess of the FCC's current
liens and secured interest in the same.
Based on the foregoing, the Debtors have concluded that a liquidation
would result in a lesser distribution to creditors than the distributions called
for under the Plan.
A hypothetical liquidation analysis is attached as Exhibit "B".
XI. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following discussion is a summary of certain federal income tax
aspects of the Plan for general information purposes only. It should not be
relied upon to determine the specific tax consequences of the Plan with respect
to a particular holder of a Claim or Equity Interest. This discussion does not
purport to be a complete analysis or listing of all potential tax factors.
The following discussion is based upon existing provisions of the
Internal Revenue Code ("IRC"), existing regulations thereunder, and current
administrative rulings and court decisions. There can be no assurance that
forthcoming legislative or administrative changes would not require significant
modification of the statements expressed in this section of the Disclosure
Statement. Moreover, the tax consequences to holders of Claims and Equity
Interests may vary based upon the individual tax circumstances of each such
holder. Nothing contained herein purports to describe any state, local, or
foreign tax consequences.
NO RULING HAS BEEN SOUGHT OR OBTAINED FROM THE IRS WITH RESPECT
TO ANY OF THE TAX ASPECTS OF THE PLAN AND NO OPINION OF COUNSEL HAS
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BEEN OBTAINED BY THE DEBTORS WITH RESPECT THERETO. NO REPRESENTATIONS OR
ASSURANCES ARE BEING MADE WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES AS
DESCRIBED IN THIS DISCLOSURE STATEMENT. CERTAIN HOLDERS OF CLAIMS AND EQUITY
INTERESTS MAY BE SUBJECT TO SPECIAL RULES NOT ADDRESSED IN THIS SUMMARY OF
FEDERAL INCOME TAX CONSEQUENCES. IN ADDITION, THERE MAY BE STATE, LOCAL, OR
FOREIGN TAX CONSIDERATIONS APPLICABLE TO A HOLDER OF A CLAIM OR EQUITY INTEREST
WHICH ARE NOT ADDRESSED HEREIN. EACH HOLDER OF A CLAIM OR EQUITY INTEREST
AFFECTED BY THE PLAN MUST CONSULT, AND RELY UPON, HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PLAN WITH RESPECT TO THAT
HOLDER'S CLAIM OR EQUITY INTEREST. THIS INFORMATION MAY NOT BE USED OR QUOTED IN
WHOLE OR IN PART IN CONNECTION WITH THE OFFERING FOR SALE OF SECURITIES.
A. TAX CONSEQUENCES TO THE DEBTORS
Under the IRC, a taxpayer generally must include in gross income the
amount of any discharge of indebtedness as income realized during the taxable
year. Section 108(a)(1)(A) of the IRC provides an exception to this general
rule, however, in the case of a taxpayer that is under the jurisdiction of a
bankruptcy court in a case brought under the Bankruptcy Code where the discharge
of indebtedness is granted by the court or is pursuant to a plan approved by the
court. The amount of discharged indebtedness that would otherwise be required to
be included in income is applied to reduce certain tax attributes of the
taxpayer. Such tax attributes may include net operating losses, capital losses
and loss carryovers, certain tax credits and the tax basis of property. Section
108(e)(2) of the IRC provides that a taxpayer shall not realize income from the
discharge of indebtedness to the extent that satisfaction of the liability would
have given rise to a deduction. As a result of sections 108(a)(1)(A) and
108(e)(2) of the IRC, the Debtors do not anticipate that they will recognize any
income from the discharge of indebtedness through the Chapter 11 Cases.
Under section 1141 of the Bankruptcy Code, confirmation of the Plan
will not, in and of itself, discharge the Debtors from any debts. Implementation
of the Plan, including the possible liquidation and ultimate dissolution of the
Debtors, may result in discharge of indebtedness to the Debtors as a matter of
tax law to the extent of any unsatisfied portion of such Claims. Any such
discharge of indebtedness should not be included in gross income of the Debtors,
however, because of the exceptions to such inclusion discussed above.
B. TAX CONSEQUENCES TO CREDITORS
The impact of recognizing income or loss, as well as the tax year for
which such income or loss shall be recognized, will depend upon the individual
circumstances of each holder of a Claim or Equity Interest, including the nature
and manner of organization of such holder. Each holder of a Claim or Equity
Interest is urged to consult with its tax advisor regarding the tax implications
of any payments or distributions under the Plan.
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In general, the principal federal income tax consequences of the Plan
to holders of Claims will be (a) recognition of loss or a bad debt deduction to
the extent that the "amount realized" under the Plan with respect to the Claim
is less than the adjusted basis of the holder in such Claim, or (b) recognition
of taxable income by the holder of the Claim to the extent of the excess of the
"amount realized" under the Plan with respect to the Claim over the holder's
adjusted basis therein. A holder's "amount realized" in respect of its Claim
will equal the fair market value of the consideration received (including cash,
property and any securities issued).
Common examples of holders of Claims who may recognize taxable income
upon receipt of payments under the Plan include (a) former employees holding
Claims for services rendered while serving as employees of the Debtors, (b)
trade creditors whose Claims represent an item not previously reported in income
(including Claims for lost income upon rejection of leases or other contracts
with the Debtors), (c) holders of Claims who had previously claimed a bad debt
deduction with respect to their Claims in excess of their ultimate economic
loss, and (d) holders of Claims that include amounts of pre petition interest
that had not previously been reported in income. Common examples of holders of
Claims who may recognize a loss or deduction for tax purposes as a result of
implementation of the Plan, provided that such holders are not paid in full,
include holders of Claims that arose out of cash actually loaned or advanced to
the Debtors, and holders of Claims consisting of items that were previously
included in income of such holders on the accrual method of accounting, to the
extent, in both cases, that the economic loss to such holders has not been
allowed as a tax deduction in a prior year.
The amount and character of any resulting income or loss recognized for
federal income tax consequences to a holder of any Claim as a result of
implementation of the Plan will, however, depend on many factors. The most
significant of these factors include: (a) the nature and origin of the Claim;
(b) whether the holder is a corporation; (c) the extent to which the Plan
provides for payment of the particular Claim; (d) the extent to which any
payment made is allocable to pre-petition interest which is part of such Claim;
and (e) the prior tax reporting positions taken by the holder with respect to
the item that constitutes the Claim. As to the last factor, relevant tax
reporting positions include whether the holder had to report, under its method
of accounting, any portion of the Claim (including accrued and unpaid interest)
as income prior to receipt and whether such holder previously claimed a bad debt
or worthlessness deduction with respect to the Claim, which would affect the
adjusted basis of the holder in the Claim.
The general rules for deductibility of bad debts are set forth in IRC
ss. 166. Those rules provide that where the creditor is a corporation or the
debt is a business bad debt in the hands of the creditor, and the creditor
demonstrates that the debt is collectible only in part, a deduction for partial
worthlessness of the debt will be allowed to the extent that the debt is charged
off in the accounting records of the creditor. For all other creditors, a bad
debt deduction is allowed only in the year that the debt becomes wholly
worthless. Business bad debts give rise to ordinary deductions, whereas
non-business bad debts, if the creditor is not a corporation, will give rise to
a short-term capital loss which can only offset capital gain income and a
limited amount of ordinary income. A "non-business debt" is a debt other than
(i) a debt created or acquired in connection with the creditor's trade or
business, or (ii) the loss from the worthlessness of which is incurred in the
taxpayer's trade or business.
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The time as of which a debt becomes worthless (or partially worthless)
and, therefore, the tax year in which a creditor may claim a bad debt deduction,
is a question of fact. Pursuant to Treasury Regulations ("Regs.") ss.
1.166-2(c), as a general rule, bankruptcy is an indication of the worthlessness
of at least part of an unsecured, non-priority debt. In bankruptcy cases, a debt
may become worthless before settlement in some instances, and only when a
settlement in bankruptcy has been reached in other instances. The mere fact that
bankruptcy proceedings instituted by or against a debtor are terminated in a
later year, thereby confirming the conclusion that the debt is worthless (or
partially worthless), does not necessarily shift the deduction to such later
year. Thus, even though the precise amount that holders of Claims will receive
under the Plan may not be known until the final Distribution Date, the
determination of the precise amount that will be paid under the Plan with
respect to a Claim, or that no amount will be paid, does not necessarily
establish that any resulting bad debt deduction is properly allowable in the tax
year in which the final distribution is made to the Claim holder, rather than in
an earlier year. Accordingly, to the extent that the holder of a Claim may claim
a bad debt deduction which it has not previously claimed, it is possible that
such holder will be required to amend its return for a prior year and claim the
deduction in that year, rather than in the year in which the final distribution
is made. Claim holders should consult with their individual tax advisors with
respect to this issue.
The extent to which gain or loss may be recognized by a holder of a
Claim upon implementation of the Plan may be significantly affected by any bad
debt deduction that may have been claimed by such holder in a prior year with
respect to the debt on which the Claim is based. If the holder took a bad debt
deduction in a prior year which is recovered in whole or part through a payment
made to the holder pursuant to the Plan, the holder will generally be required
to include in income the amount recovered in the year the holder receives the
payment. An exception to this rule permits exclusion of a recovery of a prior
bad debt deduction to the extent that the earlier bad debt deduction did not
produce a tax benefit to the holder.
THE FOREGOING IS INTENDED TO BE A SUMMARY ONLY AND NOT A SUBSTITUTE FOR
CAREFUL TAX PLANNING OR CONSULTATION WITH A TAX ADVISOR. THE FEDERAL, STATE,
LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE PLAN ARE COMPLEX AND, IN SOME CASES,
UNCERTAIN. SUCH CONSEQUENCES MAY ALSO VARY BASED UPON THE INDIVIDUAL
CIRCUMSTANCES OF EACH HOLDER OF A CLAIM OR EQUITY INTEREST. ACCORDINGLY, EACH
HOLDER OF A CLAIM OR EQUITY INTEREST IS STRONGLY URGED TO CONSULT WITH HIS OR
HER OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX
CONSEQUENCES OF THE PLAN.
XII. OVERVIEW OF CHAPTER 11
A. GENERAL INFORMATION CONCERNING CHAPTER 11 PROCEEDINGS
Chapter 11 is the principal reorganization chapter of the Bankruptcy
Code, pursuant to which a debtor-in-possession attempts to reorganize its
business for the benefit of itself, its creditors and other parties in interest.
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The commencement of a Chapter 11 case creates an estate, comprised of
all the legal and equitable interests of the debtor in property as of the date
the petition is filed, wherever located and by whomever held. Sections 1101,
1107, and 1108 of the Bankruptcy Code provide that a debtor may continue to
operate its business and remain in possession of its property as a
"debtor-in-possession" unless the bankruptcy court orders the appointment of a
trustee.
The filing of a Chapter 11 petition also triggers the automatic stay
provisions of the Bankruptcy Code. Section 362 of the Bankruptcy Code provides,
inter alia, for an automatic stay of all attempts to collect pre-petition claims
from the debtor or to otherwise interfere with its property or business. Except
as otherwise ordered by the bankruptcy court, the automatic stay remains in full
force and effect until the effective date of a confirmed plan of reorganization.
The formulation of a plan of reorganization is the principal purpose of
a Chapter 11 case. A plan sets forth the means for satisfying the claims against
and interests in the debtor. Generally, unless a trustee is appointed, only the
debtor may file a plan during the first 120 days of a Chapter 11 case (the
"Exclusive Period"). A debtor is generally then given 60 additional days (the
"Solicitation Period") during which it may solicit acceptance of its plan. The
Exclusive Period and the Solicitation Period may also be extended or reduced by
the court upon a showing of "cause."
B. GENERAL INFORMATION CONCERNING TREATMENT OF CLAIMS
AND INTERESTS
A Chapter 11 plan may provide for anything from a complex restructuring
of a debtor's business and its related obligations to a simple liquidation of
the debtor's assets. After a Chapter 11 plan has been filed, certain holders of
claims against or interests in a debtor are permitted to vote to accept or
reject the plan. Before soliciting acceptances of the proposed plan, the debtor
is required, pursuant to section 1125 of the Bankruptcy Code, to prepare a
disclosure statement containing adequate information of a kind, and in
sufficient detail, to enable a hypothetical reasonable investor to make an
informed judgment about the plan. This Disclosure Statement is presented to
holders of impaired Claims against, and Equity Interests in, the Debtors that
will receive distributions under the Plan to satisfy the requirements of section
1125 of the Bankruptcy Code.
Chapter 11 does not require that each holder of a claim against, or
interest in, a debtor vote in favor of a Chapter 11 plan in order for the
bankruptcy court to confirm the plan. At a minimum, however, the plan must be
accepted by majority in number and two-thirds in amount of those claims actually
voting in at least one class of impaired claims under the plan. Only the holders
of claims and interests who actually vote will be counted as either accepting or
rejecting the plan.
Section 1123 of the Bankruptcy Code provides that a plan of
reorganization must classify the claims of a debtor's creditors and equity
security holders. In compliance therewith, the Plan divides claims and interests
into classes and sets forth the treatment for each class. In accordance with
section 1123(a), Administrative Claims have not been classified. A debtor is
also required, under section 1122 of the Bankruptcy Code, to classify claims
against and interests in a debtor into classes that contain claims and interests
that are substantially similar to the other claims and interests in such class.
The Debtors believe that the Plan has classified all claims and interests in
compliance
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with the provisions of section 1122, but it is possible that a holder of a Claim
or Equity Interest may challenge the classification of claims and interests and
that the Bankruptcy Court may find that a different classification is required
for the Plan to be confirmed. In such event, the Debtors intend, to the extent
permitted by the Bankruptcy Code, to make such reasonable modifications to the
classifications under the Plan to permit confirmation and to use the Plan
acceptances received in this solicitation for the purpose of obtaining the
approval of the reconstituted class or classes of which the accepting holder is
ultimately deemed to be a member. Any such reclassification could adversely
affect the class in which such holder initially was a member, or any other class
under the Plan, by changing the composition of such class and the vote required
of that class for approval of the Plan. Furthermore, a reclassification of a
Claim or Equity Interest after approval of the Plan could necessitate a
re-solicitation of acceptances of the Plan.
The classification of claims and interests and the nature of
distributions to holders of impaired Claims or impaired Equity Interests are
summarized below, which should be read in conjunction with the information set
forth in section VII(A) - "Classification and Treatment of Claims and Equity
Interests Under the Plan", as well as the other information set forth in this
Disclosure Statement.
C. CLASSES IMPAIRED UNDER A PLAN
Classes of claims or equity interests that are not "impaired" under a
plan of reorganization are conclusively presumed to have accepted the plan and
thus are not entitled to vote. Similarly, classes of claims or equity interests
that are not entitled to receive or retain any property under the plan are
conclusively presumed not to have accepted the plan and thus are not entitled to
vote. Accordingly, acceptances of a plan will generally be solicited only from
those persons who hold claims or equity interests in an impaired class that will
receive distributions under the plan. A class is "impaired" if the legal,
equitable, or contractual rights relating to the claims or equity interests of
that class are modified in any way under the plan. Modification for purposes of
determining impairment, however, does not include curing defaults or reinstating
maturity. Classes 1B, 1D, 1E, 1F, 1G, 1H, 1I, 1J, 1K, 1L, 1M, 2B, 2E, 2F, 2G,
2H, 3B, 3D, 3E, 3F, 3G, 4B, 4E, 4F, 4G, 4H, 5B, 5D, 5E, 5F and 5G are impaired.
All other classes of Claims or Equity Interests either (i) are unimpaired under
the Plan, and thus deemed to accept the Plan or (ii) will not receive any
distribution under the Plan, and thus deemed to reject the Plan, and are not
entitled to vote with respect to the acceptance or rejection of the Plan.
XIII. VOTING AND CONFIRMATION OF THE PLAN
The Bankruptcy Code requires that, to confirm the Plan, the Bankruptcy
Court must make a series of findings concerning the Plan and the Debtors,
including that (a) the Plan has classified claims and interests in a permissible
manner, (b) the Plan complies with applicable provisions of the Bankruptcy Code,
(c) the Debtors have complied with applicable provisions of the Bankruptcy Code,
(d) the Debtors have proposed the Plan in good faith and not by any means
forbidden by law and (e) the disclosure required to be made by section 1125 of
the Bankruptcy Code has, in fact, been made. The Debtors believe that all of
these conditions shall have been met by the date scheduled for the
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Bankruptcy Court to consider confirmation of the Plan (the "Confirmation
Hearing"), set forth below, and shall seek rulings of the Bankruptcy Court to
such effect at the Confirmation Hearing.
The Bankruptcy Code also requires that the Plan be accepted by the
requisite number of votes (except to the extent that cramdown is available under
section 1129(b) of the Bankruptcy Code), that the Plan be feasible (that is,
that there be a reasonable prospect that the Debtors shall be able to perform
their obligations under the Plan and that they shall be able to operate their
businesses without the need for further financial reorganization), and that the
Plan be in the "best interests" of all holders of Claims or Equity Interests in
an impaired class (that is, that holders of Claims and Equity Interests shall
receive at least as much pursuant to the Plan as they would receive or retain in
a Chapter 7 liquidation). To confirm the Plan, the Bankruptcy Court must find
that all of these conditions are met. Thus, even if the holders of Claims and
Equity Interests accept the Plan by the requisite number of votes, the
Bankruptcy Court must make independent findings concerning the Plan's
feasibility and whether it is in the best interests of holders of Claims and
Equity Interests before it may confirm the Plan. The voting requirements and
statutory conditions to confirmation are discussed below.
A. VOTING PROCEDURES AND REQUIREMENTS
1. PERSONS ENTITLED TO VOTE ON THE PLAN
A holder of a Claim against or Equity Interest in the Debtors whose
Claim or Equity Interest is impaired under the Plan is entitled to vote to
accept or reject the Plan if either (i) its Claim has been scheduled by the
Debtors and such Claim is not scheduled as disputed, contingent, or unliquidated
or (ii) it has filed a proof of claim on or before the applicable Bar Date set
by the Bankruptcy Court for such filings or any extension of such dates approved
by the Bankruptcy Court.
ANY CLAIM AS TO WHICH AN OBJECTION HAS BEEN FILED IS NOT ENTITLED TO VOTE UNLESS
THE BANKRUPTCY COURT, UPON APPLICATION OF THE HOLDER TO WHOSE CLAIM OBJECTION
HAS BEEN MADE, TEMPORARILY ALLOWS SUCH CLAIM IN AN AMOUNT THAT IT DEEMS PROPER
FOR THE PURPOSE OF ACCEPTING OR
REJECTING THE PLAN. A ballot may be disregarded if the Bankruptcy Court
determines, after notice and a hearing, that such ballot was not solicited or
procured in good faith or in accordance with the provisions of the Bankruptcy
Code.
The allowance of any Claim for the purpose of voting on the Plan shall
not constitute an allowance of the Claim for purposes of receiving any
distribution pursuant to the Plan. Similarly, any references in the Plan or
Disclosure Statement to any Claims shall not constitute an admission of the
existence, nature, extent or enforceability thereof.
All proofs of claim by creditors of NPCI, NPI, NPPI and NWI, including
governmental units, must have been filed with the Clerk of the Bankruptcy Court
by 4:00 p.m., Eastern Time, on December 18, 1998. All proofs of claim by
creditors of NTI, other than governmental units, must have been filed with the
Clerk of the Bankruptcy Court by 4:00 p.m., Eastern Time, on March 15, 1999.
Proofs of claim by governmental units must have been filed by 4:00 p.m., Eastern
Time, on June 21, 1999. IF A CLAIMANT HAS ALREADY FILED A PROOF OF CLAIM WITH
THE
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BANKRUPTCY COURT OR IS NOT LISTED IN THE DEBTORS' SCHEDULES AS CONTINGENT,
UNLIQUIDATED, OR DISPUTED, A PROOF OF CLAIM NEED NOT BE OR HAVE BEEN FILED. The
schedules for all of the Debtors are on file with the Bankruptcy Court and are
available for inspection on the Bankruptcy Court website at
www.nysb.uscourts.gov.
As set forth in section 1124 of the Bankruptcy Code, a class of claims
or interests is "impaired" under a plan of reorganization unless, with respect
to each claim of such class, the plan:
a) leaves unaltered the legal, equitable, and
contractual rights of the holder of such claim or
interest; or
b) notwithstanding any contractual provision or
applicable law that entitles the holder of a claim or
interest to demand or receive accelerated payment of
such claim after the occurrence of a default:
(1) cures any such default that occurred before
or after the commencement of the case under
the Bankruptcy Code, other than a default of
a kind specified in section 365(b)(2) of the
Bankruptcy Code;
(2) reinstates the maturity of such claim or
interest as it existed before such default;
(3) compensates the holder of such claim for any
damages incurred as a result of any
reasonable reliance on such contractual
provision or such applicable law; and
(4) does not otherwise alter the legal,
equitable or contractual rights to which
such claim or interest entitles the holder
of such claim or interest.
Holders of Claims and Equity Interests in Classes 1B, 1D, 1E, 1F, 1G,
1H, 1I, 1K, 1L, 1M, 2B, 2E, 2F, 2G, 3B, 3D, 3E, 3F, 4B, 4E, 4F, 4G, 5B, 5D, 5E
and 5F are impaired and entitled to vote on the Plan.
2. VOTING INSTRUCTIONS
After carefully reviewing this Disclosure Statement, including the
attached exhibits, please indicate your acceptance or rejection of the Plan by
voting in favor of or against the Plan on the enclosed ballot and returning the
same to the address set forth on the ballot in the enclosed, postage prepaid,
return envelope so that it shall be received by counsel for the Debtors no later
than 5:00 p.m., Eastern Time, on August 27, 1999.
TO BE SURE YOUR BALLOT IS COUNTED, YOUR BALLOT MUST BE RECEIVED NO
LATER THAN 5:00 P.M., EASTERN TIME ON AUGUST 27, 1999. Please review your ballot
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for detailed voting instructions and the name, address, and phone number of the
person you may contact if you have questions regarding the voting procedures.
Holders of General Unsecured Claims who elect to reduce their Claims to
the Administrative Convenience Class limit of $20,000 will be notified by
September 3, 1999 at 5:00 p.m. if any such election is defective.
If you do not vote to accept the Plan or if you are the holder of an
unimpaired Claim or Equity Interest, you may be bound by the Plan if it is
accepted by the requisite number/percentage of holders of Claims and/or Equity
Interests.
3. CONFIRMATION HEARING
Pursuant to section 1128(a) of the Bankruptcy Code, the Bankruptcy
Court has scheduled the Confirmation Hearing to commence on September 8, 1999 at
11:30 a.m., Eastern Time, in the United States Bankruptcy Court for the Southern
District of New York (White Plains), Room 520, United States Courthouse, 300
Quarropas Street, White Plains, New York 10601.
Section 1128(b) of the Bankruptcy Code provides that any party in
interest may object to confirmation of a Chapter 11 plan. The Bankruptcy Court
has directed that objections, if any, to confirmation of the Plan be filed with
the Bankruptcy Court on or before 5:00 p.m., Eastern Time, on August 25, 1999,
and simultaneously served on the following parties:
Debtors: Counsel for the Debtors:
Frank A. Cassou, Esq. Deborah L. Schrier-Rape, Esq.
NextWave Telecom Inc. Andrews & Kurth L.L.P.
3 Skyline Drive 1717 Main Street, Suite 3700
Hawthorne, New York 10532 Dallas, Texas 75201
Special Corporate and Finance Counsel for the Internal Revenue Service:
Debtors:
Sid Brown
Michael F. Walsh, Esq. IRS - Special Procedures
Weil, Gotshal & Manges LLP P.O. Box 2899
767 Fifth Avenue Church Street Station
New York, New York 10153 New York, New York 10008
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Counsel for Official Committee of Unsecured U.S. Trustee:
Creditors:
David M. Friedman, Esq. Patricia Schrage, Esq.
Kasowitz, Benson, Torres & Friedman, L.L.P. Office of the United States Trustee
1301 Avenue of the Americas 33 Whitehall Street, 21st Floor
New York, New York 10019 New York, New York 10004
Securities and Exchange Commission:
Securities and Exchange Commission
NE Regional Office - Bankruptcy Unit
7 World Trade Center, Suite 1300
New York, New York 10048
Objections to confirmation of the Plan are governed by Rule 9014.
UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, THE BANKRUPTCY
COURT MAY NOT CONSIDER IT.
B. CONFIRMATION
1. CONFIRMATION REQUIREMENTS
At the Confirmation Hearing, the Bankruptcy Court shall confirm the
Plan only if all of the requirements of section 1129 of the Bankruptcy Code are
met. Among the requirements for confirmation of the Plan are that the Plan (i)
is accepted by the requisite number and amount of holders of impaired classes of
claims and interests, or if not so accepted, is "fair and equitable" and "does
not discriminate unfairly" as to the non-accepting class or classes; (ii) is in
the "best interests" of each holder of a Claim or Equity Interest in each
impaired class under the Plan; (iii) is feasible, and (iv) complies with the
applicable provisions of the Bankruptcy Code.
In the event that one or more classes of impaired Claims or Equity
Interests reject the Plan, the Bankruptcy Court shall determine at the
Confirmation Hearing whether the Plan is "fair and equitable" with respect to,
and does not "discriminate unfairly" against, any rejecting impaired class of
Claims or Equity Interests. These standards are described in sub-section 3 of
this section. For the reasons set forth herein, the Debtors believe the Plan
does not discriminate unfairly against, and is fair and equitable with respect
to, each impaired class of Claims or Equity Interests.
2. ACCEPTANCE OF THE PLAN
As a condition to confirmation, the Bankruptcy Code requires that each
class of impaired claims or interests vote to accept the plan, except under
certain circumstances. A plan is accepted by an impaired class of claims if
holders of at least two-thirds (2/3) in dollar amount and more than
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one-half (1/2) in number of allowed claims of that class vote to accept the
plan. A plan is accepted by an impaired class of interests if holders of at
least two-thirds (2/3) in amount of allowed interests vote to accept the plan.
Only those holders of claims or interests who actually vote count in these
tabulations. Holders of claims who fail to vote are not counted as either
accepting or rejecting a plan or for purposes of determining the number of votes
or amount of claims and interests required to accept a plan.
In addition to this voting requirement, section 1129 of the Bankruptcy
Code requires that a plan be accepted by each holder of a claim or interest in
an impaired class or that the plan otherwise be found by the bankruptcy court to
be in the best interests of each holder of a claim or interest in such class.
Also, each impaired class must accept the plan for the plan to be confirmed
without application of the "fair and equitable" and "unfair discrimination"
tests in section 1129(b) of the Bankruptcy Code discussed below.
3. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED
CLASSES
The Bankruptcy Code contains provisions for confirmation of a plan even
if a plan is not accepted by all impaired classes, as long as at least one
impaired class of claims, not counting "insiders" of the debtor, has accepted
it. These so-called "cramdown" provisions are set forth in section 1129 of the
Bankruptcy Code.
A plan may be confirmed under the cramdown provisions if, in addition
to satisfying all other requirements of section 1129(a) of the Bankruptcy Code,
it (1) does not "discriminate unfairly" and (2) is "fair and equitable," with
respect to each class of claims or interests that is impaired under, and has not
accepted, the plan. As used by the Bankruptcy Code, the phrases "discriminate
unfairly" and "fair and equitable" have specific meanings unique to bankruptcy
law.
In general, the cramdown standard requires that a dissenting class
receive full compensation for its allowed claims or interests before any junior
class receives any distribution. More specifically, section 1129(b) of the
Bankruptcy Code provides that a plan can be confirmed if: (1) with respect to a
class of unsecured claims, either (a) each holder of an impaired unsecured claim
in such class shall receive property of a value equal to the amount of its
allowed claim, or (b) the holders of claims and interests that are junior to the
claims of the dissenting class shall not receive any property under the plan;
or, (2) with respect to a class of interests, either (a) each holder of an
interest of such class shall receive or retain on account of such interest
property of a value equal to the greater of the allowed amount of any fixed
liquidation preference to which such holder is entitled, any fixed redemption
price to which such holder is entitled or the value of such interest, or (b) the
holder of any interest that is junior to the interest of such class shall not
receive or retain any property on account of such junior interest. With respect
to a dissenting class of secured claims, the "fair and equitable" standard
requires, among other things, that holders of such secured claims either (1)
retain their liens and receive deferred cash payments with a value as of the
plan's effective date equal to the value of their interest in property of the
estate or (2) otherwise receive the indubitable equivalent of these secured
claims.
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The requirement that a plan not "discriminate unfairly" means, among
other things, that a dissenting class must be treated substantially equally with
respect to other classes of equal rank. The "fair and equitable" standard, also
known as the "absolute priority rule," requires, among other things, that unless
a dissenting unsecured class of claims or interests receives full compensation
for its allowed claims or allowed interests, no holder of claims or interests in
any junior class may receive or retain any property on account of such claims or
interests. The "fair and equitable" standard has also been interpreted to
prohibit any class senior to a dissenting class from receiving under a plan more
than 100% of its allowed claims.
In the event that any impaired class is determined to have rejected the
Plan in accordance with section 1126 of the Bankruptcy Code, the Debtors may
seek to confirm the Plan as to any such class under the cramdown provisions of
section 1129 of the Bankruptcy Code. Alternatively, the Debtors may modify or
revoke the Plan in accordance with the Plan.
4. BEST INTERESTS TEST
Notwithstanding acceptance of the Plan by each impaired class, for the
Plan to be confirmed, the Bankruptcy Court must determine that the Plan is in
the best interests of each holder of a Claim or Equity Interest who is in an
impaired class and has not voted to accept the Plan. Accordingly, if an impaired
class does not unanimously accept the Plan, the best interests test requires the
Bankruptcy Court to find that the Plan provides to each member of such impaired
class a recovery on account of the class member's Claim or Equity Interest that
has a value, as of the Effective Date, at least equal to the value of the
distribution that each such member would receive if the Debtors were liquidated
under Chapter 7 of the Bankruptcy Code on such date.
To estimate what members of each impaired class of unsecured Claims and
Equity Interests would receive if the Debtors were liquidated, the Bankruptcy
Court must first determine the aggregate dollar amount that would be generated
from the Debtors' assets if the Chapter 11 Cases were converted to Chapter 7
cases under the Bankruptcy Code and the assets were liquidated by a trustee in
bankruptcy (the "Liquidation Value"). The Liquidation Value would consist of the
net proceeds from the disposition of the assets of the Debtors and would be
augmented by any cash held by the Debtors.
The Liquidation Value of the Debtors' assets available to general
unsecured creditors would be reduced by the costs and expenses of the
liquidation, as well as other administrative expenses of the estate. The costs
of liquidation under Chapter 7 would include the compensation of a trustee or
trustees, as well as counsel and other professionals retained by the trustee,
disposition expenses, all unpaid expenses incurred by the Debtors during the
Chapter 11 Cases (such as compensation for attorneys and accountants) that are
allowed in the Chapter 7 proceeding, litigation costs and claims against the
Debtors arising from their business operations during the pendency of the
Chapter 11 Cases and Chapter 7 liquidation proceeding. These costs, expenses and
claims would be paid in full out of the liquidation proceeds before the balance
would be made available to pay creditors.
Once the percentage recoveries in liquidation of priority claimants,
secured creditors, general unsecured creditors and equity interest holders are
ascertained, the value of the distribution available
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out of the Liquidation Value is compared with the value of the property offered
to each of the classes of claims and interests under the Plan to determine if
the Plan is in the best interests of each class of Claims and Equity Interest
holders. A comparative analysis of the Plan versus liquidation will be provided
at the Confirmation Hearing and the Debtors believe it will show significantly
less recovery than the Plan to holders of Claims and Equity Interests.
5. FEASIBILITY
Section 1129(a)(11) of the Bankruptcy Code requires that the Debtors be
able to perform their respective obligations under the Plan and that
confirmation is not likely to be followed by liquidation, or the need for
further financial reorganization of the Debtors (except as provided in the
Plan). For purposes of determining whether the Plan meets this requirement, the
Debtors analyzed their future prospects and their ability to meet their
obligations under the Plan. The Debtors believe that they will be able to meet
their obligations under the Plan and that confirmation is not likely to be
followed by liquidation or further financial reorganization.
C. ALTERNATIVES TO THE PLAN AND BEST INTERESTS OF CREDITORS
A likely alternative to the Plan would be the conversion of the Chapter
11 Cases to liquidation proceedings under Chapter 7 of the Bankruptcy Code.
Under Chapter 7, a trustee would be appointed to administer the estates, to
resolve pending controversies including Disputed Claims, and to make
distributions to creditors.
If the Chapter 11 Cases were converted to cases under Chapter 7, there
would be additional administrative expenses, any distributions to holders of
Claims would be substantially delayed and, in all likelihood, reduced as
compared to the anticipated results of confirmation of the Plan. A Chapter 7
trustee would be entitled to compensation in accordance with the scale set forth
in section 326 of the Bankruptcy Code. A Chapter 7 trustee might also seek to
retain new professionals, including attorneys and accountants, in order to
resolve any Disputed Claims and possibly to pursue claims of the jointly
administered estates against other parties. The trustee and any such new
professionals retained by the trustee would need to spend time familiarizing
themselves with the Chapter 11 Cases, which could result in duplication of
effort, increased expense and delay in payment to creditors. Under the Federal
Rules of Bankruptcy Procedure, a new bar date for the filing of proofs of claim
would have to be set, and additional Claims against the estates that might now
be time-barred (because they were not filed before the applicable bar dates in
the Chapter 11 Cases) could be asserted.
Any Chapter 7 trustee would have great difficulty in preserving the
value of the Debtors' PCS licenses. A trustee would not have the required
expertise to maintain and preserve and ultimately utilize the licenses.
Moreover, the trustee would not have the ability to promptly raise the necessary
funds from private and public markets to complete the build-out of the required
network to utilize the licenses. The trustee would also most likely lose the
support of the Debtors' current investors. As a result, the trustee's only
option would be an immediate sale or return of the licenses to the FCC, which
would, in all likelihood, result in no recovery for the estates or creditors.
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Due to the numerous uncertainties and time delays associated with
liquidation under Chapter 7 of the Bankruptcy Code, it is not possible to
predict with certainty the outcome of any Chapter 7 liquidation of the Debtors
or the timing of any distribution to creditors. However, the Debtors have
concluded that a complete liquidation under Chapter 7 of the Bankruptcy Code
would result in a lesser distribution to holders of Claims and Equity Interests
than that provided for in the Plan.
D. COMPLIANCE WITH APPLICABLE PROVISIONS OF THE
BANKRUPTCY CODE
Section 1129(a)(1) of the Bankruptcy Code requires that the Plan comply
with the applicable provisions of the Bankruptcy Code. During the course of
negotiations among the Debtors, their respective creditors and their
representatives, various legal issues, including Claims classification and
treatment, were raised. The Debtors have considered each of these issues in the
development and formulation of the Plan and believe that the Plan complies with
all applicable provisions of the Bankruptcy Code.
XIV. ADDITIONAL PROVISIONS AND EFFECT OF THE PLAN
A. LEGAL EFFECT OF THE PLAN
1. INJUNCTION
Except as provided in the Plan or the order confirming the Plan (the
"Confirmation Order"), as of the Effective Date, all entities that have held,
currently hold or may hold a Claim or other debt or liability, Equity Interest
or other right of an equity security holder are permanently enjoined from taking
any of the following actions on account of any such Claims, debts, liabilities,
Equity Interests or rights: (a) commencing or continuing, in any manner or in
any place, any action or other proceeding against the Debtors or their property;
(b) enforcing, attaching, collecting or recovering in any manner any judgment,
award, decree or order against the Debtors; (c) creating, perfecting or
enforcing any lien or encumbrance against the Debtors or their property; and (d)
commencing or continuing, in any manner or in any place, any action that does
not comply with or is inconsistent with the provisions of the Plan.
As of the Effective Date, all entities that have held, currently hold
or may hold a Claim, counterclaim, demand, debt, right, cause of action or
liability that is released pursuant to Article XIII of the Plan are permanently
enjoined from taking any of the following actions on account of such released
Claims, counterclaims, demands, debts, rights, causes of action or liabilities:
(a) commencing or continuing in any manner any action or other proceeding
against the Debtors or their property; (b) enforcing, attaching, collecting or
recovering in any manner any judgment, award, decree or order against the
Debtors; (c) creating, perfecting or enforcing any lien or encumbrance against
the Debtors or their property; and (d) commencing or continuing any action, in
any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan.
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By accepting distributions pursuant to the Plan, each holder of an
Allowed Claim or Allowed Interest receiving distributions pursuant to the Plan
will be deemed to have specifically consented to the injunctions set forth in
Article XIII of the Plan.
2. LIMITATION OF LIABILITY IN CONNECTION WITH THE PLAN,
DISCLOSURE STATEMENT AND RELATED DOCUMENTS; INDEMNITY
To the fullest extent permissible under applicable law, the Debtors and
their officers, directors, members, attorneys, agents and representatives will
neither have nor incur any liability to any entity, including, specifically any
holder of a Claim or Equity Interest, for any act taken or omitted to be taken
in connection with or related to the formulation, preparation, dissemination,
implementation, confirmation or consummation of the Plan, the Disclosure
Statement, the Confirmation Order or any contract, instrument, release or other
agreement or document created or entered into, or any other act taken or omitted
to be taken in connection with the Plan, the Disclosure Statement or the
Confirmation Order, including the solicitation of acceptances of the Plan.
3. RELEASE OF LIENS
Except as otherwise specifically provided in the Plan, on the Effective
Date, all mortgages, deeds of trust, liens or other security interests in, to or
against the property of the estate shall be released, and all right, title and
interest of any holder of such mortgages, deeds of trust, liens or other
security interests shall revert to the Reorganized Debtors.
B. RETENTION OF CAUSES OF ACTION
The Plan provides that the Debtors shall have the exclusive right to
prosecute all causes of action following confirmation, including avoidance
actions. The Debtors have neither prepared a detailed analysis of the viability
of specific causes of action, nor made any determination as to whether pursuing
the same would be in the best interests of the estate. The two primary causes of
action available to a debtor are discussed below.
1. PREFERENCE CLAIMS
Section 547 of the Bankruptcy Code enables a debtor in possession to
avoid transfers to a creditor based upon an antecedent debt within ninety (90)
days of the petition date which enabled the creditor to receive more than it
would under a liquidation. Where the creditor is an insider, section 547 enables
a debtor in possession to avoid transfers made within one (1) year of the
petition date. Creditors have defenses to the avoidance of such preferential
transfers based upon, among other things, the transfer's occurrence as part of
the debtor's ordinary course of business or that subsequent to the transfer the
creditor provided the debtor with new value.
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A. VOLUNTARY PAYMENTS TO CREDITORS
The Debtors and their professionals are analyzing payments by the
Debtors to creditors within ninety (90) days before the commencement of the
Chapter 11 Cases to determine which such payments may be avoidable as
preferential transfers under section 547 of the Bankruptcy Code. The total
disbursements made to nonaffiliated third parties was approximately
$1,403,601.11 for NWI, $195,544.21 for NTI, and $64,125.00 for NPCI. NTI's
payments were actually made by NWI for the sole benefit of NTI. Thus far, the
analysis has focused on payments to creditors in excess of $10,000, which
represents disbursements of over $950,000 for NWI, over $130,000 for NTI, and
over $60,000 for NPCI. At this time, no determination has been made as to what
defenses may exist which could potentially prevent the recovery of these
amounts.
Additionally, the Debtors and their professionals are analyzing
payments by the Debtors to insiders within one (1) year before the commencement
of the Chapter 11 Cases to determine which such payments, if any, may be
avoidable as preferential transfers under section 547 of the Bankruptcy Code.
The total disbursements made to insiders was approximately $826,382.86 for NWI.
At this time, no determination has been made as to what defenses may exist which
could potentially prevent the recovery of these amounts.
B. INVOLUNTARY PAYMENTS TO CREDITORS
The Debtors and their professionals have identified involuntary
payments made to creditors within ninety (90) days before the commencement of
the Chapter 11 Cases which the Debtors believe may be avoidable as preferential
transfers under section 547 of the Bankruptcy Code. For example, on October 30,
1998, Carlson Technologies seized $12,433.31 from NTI's accounts pursuant to a
writ of execution after obtaining a judgment against NTI for NTI's failure to
remain current on its payment obligations pursuant to an agreed settlement. A
levy on a bank account to satisfy a judgment may constitute an avoidable
preference. See Deel Rent-A-Car, Inc. v. Levine, 721 F.2d 750, 753 n.11 (11th
Cir. 1983); In re Cosmopolitan Aviation Corp., 34 B.R. 592, 594 (Bankr. E.D.N.Y.
1983). The Debtors are evaluating whether to pursue a preference action against
Carlson Technologies to recover these disbursements.
2. POTENTIAL FRAUDULENT TRANSFER CAUSES OF ACTION
In order to successfully prosecute a fraudulent transfer cause of
action, the Debtors would have to establish (i) that the Debtor(s) did not
receive reasonably equivalent value in exchange for the transfers made to the
third party and (ii) that the Debtor(s) was (were) rendered insolvent or left
with unreasonably small capital as a result of the transaction. The Debtors and
their professionals are analyzing the facts and circumstances surrounding
various agreements between the Debtors and third parties and whether there are
any potential causes of action arising therefrom.
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A. AGREEMENTS WITH SAMYANG MERCHANT BANK
("SAMYANG")
NTI, NPI and their various subsidiaries entered into numerous
agreements with Samyang between February 6, 1997 and June 18, 1997. As part of
NTI's fund raising efforts, NTI and Samyang entered into loan agreements on
February 6, 1997, March 21, 1997, April 4, 1997 and May 8, 1997 (collectively
the "Original Loans") in the aggregate principal amount of $23,916,666. Each
loan had a term of five (5) years and bore interest at a rate of 9% per annum.
As additional consideration for the Original Loans, Samyang received warrants
which collectively allowed Samyang to purchase 4,783,333 shares of NTI Series B
Common Stock with an exercise price of $5.00 per share. On June 18, 1997, NTI
and Samyang executed a loan agreement for the principal amount of $11,000,000
(the "Final Loan" and together with the Original Loans, the "Loans") under
substantially similar terms as the Original Loans. As a part of the Final Loan,
however, NTI executed a senior pledge agreement, subordinated pledge agreement
and second subordinated pledge agreement which granted a security interest in,
among other things, all outstanding stock in NTI's subsidiaries. NPI likewise
executed a pledge agreement, subordinated pledge agreement and second
subordinated pledge agreement which granted a security interest in, among other
things, all outstanding stock in NPI's subsidiaries. Additionally, NWI, NPI,
NPPI and TC each executed guarantees covering all of the Loans.
The Debtors are analyzing whether NPI, NWI, NPPI and TC (collectively
the "Subsidiaries") received reasonably equivalent value for the transfers of
security interests and guarantees executed in favor of Samyang, and accordingly,
whether such transfers and obligations may be avoidable under the Bankruptcy
Code. In order to establish that the Subsidiaries did not receive value for the
transfers and/or obligations they incurred, the Debtors would have to show that
the economic benefit to the Subsidiaries was disproportionately small when
compared to the size of the security that the Subsidiaries gave and the
obligations they incurred. See Rubin v. Manufacturers Hanover Trust Co., 661
F.2d 979, 993 (2d Cir. 1981). The Debtors are analyzing whether the
Subsidiaries' guarantee of approximately $24,000,000 of Original Loans in return
for which they may or may not have received an indirect economic benefit from
the Final Loan constitutes receipt of reasonably equivalent value.
The argument frequently raised by defendants in an action to set aside
a subsidiary's guarantee of a parent's debt is that even though the subsidiary
did not receive any direct consideration in exchange for the
transfer/obligation, the subsidiary did receive some indirect or benefit by
virtue of the transfer to the affiliated entity. Courts have upheld guarantees
from fraudulent transfer attack on this basis. See In re Augie/Restivo Baking
Co., 87 B.R. 242 (Bankr. E.D.N.Y. 1988). There can be no assurance that the
Debtors will determine that it is advantageous or appropriate to pursue any
potential cause of action or that such would be successful in setting aside the
guarantees or security interests. Further, the Debtors anticipate Samyang would
vigorously contest any such cause of action.
The claim under the Samyang Agreements is now held by Hanareum, as
discussed in section VII(A)(2)(a) hereof.
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B. AGREEMENTS WITH LG INFOCOMM, INC. AND LG
INFORMATION & COMMUNICATIONS LTD. ("LG
INFOCOMM")
On February 23, 1996 NTI and LG InfoComm entered into a convertible
loan agreement whereby LG InfoComm agreed to loan NTI $10,000,000 within
forty-five (45) days of the completion of the C block auction. On June 3, 1996,
LG InfoComm and NTI consummated the transaction and NTI executed a convertible
promissory note in favor of LG InfoComm with a maturity date of June 3, 1997
(the "Convertible Note"). On January 6, 1997 NTI entered into a $25,000,000 loan
agreement (the "Secured Loan") with a maturity date of the earlier of (i) 30
days after NTI received the proceeds of an initial public offering or (ii) six
months from the date the funds were drawn down. As collateral for the Secured
Loan, NTI pledged all issued and outstanding shares of NPCI stock and executed a
stock pledge agreement. After NTI encountered short-term cash flow problems, NTI
and LG InfoComm agreed to amend the Convertible Note and Secured Loan, which
they did on June 3, 1997. LG InfoComm agreed to extend the maturity dates of the
Convertible Note and Secured Loan to August 29, 1997 in return for which, among
other things, NPCI agreed to grant a security interest in all of its C block PCS
licenses.
The Debtors are analyzing the transactions to determine whether NPCI
received reasonably equivalent value for the transfer of a security interest in
favor of LG InfoComm, and if such transfer is avoidable under the Bankruptcy
Code. For the reasons set forth above with respect to Samyang, there can be no
assurance that the Debtors will determine that it is advantageous or appropriate
to pursue any potential cause of action or that such would be successful.
Further, the Debtors anticipate LG InfoComm would vigorously contest any such
cause of action.
C. AGREEMENTS WITH THE BRIDGE NOTEHOLDERS
On April 9, 1996 NTI executed a Securities Purchase Agreement which
provided for the sale of convertible bridge notes and, among other things,
required NTI to cause all of its existing and future subsidiaries to execute a
subsidiary guaranty. TC, NWI and NPI subsequently executed guarantees. On June
18, 1997 NTI and NPI executed a stock pledge and subordination agreement in
favor of the Bridge Noteholders whereby NTI assigned and granted a continuing
security interest in all of the issued and outstanding shares of capital stock
of NPI, and NPI assigned and granted a continuing security interest in all of
the issued and outstanding shares of capital stock of NPPI. NTI additionally
executed an Allonge which required NTI to pay interest retroactive to the
issuance date at a rate 10% higher than that required under the terms of the
original convertible bridge notes if NTI did not successfully complete its
initial public offering by June 30, 1998, which NTI failed to do.
The guarantees executed by TC, NWI and NPI, as well as the security
interests granted by NTI and NPI and the Allonge executed by NTI, may constitute
avoidable transfers and obligations under sections 544(b) and 548 of the
Bankruptcy Code.
There also could be legal and interpretive issues with respect to the
actual amounts owed to the Bridge Noteholders. Contentions regarding the amount
of the Bridge Noteholders' Claim have ranged from $143,000,000 to over
$190,000,000, an amount the Debtors would strongly contest.
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Under the Plan, the Bridge Noteholders will participate in a consensual
resolution of any such issues through the Allowed Bridge Noteholders' Claim
($174,227,294.98).
In exchange for the treatment set forth in the Plan and described in
section VIII(A)(2) hereof, the Debtors have agreed to release LG InfoComm,
Hanareum and the Bridge Noteholders of and from any and all causes of action
described in this section XIV(B). If the Plan is not confirmed or does not
become effective, such release will not take effect and the Debtors will retain
all the causes of action described above. The Debtors have determined that no
other possible fraudulent transfer causes of action exist except with respect to
LG InfoComm, Hanareum and the Bridge Noteholders.
C. RELEASES UNDER THE PLAN; RELATED INJUNCTION
1. RELEASES BY HOLDERS OF CLAIMS OR INTERESTS
A. HOLDERS OF CLAIMS
As of the Effective Date, to the fullest extent permitted by applicable
law, in consideration for the obligations of the Debtors under the Plan and the
contracts, instruments, releases and other agreements or documents to be
delivered in connection with the Plan, each holder of a Claim that is impaired
under the Plan will be deemed to forever release, waive and discharge all
Claims, counterclaims, demands, debts, rights, causes of action and liabilities
(other than the right to enforce the Debtors' obligations under the Plan and the
contracts, instruments, releases and other agreements and documents delivered
thereunder or right of setoff or recoupment, if any), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising, that are based in
whole or in part on any act, omission or other occurrence taking place on or
prior to the Effective Date against the Debtors and their respective officers,
directors, agents, advisors, attorneys, employees and professionals, acting in
such capacity, for any act, event or omission arising out of, in connection with
or relating to the Chapter 11 Cases, the confirmation of the Plan, the
consummation of the Plan, the administration of the Plan or the property to be
distributed thereunder, except for willful misconduct or gross negligence.
B. HOLDERS OF EQUITY INTERESTS
As of the Effective Date, to the fullest extent permissible under
applicable law, in consideration for the obligations of the Debtors under the
Plan, the contracts, instruments, releases or other agreements or documents to
be delivered in connection with the Plan, each entity that has held, holds or
may hold an Equity Interest in the Debtors will be deemed to forever release,
waive and discharge all Claims, counterclaims, demands, debts, rights, causes of
action and liabilities (other than the right to enforce the Debtors' obligations
under the Plan and the contracts, instruments, releases and other agreements and
documents delivered thereunder), whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then
existing or thereafter arising, that are based in whole or in part on any act,
omission or other occurrence taking place on or prior to the Effective Date
against the Debtors and their respective officers, directors agents, advisors,
attorneys, employees and professionals, acting in such
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capacity, for any act, event or omission arising out of, in connection with or
relating to the Chapter 11 Cases, the confirmation of the Plan, the consummation
of the Plan or the administration of the Plan or the property to be distributed
hereunder, except for willful misconduct or gross negligence.
2. INJUNCTION RELATED TO RELEASES
As further provided in Article XIII of the Plan, the Confirmation Order
will enjoin the prosecution, whether directly, derivatively or otherwise, of any
Claim, counterclaim, demand, debt, right, cause of action, liability or interest
released, discharged or terminated pursuant to the Plan.
D. CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE
DATE
1. CONDITIONS TO CONFIRMATION
The conditions precedent to Confirmation will be:
A. the entry of the Confirmation Order, in form
and substance acceptable to the Debtors;
B. receipt by the Debtors of commitments in the
minimum amount of $225,000,000 for the
purchase of NTI Series A Convertible
Preferred Stock; and
C. Bankruptcy Court approval of the Plan
Documents.
2. CONDITIONS TO EFFECTIVE DATE
The Effective Date is defined as the first Business Day, on or after
the Confirmation Date, on which (i) no stay of the Confirmation Order is in
effect and (ii) all conditions to the Effective Date of the Plan have been
satisfied or waived (if available), as described therein. There can be no
assurance that the conditions to the Effective Date will be satisfied or, if
permitted, waived. The Effective Date will not occur and the Plan will not be
consummated unless and until each of the following conditions has been satisfied
or, if permitted, duly waived:
A. the Bankruptcy Court shall have entered a
Confirmation Order, the effect of which
shall not have been stayed;
B. the Debtors shall have received a minimum of
$225,000,000 for the purchase of shares of
NTI Series A Convertible Preferred Stock;
and
C. all Plan Documents have been executed and
delivered by the parties thereto and any
conditions to the effectiveness of the Plan
Documents have been satisfied or waived, as
provided therein.
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3. WAIVER OF CONDITIONS TO CONFIRMATION AND EFFECTIVE
DATE
Each of the conditions to confirmation and the Effective Date may be
waived by the Debtors with the consent of the Committee, which consent shall not
be unreasonably withheld, in whole or in part, without notice, by an order of
the Bankruptcy Court or any further action other than proceeding to confirmation
and consummation of the Plan. The failure to satisfy or waive any condition may
be asserted by the Debtors regardless of the circumstances giving rise to the
failure of such condition to be satisfied (including any action or inaction by
the Debtors). The failure of the Debtors to exercise any of the foregoing rights
shall not be deemed a waiver of any other rights and each such right will be
deemed an ongoing right that may be asserted at any time.
4. MODIFICATION OR REVOCATION OF THE PLAN; SEVERABILITY
Subject to the restrictions on modifications set forth in section 1127
of the Bankruptcy Code and any applicable notice requirements, the Debtors have
reserved the right to alter, amend or modify the Plan before its Substantial
Consummation. The Debtors have also reserved the right to revoke or withdraw the
Plan prior to the Confirmation Date. If the Debtors revoke or withdraw the Plan,
or if confirmation does not occur, then the Plan shall be null and void in all
respects, and nothing contained in the Plan will: (1) constitute a waiver or
release of any Claims or rights against, or any Equity Interests in, the
Debtors, or (2) prejudice in any manner the rights of the Debtors.
If, prior to confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court,
at the request of the Debtors, has the power to alter and interpret such term or
provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision will then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of the
Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order will constitute a judicial determination and will provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
E. RETENTION OF BANKRUPTCY COURT JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court will retain such jurisdiction over
the Chapter 11 Cases after the Effective Date to the fullest extent permitted by
applicable law, including, without limitation, jurisdiction to:
1. Allow, disallow, determine, liquidate, classify,
estimate or establish the priority or secured or
unsecured status of any Claim or Interest, including
the resolution of any request for payment of any
Administrative Claim, the resolution of any
objections to the allowance or priority of Claims or
Interests and the resolution of any dispute as to the
treatment necessary to reinstate a Claim pursuant to
the Plan;
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2. Grant or deny any applications for allowance of
compensation or reimbursement of expenses authorized
pursuant to the Bankruptcy Code or the Plan, for
periods ending on or before the Effective Date;
3. Resolve any matters related to the assumption or
rejection of any executory contract or unexpired
lease to which the Debtors are a party or with
respect to which the Debtors may be liable, and to
hear, determine and, if necessary, liquidate any
Claims arising therefrom;
4. Ensure that distributions to holders of Allowed
Claims or Allowed Interests are accomplished pursuant
to the provisions of the Plan;
5. Decide or resolve any motions, adversary proceedings,
contested or litigated, and grant or deny any
applications involving the Debtors that may be
pending any other matters and grant or deny any
application involving the Debtors that may be pending
on the Effective Date;
6. Enter such orders as may be necessary or appropriate
to implement or consummate the provisions of the Plan
and all contracts, instruments, releases, indentures
and other agreements or documents created in
connection with the Plan, the Disclosure Statement or
the Confirmation Order;
7. Resolve any cases, controversies, suits or disputes
that may arise in connection with the consummation,
interpretation or enforcement of the Plan or the
Confirmation Order, including the release and
injunction provisions set forth in and contemplated
by the Plan and the Confirmation Order, or any
entity's rights arising under or obligations incurred
in connection with the Plan or the Confirmation
Order;
8. Modify the Plan before or after the Effective Date
pursuant to section 1127 of the Bankruptcy Code or
modify the Disclosure Statement, the Confirmation
Order or any contract, instrument, release, indenture
or other agreement or document created in connection
with the Plan, the Disclosure Statement or the
Confirmation Order; or remedy any defect or omission
or reconcile any inconsistency in any Bankruptcy
Court order, the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument,
release, indenture or other agreement or document
created in connection with the Plan, the Disclosure
Statement or the Confirmation Order, in such manner
as may be necessary or appropriate to consummate the
Plan, to the extent authorized by the Bankruptcy
Code;
9. Issue injunctions, enter and implement other orders
and take such other actions as may be necessary or
appropriate to restrain interference by any
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entity with the consummation, implementation or
enforcement of the Plan or the Confirmation Order;
10. Enter and implement such orders as are necessary or
appropriate if the Confirmation Order is for any
reason modified, stayed, reversed, revoked or
vacated;
11. Determine any other matters that may arise in
connection with or relating to the Plan, the
Disclosure Statement, the Confirmation Order or any
contract, instrument, release, indenture or other
agreement or document created in connection with the
Plan, the Disclosure Statement or the Confirmation
Order, except as otherwise provided in the Plan; and
12. Enter an order concluding the Chapter 11 Cases.
F. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
1. REJECTION OF EXECUTORY CONTRACTS
Except as otherwise provided in the Plan, including Article X of the
Plan, or in any contract, instrument, release, indenture or other agreement or
document entered into in connection with the Plan, on the Effective Dates,
pursuant to section 365 of the Bankruptcy Code, the Debtors will reject each
executory contract and unexpired lease entered into by the Debtors prior to the
Petition Dates that (i) has not previously been assumed, assumed and assigned,
or rejected pursuant to section 365 of the Bankruptcy Code; (ii) is not subject
to a pending motion to assume and assign, or reject; or (iii) is not listed on
the notice to be provided by the Debtors to parties in interest as being
assumed, shall be deemed rejected on the Confirmation Date. The Confirmation
Order will constitute an order of the Bankruptcy Court approving the rejections
described in Article X of the Plan, pursuant to section 365 of the Bankruptcy
Code, as of the Effective Date.
2. BAR DATE FOR REJECTION DAMAGES
If the rejection of an executory contract or unexpired lease pursuant
to Article X of the Plan gives rise to a Claim by the other party or parties to
such contract or lease, such Claim will be forever barred and will not be
enforceable against the Debtors or their successors or their properties unless
(a) a stipulation of amount and nature of claim has been entered into with
respect to the rejection of such executory contract or unexpired lease or (b) a
proof of Claim is filed and served
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on the Debtors within 30 days after the Effective Date or such earlier date as
established by the Bankruptcy Court.
G. DISTRIBUTIONS UNDER THE PLAN
1. GENERAL: DISTRIBUTIONS FOR CLAIMS AND INTERESTS
ALLOWED AS OF THE EFFECTIVE DATE
Distributions to be made on account of Claims or Interests that are
Allowed as of the Effective Date shall be made on the Effective Date.
Distributions shall be deemed made on the Effective Date if made on the
Effective Date, or as promptly thereafter as practicable, or such later date
when the applicable conditions of Article X (regarding cure payments for
executory contracts and unexpired leases being assumed) of the Plan are
satisfied. Distributions on account of Claims or Interests that are Allowed
after the Effective Date shall be made pursuant to Article IX of the Plan.
2. TIMING AND CALCULATION OF AMOUNTS TO BE DISTRIBUTED
On the Effective Date or on such later date as is prescribed by Article
VIII of the Plan, to the extent that the Plan provides for distributions on
account of Allowed Claims or Allowed Interests, the applicable holder of an
Allowed Claim or Allowed Interest shall receive the full amount of the
distributions that the Plan provides for Allowed Claims or Allowed Interests in
the applicable class.
3. PROSECUTION OF OBJECTIONS TO CLAIMS
After the Effective Date, the Debtors shall retain the exclusive right
to file, settle, compromise, withdraw or litigate to judgment objections to
claims and interests.
4. DISPUTED CLAIMS; RESERVE AND ESTIMATIONS
A. OBJECTION DEADLINE
Under the Plan, the Debtors may object to: (a) Administrative Claims
within thirty (30) days after a request for payment of each Claim has been
filed; and (b) all other Claims within one hundred eighty (180) days after the
Effective Date by filing an objection with the Bankruptcy Court and serving a
copy upon the holder of the Claim to which an objection is made, in which event
the Claim will be treated as a Disputed Claim under the Plan. The Bankruptcy
Court shall adjudicate all such objections. The Debtors may litigate to
judgment, settle, or withdraw objections to Disputed Claims.
B. NO DISTRIBUTIONS PENDING ALLOWANCE
No payments or distributions will be made with respect to the disputed
portion of a Disputed Claim unless and until all objections to such Disputed
Claim or portion thereof have been determined by a Final Order or judgment of
the Bankruptcy Court, or such Disputed Claim has otherwise become an Allowed
Claim. Any payments or distributions that would have been made
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on account of a prepetition Claim had it been Allowed will be withheld (the
"Withheld Distribution Amount") by the Debtors pending a determination with
respect to allowability.
C. DISTRIBUTION AFTER ALLOWANCE OR DISALLOWANCE
If and when a Disputed Claim is resolved by allowing the Claim in whole
or in part, the Debtors, will make distributions to the holder of the Allowed
Claim in accordance with the provisions of the Plan. In the event that any
property withheld or the proceeds thereof, remains after all objections to
Disputed Claims of a particular class have been resolved, any remainder of the
Withheld Distribution Amount attributable to the Disallowed Claims of such class
will be distributed pursuant to the provisions of the Plan among the holders of
Allowed Claims in the class to which the holders of the Disallowed Claims
belonged.
D. ESTIMATION
Prior to the Effective Date, the Debtors, after notice and a hearing,
may request the Bankruptcy Court to estimate, for purposes of determining the
Withheld Distribution Amount applicable to Disputed Claims, the maximum amount
of Allowed Claims and of Disputed Claims. Any such estimation will not determine
the merits of the Claims alleged by the holders of Disputed Claims, but will
merely set a ceiling on the Claims that could become Allowed Claims for purposes
of computing distributions to other creditors on the Distribution Date.
E. CLAIMS FILED AFTER THE BAR DATE
Unless otherwise provided in a Final Order of the Bankruptcy Court, any
Claim on account of which a proof of Claim is filed after the Bar Date shall be
deemed disallowed. The holder of a Claim that is disallowed pursuant to Article
IX of the Plan shall not receive any distribution on account of such Claim.
F. SOLE REMEDY
The procedures under the Plan for resolving Disputed Claims constitute
the sole and exclusive remedy of holders of Disputed Claims. The Confirmation
Order will permanently enjoin the holders of Disputed Claims in the manner
described herein and in the Plan.
5. SETOFFS
Except with respect to Claims released pursuant to the Plan or any
contract, instrument, release or other agreement or document created in
connection with the Plan, the Debtors may set off against any Allowed Claim and
the distributions to be made pursuant to the Plan on account of such Claim
(before any distribution is made on account of such Claim), the claims, rights
and causes of action of any nature that the Debtors may hold against the holder
of such Allowed Claim; provided, however, that neither the failure to effect
such a setoff nor the allowance of any Claim hereunder shall constitute a waiver
or release by the Debtors of any such claims, rights and causes of action that
the Debtors may possess against such holder or the right to setoff with respect
thereto.
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6. UNCLAIMED DISTRIBUTIONS
Unless a holder of an Allowed Claim provides the Debtors and the
Bankruptcy Court with written notice of a change of address, distributions under
the Plan will be mailed to such holder at the address specified in the proof of
Claim filed with the Bankruptcy Court by such holder or, if no proof of Claim
has been filed, at the address for such holder shown on the Schedules filed by
the Debtors with the Court. Any distribution that the United States Postal
Service returns as undeliverable will be treated as unclaimed property.
Similarly, distributions that would have been made to a claimant if it had a
proper address shall be deemed unclaimed property. In this regard, unless and
until the claimant provides the Debtors and the Bankruptcy Court with written
notice of a proper address, no distributions shall be made to any holder of an
Allowed Claim whose copy of the notice of the time fixed for filing objections
to and the hearing on the confirmation of the Plan (or whose copy of the notice
of the hearing on the Disclosure Statement for the Plan), provided by the
Debtors, is returned by the United States Postal Services as undeliverable.
Finally, each holder of an Allowed Claim who receives a distribution under the
Plan must cash the check within six (6) months of the mailing of the
distribution. Six (6) months after the mailing of the distribution, the Debtors
will stop payment on any check remaining unpaid and not returned to the Debtors,
and the funds represented by a check that has not been cashed within this
six-month period will become unclaimed property.
XV. SECURITIES LAW MATTERS
The offer and issuance of the Plan Securities pursuant to the Plan are
exempt from the registration requirements of the United States Securities Act of
1933, as amended (the "Securities Act"), and relevant provisions of applicable
state securities or "blue sky" laws by virtue of either section 1145 of the
Bankruptcy Code or an exemption from offers and sales of securities not
involving a public offering. THE DEBTORS AND THEIR COUNSEL MAKE NO
REPRESENTATION AS TO THE APPLICABILITY OF SUCH EXEMPTIONS.
A. AVAILABILITY OF SECTION 1145 OF THE BANKRUPTCY CODE
Section 1145(a)(1) of the Bankruptcy Code provides an exemption from
the registration requirements of section 5 of the Securities Act and state and
local securities laws in connection with the offer or sale under a plan of
reorganization of a security of the debtor, of an affiliate participating in a
joint plan with the debtor or of a successor to the debtor under the plan.
Generally, the exemption is not available for offers or sales that are not made
in exchange for a claim against, an interest in, or a claim for an
administrative expense in the case concerning the debtor or the applicable
affiliate. In addition, section 1145(a)(2) of the Bankruptcy Code provides an
exemption in connection with the offer of a security through any warrant or
other similar right that was sold in the manner specified under section
1145(a)(1) or the sale of a security upon exercise of such a warrant or similar
right. Other than with respect to ordinary trading transactions of an entity
that is not an issuer (within the meaning of such terms as they are used in
section 1145(b)(1) of the Bankruptcy Code), the exemptions provided by sections
1145(a)(1) and (2) are not available as to any sale of a security to any entity
that is deemed to be an "underwriter" (as that term is defined in section
1145(b)(1) of the Bankruptcy Code).
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B. PARTIES WHO ARE UNDERWRITERS
Section 1145(b) of the Bankruptcy Code defines a person or entity that
may be an "underwriter," and thus restricted in the resale of securities
received, as any person or entity that (i) purchases a Claim, including an
Administrative Claim, with a view towards distribution of any security received
or to be received under a plan of reorganization in exchange for such a Claim,
Interest, or Administrative Claim; (ii) offers to sell securities offered or
sold under a plan of reorganization for the holders of such securities; (iii)
offers to buy securities offered for sale under a plan of reorganization from
the holders of such securities, if such offer to buy is with a view towards
distribution of such securities under an agreement made either in connection
with such plan, with the consummation of such plan, or with the offer or sale of
securities under such plan; or (iv) is an "issuer" of the securities offered or
sold under a plan of reorganization as that term is defined in section 2(11) of
the Securities Act, with respect to such securities. Under section 2(11) of the
Securities Act, an "issuer" includes any person directly or indirectly
controlling or controlled by an issuer, or any person under direct or indirect
control with an issuer.
In order to ensure that the distribution of the Plan Securities to
holders of Allowed Claims in exchange for such Allowed Claims is exempt under
section 1145(a), any entity that the Debtors reasonably determine may be deemed
to be an "underwriter" pursuant to section 1145(b)(1) of the Bankruptcy Code
(other than solely by virtue of clause (iv) of section 1145(b)(1) of the
Bankruptcy Code as the result of being a person controlling or controlled by the
issuer of the Plan Securities (a "Non-underwriter Affiliate")) will be required
to covenant and agree with the Reorganized Debtors, prior to the issuance of any
Plan Securities to any such party, that, if such party is an entity of the type
described in section 1145(b)(1) of the Bankruptcy Code, it will engage only in
"ordinary trading transactions" within the meaning of section 1145(b)(1) of the
Bankruptcy Code with respect to any Plan Securities that such party receives
pursuant to the Plan.
Any such party that refuses or otherwise fails to provide the
Reorganized Debtors with the requested agreements will receive Plan Securities
containing a legend to the effect that such Plan Securities may not be sold
unless and until (i) such securities are registered under the Securities Act and
any applicable state law or (ii) an opinion of counsel satisfactory to the
Reorganized Debtors is obtained to the effect that such registration is not
required.
Any party that the Reorganized Debtors determine is an "affiliate" of
the issuer of the Plan Securities prior to the Distribution Date (i.e., directly
or indirectly controlling or controlled by the issuer of the Plan Securities)
will receive Plan Securities containing a legend to the effect that such Plan
Securities may not be sold unless and until (i) such securities are registered
under the Securities Act and any applicable state law or (ii) an opinion of
counsel satisfactory to the Reorganized Debtors is obtained to the effect that
such registration is not required.
Any NTI Series B Warrants bearing either such legend will also bear a
legend restricting the exercise thereof to the original holder thereof unless
(i) such exercise is registered under the Securities Act and any applicable
state law or (ii) an opinion of counsel satisfactory to the Reorganized Debtors
is obtained to the effect that such registration is not required.
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Notwithstanding the foregoing, statutory underwriters may be able to
sell securities without registration pursuant to the resale limitations of Rule
144 under the Securities Act which, in effect, permits the resale of securities
received by statutory underwriters pursuant to a Chapter 11 plan, subject to
applicable volume limitations, notice and manner of sale requirements, and
certain other conditions. Parties who believe they may be underwriters, as
defined in section 1145 of the Bankruptcy Code, are advised to consult with
their own legal advisors as to the availability of the exemption provided by
Rule 144.
C. PRIVATE PLACEMENT
To the extent that the exemption from registration under the Securities
Act pursuant to section 1145 of the Bankruptcy Code is unavailable to the
Debtors, this Disclosure Statement constitutes an offer of the Plan Securities
to qualified institutional investors, accredited investors, or directors or
officers of the Debtors, in reliance upon an exemption from registration for an
offer and sale of securities which does not involve a public offering. In that
event, each entity that elects to participate in the purchase of the Plan
Securities will be required to make certain acknowledgments, representations,
warranties and agreements regarding the status of such investor. Entities who do
not qualify as a qualified institutional investors or accredited investors and
are also not a director or officer of the Debtors will not be entitled to
participate in the purchase of Plan Securities.
The issuance of Plan Securities to persons other than holders of
Allowed Claims, in exchange for such Allowed Claims, will be exempt from
registration under the Securities Act pursuant to Section 4(2) of the Securities
Act and applicable state securities laws. The NTI Series A Convertible Preferred
Stock and NTI Series B Warrants issued to persons other than such holders of
Allowed Claims, in reliance on Section 4(2) of the Securities Act, will be
subject to such transfer restrictions and bear such legends as are customary for
privately placed securities.
D. AVAILABILITY OF SEC RULE 144 FOR AFFILIATE RESALES
It is an integral part of the Plan that the issuance of the Plan
Securities pursuant to the Plan to holders of the Allowed Claims in exchange for
such Allowed Claims is exempt from registration under the Securities Act
pursuant to section 1145(a) of the Bankruptcy Code. As mentioned above, however,
section 1145(a) of the Bankruptcy Code does not apply to subsequent sales of
Plan Securities by persons who are "underwriters," as that term is defined in
section 1145(b)(1). Section 1145(b)(1) provides that, for purposes of section
2(11) of the Securities Act, the term "underwriter" means, in addition to those
persons who perform traditional underwriting activities, any person directly
controlling or controlled by the issuer of the securities, or any person under
direct or indirect common control with such issuer. By defining the term
"underwriter" to include affiliates of the issuer, subsequent sales by such
affiliates of securities issued under a plan of reorganization are subject to
the registration requirements of the Securities Act, unless another exemption
from registration is available to the affiliate who desires to effect such sale.
In evaluating whether a person directly or indirectly controls, is
controlled by, or is under common control with an issuer of securities, an
analysis must be made of the facts and circumstances
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regarding the relationship between such person and the issuer. A detailed
discussion of all the criteria applicable to such an analysis, and of the
application of such analysis to all the persons who will receive securities
under the Plan is beyond the scope of this Disclosure Statement. Interested
persons are referred to their own professional advisors for further information
regarding such person's possible status as an affiliate of any issuer of Plan
Securities and of the consequences of such status.
The SEC has promulgated Rule 144, among other reasons, to permit
resales by affiliates, including Non-underwriter Affiliates under certain
specified conditions while, by complying with such conditions, avoiding being
deemed statutory underwriters. Among the conditions to use of Rule 144 by
Non-underwriter Affiliates is the requirement that certain current information
regarding the issue be publicly available. The Company may choose not to make
such information publicly available.
XVI. CONCLUSION AND RECOMMENDATION
For all of the reasons set forth in this Disclosure Statement, the
Debtors believe that confirmation and consummation of the Plan is preferable to
all other alternatives. Consequently, the Debtors urge all holders of Claims and
Equity Interests to vote to ACCEPT the Plan, and to duly complete and return
their ballots such that they shall be ACTUALLY RECEIVED on or before 5:00 p.m.
Eastern Time on August 27, 1999.
Dated: New York, New York
July 27, 1999
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NEXTWAVE WIRELESS INC. NEXTWAVE POWER PARTNERS INC.
- ------------------------------- -----------------------------------
Frank A. Cassou Frank A. Cassou
Executive Vice President Secretary
NEXTWAVE PERSONAL
COMMUNICATIONS INC. NEXTWAVE TELECOM INC.
- ------------------------------- -----------------------------------
Frank A. Cassou Frank A. Cassou
Secretary Secretary
NEXTWAVE PARTNERS INC.
- -------------------------------
Frank A. Cassou
Secretary
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COUNSEL FOR THE DEBTORS SPECIAL CORPORATE AND
FINANCE COUNSEL FOR THE DEBTORS
- ------------------------------- -----------------------------------
Deborah L. Schrier-Rape Michael F. Walsh (MW 8000)
Texas State Bar No. 00785635 WEIL, GOTSHAL & MANGES L.L.P.
ANDREWS & KURTH L.L.P. 767 Fifth Avenue
1717 Main Street, Suite 3700 New York, New York 10153
Dallas, Texas 75201 Telephone: (212) 310-8000
Telephone: (214) 659-4400 Facsimile: (212) 310-8007
Facsimile: (214) 659-4401
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Deborah L. Schrier-Rape Michael F. Walsh (MW 8000)
Texas State Bar No. 00785635 WEIL, GOTSHAL & MANGES LLP
Jason S. Brookner (JB 6166) 767 Fifth Avenue
ANDREWS & KURTH L.L.P. New York, New York 10153
1717 Main Street Telephone: (212) 310-8000
Suite 3700 Facsimile: (212) 310-8007
Dallas, Texas 75201
Telephone: (214) 659-4400 SPECIAL CORPORATE AND FINANCE
Facsimile: (214) 659-4401 COUNSEL FOR THE DEBTORS
COUNSEL FOR THE DEBTORS
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - - - - - -X
In re: Chapter 11
:
NEXTWAVE PERSONAL COMMUNICATIONS INC., Case No. 98 B 21529 (ASH)
NEXTWAVE POWER PARTNERS INC., : Case No. 98 B 21530 (ASH)
NEXTWAVE PARTNERS INC., Case No. 98 B 21531 (ASH)
NEXTWAVE WIRELESS INC., and : Case No. 98 B 21532 (ASH)
NEXTWAVE TELECOM INC., Case No. 98 B 23303 (ASH)
:
Debtors. Jointly Administered Under
: Case No. 98 B 21529 (ASH)
- - - - - - - - - - - - - - - - - - - - - - -X
FIRST AMENDED JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11 OF
THE BANKRUPTCY CODE OF NEXTWAVE PERSONAL COMMUNICATIONS
INC., NEXTWAVE POWER PARTNERS INC., NEXTWAVE PARTNERS
INC., NEXTWAVE WIRELESS INC. AND NEXTWAVE TELECOM INC.
------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
1.1 Administrative Claim.........................................................................1
1.2 Administrative Convenience Claim.............................................................1
1.3 Adversary Proceeding.........................................................................1
1.4 Allowed......................................................................................1
1.5 Allowed Bridge Noteholders Claim.............................................................2
1.6 Avoidance Decision...........................................................................2
1.7 Avoidance Judgment...........................................................................2
1.8 Ballot.......................................................................................2
1.9 Bankruptcy Code..............................................................................2
1.10 Bankruptcy Court.............................................................................2
1.11 Bankruptcy Rules.............................................................................2
1.12 Bridge Notes.................................................................................2
1.13 Bridge Noteholders...........................................................................2
1.14 Bridge Noteholder Claim......................................................................3
1.15 Business Day.................................................................................3
1.16 Cash.........................................................................................3
1.17 CDMA California Partners Claim...............................................................3
1.18 Cellexis.....................................................................................3
1.19 Chapter 11 Cases.............................................................................3
1.20 Claim........................................................................................3
1.21 Committee....................................................................................3
1.22 Confirmation Date............................................................................3
1.23 Confirmation Hearing.........................................................................4
1.24 Confirmation Order...........................................................................4
1.25 Contract Notice..............................................................................4
1.26 Current Active Employees.....................................................................4
1.27 Debtors......................................................................................4
1.29 DIP Loan Agreement...........................................................................4
1.30 DIP Loan Claims..............................................................................4
1.31 Disbursing Agent.............................................................................4
1.32 Disclosure Statement.........................................................................4
1.33 Disputed Claim...............................................................................4
1.34 Distribution Date............................................................................5
1.35 Effective Date...............................................................................5
1.36 Equity Interest..............................................................................5
1.37 Existing Options/Warrants....................................................................5
1.38 Existing NTI Series A Common Stock...........................................................5
1.39 Existing NTI Series B Common Stock...........................................................5
A-i
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TABLE OF CONTENTS (cont'd)
Page
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1.40 FCC..........................................................................................5
1.41 FCC Claims...................................................................................5
1.42 FCC C Block Notes............................................................................5
1.43 FCC F Block Notes............................................................................5
1.44 FCC NPCI Claim...............................................................................5
1.45 FCC NPPI Claim...............................................................................6
1.46 Fee Application..............................................................................6
1.47 Fee Claim....................................................................................6
1.48 General Unsecured Claim......................................................................6
1.49 Hanareum Claims..............................................................................6
1.50 Hughes.......................................................................................6
1.51 Hughes Claims................................................................................7
1.52 Incentive Option Shares......................................................................7
1.53 Indenture....................................................................................7
1.54 Intercompany Claim...........................................................................7
1.55 Intercreditor Agreement......................................................................7
1.56 LG InfoComm..................................................................................7
1.57 LG InfoComm Claims...........................................................................7
1.58 License Subsidiaries.........................................................................8
1.59 NPCI.........................................................................................8
1.60 NPI .........................................................................................8
1.61 NPPI ........................................................................................8
1.62 NTI .........................................................................................8
1.63 NTI Senior Redeemable Preferred Stock........................................................8
1.64 NTI Senior Subordinated Notes................................................................8
1.65 NTI Series A Convertible Stock...............................................................8
1.66 NTI Series B Warrants........................................................................8
1.67 NWI..........................................................................................9
1.68 Objection Deadline...........................................................................9
1.69 Other Secured Claim..........................................................................9
1.70 Participant..................................................................................9
1.71 PCS Licenses.................................................................................9
1.72 Person.......................................................................................9
1.73 Petition Date................................................................................9
1.74 Plan.........................................................................................9
1.75 Plan Documents...............................................................................9
1.76 Plan Securities.............................................................................10
1.77 Prime Rate..................................................................................10
1.78 Priority Non-Tax Claim......................................................................10
1.79 Priority Tax Claim..........................................................................10
1.80 Professional Person.........................................................................10
A-ii
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TABLE OF CONTENTS (cont'd)
Page
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1.81 Reorganized Debtors.........................................................................10
1.82 Samyang.....................................................................................10
1.83 Schedules...................................................................................10
1.84 Secured Claims..............................................................................10
1.85 Senior Claims...............................................................................10
1.86 Statements of Financial Affairs.............................................................10
1.87 Substantial Consummation....................................................................11
1.90 Vendor Financing............................................................................11
1.91 Vendor Financing Documents..................................................................11
1.92 Voting Deadline.............................................................................11
1.93 Withheld Distribution Amount................................................................11
ARTICLE II
INTERPRETATION AND CONSTRUCTION.........................................................................11
2.1 Interpretation..............................................................................11
2.2 Construction and Application of Bankruptcy Code Definitions.................................11
2.3 Other Terms.................................................................................12
2.4 Plan Documents..............................................................................12
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS...........................................................12
3.1 NTI Classes.................................................................................12
3.2 NPCI Classes................................................................................13
3.3 NPI Classes.................................................................................13
3.4 NPPI Classes................................................................................14
3.5 NWI Classes.................................................................................14
3.6 Administrative Claims and Priority Tax Claims...............................................14
ARTICLE IV
TREATMENT OF CLAIMS AND EQUITY INTERESTS................................................................14
4.1 Classes 1A, 2A, 3A, 4A and 5A - Priority Non-Tax Claims.....................................14
4.2 Classes 1B, 2B, 3B, 4B, and 5B - Administrative
Convenience Claims..........................................................................14
4.3 Classes 1C, 2C, 3C, 4C and 5C - Other Secured Claims........................................15
4.4 Class 2D - FCC NPCI Claim...................................................................15
4.5 Class 4D - FCC NPPI Claim...................................................................15
4.6 Classes 1G, 3D, 4E and 5D - Hanareum Claims.................................................15
4.7 Classes 1D and 2E - LG InfoComm Claims......................................................15
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TABLE OF CONTENTS (cont'd)
Page
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4.8 Class 1F - CDMA California Partners Claim...................................................15
4.9 Class 1E - Hughes Claims....................................................................16
4.10 Classes 1H, 3E, 4F, and 5E - Bridge Noteholders Claims......................................16
4.11 Classes 1I, 2G, 3F, 4G and 5F - General Unsecured Claims....................................16
4.12 Classes 1J, 2H, 3G, 4H and 5G - Intercompany Claims.........................................16
4.13 Classes 2I, 3H, 4I and 5H - Equity Interests in NPCI, NPPI, NPI and
NWI.........................................................................................16
4.14 Class 1K - Existing NTI Series A Common Stock...............................................16
4.15 Class 1L - Existing NTI Series B Common Stock...............................................16
4.16 Class 1M - Existing Options/Warrants........................................................16
4.17 Conversion Rights...........................................................................16
ARTICLE V
TREATMENT OF UNCLASSIFIED CLAIMS........................................................................17
5.1 Administrative Claims.......................................................................17
5.1.1 Time for Filing................................................................17
5.1.2 Allowance......................................................................17
5.1.3 Payment........................................................................17
5.1.4 DIP Loan Claims................................................................17
5.2 Priority Tax Claims.........................................................................18
5.3 Confirmation Bonus Pool.....................................................................18
ARTICLE VI
ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS OR EQUITY INTERESTS.......................................................18
6.1 Classes Entitled to Vote....................................................................18
6.2 Class Acceptance Requirement................................................................18
6.3 Confirmation Requirements...................................................................18
6.4 Cramdown....................................................................................18
ARTICLE VII
FUNDING OF THE PLAN AND MEANS FOR IMPLEMENTATION........................................................19
7.1 Vendor Financing............................................................................19
7.2 Working Capital - Issuance of NTI Series A Convertible Preferred
Stock.......................................................................................19
7.3 Boards of Directors.........................................................................19
7.4 Other Officers..............................................................................19
7.5 Certificates of Incorporation and Bylaws....................................................19
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TABLE OF CONTENTS (cont'd)
Page
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7.6 Stock Option Plan...........................................................................20
ARTICLE VIII
DISTRIBUTION............................................................................................20
8.1 Date of Distributions.......................................................................20
8.2 Disbursing Agent............................................................................20
8.3 Rights and Powers of Disbursing Agent.......................................................20
8.4 De Minimis Distributions....................................................................21
8.5 Fractional Shares...........................................................................21
8.6 DIP Loan Participants. ....................................................................21
8.7 Means of Payment............................................................................21
8.8 Delivery of Distributions...................................................................21
8.9 Time Bar to Payments........................................................................21
8.10 Surrender of Instruments....................................................................21
ARTICLE IX
PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS...................................................22
9.1 Objection Deadline..........................................................................22
9.2 Prosecution of Objections...................................................................22
9.3 No Distributions Pending Allowance..........................................................22
9.4 Late Filed Claims...........................................................................22
9.5 Distributions Relating to Disputed Claims...................................................22
ARTICLE X
EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................................................23
10.1 Rejection of Executory Contracts............................................................23
10.2 Cure of Defaults............................................................................23
10.3 Rejection Claims............................................................................23
ARTICLE XI
CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS..................................................23
11.1 Conditions to Confirmation..................................................................23
11.2 Conditions to Effective Date................................................................23
11.3 Waiver of Conditions........................................................................24
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TABLE OF CONTENTS (cont'd)
Page
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ARTICLE XII
RETENTION OF JURISDICTION...............................................................................24
12.1 Jurisdiction of the Bankruptcy Court........................................................24
12.2 Failure of Bankruptcy Court to Exercise Jurisdiction........................................25
ARTICLE XIII
EFFECTS OF CONFIRMATION; PROPERTY AND DISCHARGE.........................................................25
13.1 Discharge of Claims and Termination of Certain Equity Interests.............................25
13.2 Discharge of Debtors........................................................................26
13.3 Exculpations................................................................................26
13.4 Injunction Against Interference With Plan...................................................26
13.5 Vesting of Assets...........................................................................26
ARTICLE XIV
SETTLEMENT AND COMPROMISE OF CERTAIN CLAIMS.............................................................27
14.1 Amount of Allowed Claims....................................................................27
ARTICLE XV
MISCELLANEOUS PROVISIONS................................................................................27
15.1 Dissolution of Committee....................................................................27
15.2 Retention of Claims and Causes of Action....................................................27
15.3 Payment of Statutory Fees...................................................................27
15.4 Recognition of Guaranty Rights..............................................................27
15.5 Recognition of Subordination Rights.........................................................28
15.6 Setoff Rights...............................................................................28
15.7 Substantial Consummation....................................................................28
15.8 Revocation..................................................................................28
15.9 Amendments..................................................................................28
15.10 Binding Effect..............................................................................29
15.11 Compliance with Regulations.................................................................29
15.12 No Attorneys' Fees..........................................................................29
15.13 Time........................................................................................29
15.14 Notices.....................................................................................29
15.15 Severability................................................................................30
15.17 Governing Law...............................................................................31
</TABLE>
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NextWave Personal Communications Inc., NextWave Power Partners Inc.,
NextWave Partners Inc., NextWave Wireless Inc., and NextWave Telecom Inc., as
debtors and debtors-in-possession in the above-captioned jointly administered
Chapter 11 cases, hereby propose the following First Amended Joint Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code pursuant to 11 U.S.C. ss.
1121(a). All creditors and equity security holders are encouraged to consult the
accompanying Disclosure Statement as approved by the Bankruptcy Court before
voting to accept or reject this Plan.
NO SOLICITATION MATERIALS, OTHER THAN THE DISCLOSURE STATEMENT AND
RELATED MATERIALS TRANSMITTED THEREWITH AND APPROVED BY THE BANKRUPTCY
COURT HAVE BEEN AUTHORIZED BY THE BANKRUPTCY COURT FOR USE IN
SOLICITING ACCEPTANCES OR REJECTIONS OF THIS PLAN.
ARTICLE I
DEFINITIONS
For the purposes of this Plan, the following terms shall have the
respective meanings set forth below:
1.1 Administrative Claim means any Claim entitled to priority under
sections 503(b), 507(a)(1), 365(d)(3) or 365(d)(10) of the Bankruptcy Code,
including, without limitation (i) any actual and necessary costs and expenses of
preserving the Debtors' estates; (ii) any Fee Claims; (iii) any fees or charges
assessed against the Debtors' estates under 28 U.S.C. ss. 1930; (iv) all costs
and expenses, including any recording fees, transfer taxes and the like, arising
out of or related to the transfer of the Debtors' assets pursuant to this Plan;
and (v) other Claims as ordered by the Bankruptcy Court.
1.2 Administrative Convenience Claim means any General Unsecured Claim
of $20,000 or less, and any General Unsecured Claim in excess of $20,000 that,
by written election of the holder of such Claim made on the Ballot, is reduced
to $20,000.
1.3 Adversary Proceeding means Adversary Proceeding No. 98-5178,
captioned NextWave Personal Communications Inc. v. Federal Communications
Commission, which was commenced on June 8, 1998 by filing an original complaint
with the Bankruptcy Court, as such complaint was twice amended.
1.4 Allowed, when used with respect to any Claim, except an
Administrative Claim or the Bridge Noteholders Claims, the Hughes Claims, the
Hanareum Claims, the LG Claims and the CDMA California Partners Claim, means (i)
such Claim to the extent it is not a Disputed Claim; (ii) such Claim to the
extent it may be allowed pursuant to final order of the Bankruptcy Court; or
(iii)
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a Disputed Claim, proof of which was timely filed with the Bankruptcy Court, and
(A) as to which no objection was filed by the Objection Deadline, unless such
Claim is to be determined in a forum other than the Bankruptcy Court, in which
case such Claim shall not become allowed until determined by final order of such
other forum and allowed by final order of the Bankruptcy Court; or (B) as to
which an objection was filed by the Objection Deadline, to the extent allowed by
a final order of the Bankruptcy Court. "Allowed," when used with respect to any
Equity Interest, means an Equity Interest, proof of which was timely and
properly filed or, if no such proof of Equity Interest was filed, an Equity
Interest that has been or is hereafter listed by the Debtors on their Schedules
as liquidated in amount and not disputed or contingent, and, in either case, as
to which no objection to the allowance thereof has been interposed on or before
the applicable period of limitation fixed by the Bankruptcy Code, the Bankruptcy
Rules, the Bankruptcy Court, or the Plan, or as to which any objection has been
determined by a final order to the extent such objection is determined in favor
of the respective holder.
1.5 Allowed Bridge Noteholders Claims means $174,327,294.98, in the
aggregate, for all Bridge Noteholders Claims.
1.6 Avoidance Decision means, collectively, the Bankruptcy Court's (i)
May 12, 1999 Decision on Constructive Fraudulent Conveyance Claim and (ii) June
22, 1999 Decision on Remedy in the Adversary Proceeding.
1.7 Avoidance Judgment means the Bankruptcy Court's Final Judgment on
Avoidance Claim in the Adversary Proceeding dated June 11, 1999, pursuant to
which the Bankruptcy Court avoided NPCI's obligations to the FCC in respect of
its 63 C Block PCS licenses and determined that the FCC was entitled to enforce
such obligation in the principal amount of $548,846,194.
1.8 Ballot means the ballot upon which holders of Claims and Equity
Interests in classes entitled to vote on the Plan vote to accept or reject the
Plan.
1.9 Bankruptcy Code means title 11 of the United States Code, 11 U.S.C.
ss. 101 et seq., as in effect on the Petition Date, together with all
amendments, modifications and replacements of the foregoing as the same may
exist on any relevant date to the extent applicable to the Chapter 11 Cases.
1.10 Bankruptcy Court means the United States Bankruptcy Court for the
Southern District of New York.
1.11 Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure,
as prescribed by the United States Supreme Court pursuant to 28 U.S.C. ss. 2075.
1.12 Bridge Notes means the Convertible Senior Subordinated Notes due
2002 issued by NTI.
1.13 Bridge Noteholders means the holders of Bridge Notes.
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1.14 Bridge Noteholder Claim means the Claim of a Bridge Noteholder
against NTI, NPPI, NPI and NWI arising under, in connection with or relating to
the following: Convertible Senior Subordinated Notes due 2002; Securities
Purchase Agreement dated as of April 9, 1996, among NTI and the signatories
thereto; Subsidiary Guarantees dated April 9, 1996 among TC and the Bridge
Noteholders, June 6, 1996 among NWI and the Bridge Noteholders, and August 1,
1996 among NPI and the Bridge Noteholders; Stock Pledge and Subordination
Agreement dated June 18, 1997 among NTI, NPI and the Bridge Noteholders; and any
and all modifications or amendments or documents related thereto in effect on
the Petition Date. The Bridge Noteholder Claims, for the purposes of this Plan
only, and without prejudice to any party's rights to contest the amount,
allowability or validity of such claims if this Plan is not confirmed or does
not become effective, are allowed in the aggregate amount of $174,327,294.98.
1.15 Business Day means any day other than a Saturday, Sunday or "legal
holiday" as defined in Bankruptcy Rule 9006(a).
1.16 Cash means U.S. Dollars, check drawn on a domestic bank or wire
transfer from a domestic bank.
1.17 CDMA California Partners Claim means the Claim of CDMA California
Partners, LLC, against NTI arising under, in connection with or relating to the
following: Settlement and Debt Restructuring Agreement by and between NTI and
CDMA California Partners dated April 24, 1998; Warrant to Purchase Shares of
Series B Common Stock of NTI issued April 17, 1998; Stock Pledge and
Subordination Agreement dated April 24, 1998; and any and all modifications or
amendments or documents related thereto in effect on the Petition Date. The CDMA
California Partners Claim, for the purposes of this Plan only, and without
prejudice to any party's rights to contest the amount, allowability or validity
of such Claim if this Plan is not confirmed or does not become effective, is
allowed in the aggregate amount of $10,694,444.44.
1.18 Cellexis means Cellexis International, Inc.
1.19 Chapter 11 Cases means the above-captioned, jointly administered
Chapter 11 bankruptcy cases of the Debtors.
1.20 Claim means a claim against a Debtor within the meaning of section
101(5) of the Bankruptcy Code.
1.21 Committee means the current Official Committee of Unsecured
Creditors in the Chapter 11 Cases appointed pursuant to section 1102 of the
Bankruptcy Code on July 27, 1998 in the Chapter 11 cases of NPCI, NPPI, NPI and
NWI, and as amended on February 26, 1999 due to the commencement of NTI's
Chapter 11 case.
1.22 Confirmation Date means the date on which the clerk of the
Bankruptcy Court enters the Confirmation Order on the docket maintained by the
clerk's office.
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1.23 Confirmation Hearing means the hearing at which the Bankruptcy
Court considers confirmation of the Plan pursuant to sections 1128 and 1129 of
the Bankruptcy Code.
1.24 Confirmation Order means the order of the Bankruptcy Court
confirming this Plan pursuant to section 1129 of the Bankruptcy Code.
1.25 Contract Notice means the notice to parties in interest listing
the executory contracts and unexpired leases the Debtors intend to assume under
this Plan which will be filed with the Bankruptcy Court fifteen (15) days prior
to the Confirmation Hearing and served upon affected Persons.
1.26 Current Active Employees means all employees of the Debtors on the
Confirmation Date, except for NTI's current Chief Executive Officer and
President and those employees on leave of absence.
1.27 Debtors means NPCI, NPPI, NPI, NWI and NTI, collectively, as
debtors and debtors-in-possession.
1.28 Deferred Interest means all interest accrued on (i) the FCC C
Block Notes and (ii) the FCC F Block Notes, each from April 1, 1998 through the
Petition Date.
1.29 DIP Loan Agreement means that certain Post-Petition Loan and
Security Agreement, dated as of June 16, 1998, by and among Cellexis and NPCI,
NPPI, NPI, NWI and NTI, as the same may have been amended from time to time.
1.30 DIP Loan Claims mean the Administrative Claims of Cellexis and any
Participant arising under the DIP Loan Agreement, consisting of the aggregate
amount of outstanding and unpaid principal and interest, and any other amounts
payable under the DIP Loan Agreement.
1.31 Disbursing Agent means any entity in its capacity as a disbursing
agent under section 8.2 of this Plan. The Reorganized Debtors may, in their sole
discretion, act as Disbursing Agent hereunder.
1.32 Disclosure Statement means the disclosure statement of even date
herewith relating to the Plan and any amendments thereto, as approved by the
Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code and Bankruptcy
Rule 3017.
1.33 Disputed Claim means (i) every Claim that is scheduled by the
Debtors as disputed, contingent or unliquidated; or (ii) every Claim or part
thereof, proof of which has been filed with the Bankruptcy Court and to which an
objection to the allowance thereof, in whole or in part, has been interposed on
or prior to the Objection Deadline or such other time as may be directed by the
Bankruptcy Court and which objection has not been withdrawn, settled or
determined by a final order of the Bankruptcy Court.
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1.34 Distribution Date means the later of (i) the Effective Date or
within 10 days thereafter; (ii) the date by which an Allowed Claim is to be paid
hereunder if other than the Effective Date; or (iii) within twenty (20) days
after the date on which a Disputed Claim becomes an Allowed Claim.
1.35 Effective Date means the first Business Day on or after the
Confirmation Date on which (i) no stay of the Confirmation Order is in effect;
and (ii) all the conditions to the effectiveness of the Plan have been satisfied
or waived as provided in Article XI hereof.
1.36 Equity Interest means any "equity security" of the Debtors, as
that term is defined in section 101(16) of the Bankruptcy Code.
1.37 Existing Options/Warrants means all options, warrants or rights,
contractual or otherwise, to acquire an Equity Interest in NTI, including all
incentive stock options, non-qualified stock options, and stock appreciation
rights granted under any NTI sponsored stock option plans.
1.38 Existing NTI Series A Common Stock means all the shares of Series
A Common Stock par value $0.0001 of NTI, issued and outstanding on December 23,
1998.
1.39 Existing NTI Series B Common Stock means (i) all the shares of
Series B Common Stock par value $0.0001 of NTI, issued and outstanding on
December 23, 1998; (ii) any shares of Series B Common Stock par value $0.0001 of
NTI to issued in accordance with the proper exercise of any conversion rights or
Existing Options/Warrants prior to the Voting Deadline; and (iii) any shares of
Series B Common Stock subject to issuance on or after the Effective Date
pursuant to the terms of the Plan.
1.40 FCC means the Federal Communications Commission, an agency of the
United States government.
1.41 FCC Claims means, collectively, the FCC NPCI Claim and the FCC
NPPI Claim.
1.42 FCC C Block Notes means the Amended and Restated Installment
Payment Plan Notes to be executed by NPCI in favor of the FCC in respect of
NPCI's 63 C Block PCS licenses, with an aggregate face amount of $548,846,194,
the form of which will be submitted to the Bankruptcy Court for approval as a
Plan Document.
1.43 FCC F Block Notes means the Amended and Restated Installment
Payment Plan Notes to be executed by NPPI in favor of the FCC in respect of
NPPI's 32 F Block PCS licenses, with an aggregate face amount of $98,551,806,
the form of which will be submitted to the Bankruptcy Court for approval as a
Plan Document.
1.44 FCC NPCI Claim means the Claim of the FCC against NPCI in the
aggregate principal amount of $548,846,194, as determined by the Avoidance
Decision and the Avoidance
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Judgment, and as evidenced by the FCC C Block Notes, plus (i) interest thereon
at 6.5% per annum from the Petition Date to the Confirmation Date and (ii)
Suspension Interest and Deferred Interest.
1.45 FCC NPPI Claim means the Claim of the FCC against NPPI in the
aggregate principal amount of $98,551,806, as evidenced by the FCC F Block
Notes, plus (i) interest thereon at 6.25% per annum from the Petition Date to
the Confirmation Date and (ii) Suspension Interest and Deferred Interest.
1.46 Fee Application means an application of a Professional Person
under sections 330, 331 or 503 of the Bankruptcy Code for allowance of a Fee
Claim.
1.47 Fee Claim means any Claim by a Professional Person under sections
330, 331 or 503 of the Bankruptcy Code for allowance of compensation and/or
reimbursement of expenses in the Chapter 11 Cases.
1.48 General Unsecured Claim means any Claim against the Debtors that
is not an Administrative Claim, a Priority Tax Claim, a Priority Non-Tax Claim,
an Administrative Convenience Claim, a Secured Claim, an Intercompany Claim, or
one of the FCC Claims.
1.49 Hanareum Claims means the Claims of Hanareum Banking Corporation
against NTI, NPPI, NPI and NWI arising under, in connection with or relating to
the following: Registration Rights Agreement by and between NTI and Samyang
dated April 4, 1997; Loan Agreement by and between NTI and Samyang dated April
4, 1997; Loan Agreement by and between NTI and Samyang dated June 18, 1997;
Warrants to purchase shares of NTI Series B Common Stock issued February 6,
1997, March 21, 1997, April 4, 1997, May 8, 1997 and June 18, 1997; Promissory
Note dated March 21, 1997 in the original principal amount of $3,000,000; Senior
Pledge Agreement by and between NTI and Samyang dated June 18, 1997; Promissory
Note dated April 4, 1997 in the original principal amount of $6,000,000;
Promissory Note dated May 8, 1997 in the original principal amount of
$13,600,000; Loan Agreement between NTI and Samyang dated March 21, 1997;
Promissory Note dated February 6, 1997 in the original principal amount of
$1,000,000; Subordinated Pledge Agreement by and between NTI and Samyang dated
June 18, 1997; Loan Agreement by and between NTI and Samyang dated February 6,
1997; Second Subordinated Pledge Agreement by and between NTI and Samyang dated
June 18, 1997; Subsidiary Guarantee by and between NTI and Samyang dated June
18, 1997; Loan Agreement by and between NTI and Samyang dated May 8, 1997;
Promissory Note dated June 18, 1997 in the original principal amount of
$11,000,000; Subordinated Pledge Agreement by and between NPI and Samyang dated
June 18,1997; Second Subordinated Pledge Agreement by and between NPI and
Samyang dated June 18, 1997; Subsidiary Guarantee by and among Samyang, NWI,
NPI, NPPI and TC dated June 18, 1997; and any and all modifications or
amendments or documents related thereto in effect on the Petition Date. The
Hanareum Claims are allowed, for the purposes of this Plan only, and without
prejudice to any party's rights to contest the amount, allowability or validity
of such Claims if this Plan is not confirmed or does not become effective, in
the aggregate amount of $40,095,311.73.
1.50 Hughes means Hughes Network Systems, Inc.
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1.51 Hughes Claims means the Claims of Hughes against NTI and NPCI
arising under, in connection with or relating to the following: Registration
Rights Agreement by and between NTI and Hughes dated October 29, 1996; Letter
Agreement by and between NTI and Hughes dated January 8, 1997; Security
Agreement by and between NTI and Hughes dated January 8, 1997; Letter Agreement
by and between NTI and Hughes dated March 28, 1997; Letter Agreement by and
between NPCI and Hughes dated March 28, 1997; Letter Agreement by and between
NTI and Hughes dated June 18, 1997; Convertible Secured Promissory Note dated
October 30, 1996 in the original principal amount of $35 million; Convertible
Promissory Note Subscription Agreement dated October 29, 1996; and all
modifications or amendments or documents related thereto in effect on the
Petition Date. The Hughes Claims are allowed, for the purposes of this Plan
only, and without prejudice to any party's rights to contest the amount,
allowability or validity of such Claims if this Plan is not confirmed or does
not become effective, in the aggregate amount of $44,718,333.33.
1.52 Incentive Option Shares means options to purchase up to 11% of the
total number of shares of NTI Series B Common Stock on a fully diluted basis as
of the Effective Date.
1.53 Indenture means the indenture governing the NTI Senior
Subordinated Notes, dated as of the Effective Date, the form of which will be
submitted to the Bankruptcy Court for approval as a Plan Document.
1.54 Intercompany Claim means any Claim by (i) any of the Debtors
against another Debtor, or (ii) a direct or indirect subsidiary of NTI against
any Debtor on account of any intercompany notes, claims or accounts arising
prior to the Petition Date.
1.55 Intercreditor Agreement means an agreement among the holders of
Senior Claims, other than Hughes and LG InfoComm, with respect to the
liquidation and payment priority of the Hanareum Claims, the CDMA California
Partners Claim and the Bridge Noteholders Claims, the form of which will be
submitted to the Bankruptcy Court for approval as a Plan Document, and shall be
binding upon the signatories thereto and their respective successors and
assigns. The Intercreditor Agreement may be either a separate agreement or
embodied in the terms of the Indenture.
1.56 LG InfoComm means, collectively, LG InfoComm, Inc. and LG
Information & Communications Ltd.
1.57 LG InfoComm Claims means the Claims of LG InfoComm against NTI and
NPCI, arising under, in connection with or relating to the following: Loan
Agreement by and between NTI and LG InfoComm dated February 23, 1996; Loan
Agreement by and between NTI and LG InfoComm dated January 6, 1997; Stock Pledge
Agreement by and between NTI and LG InfoComm dated January 6, 1997; Stock Pledge
Agreement by and between NTI and LG InfoComm dated June 3, 1997; Amendment No. 2
to Loan Agreement by and between NTI and LG InfoComm dated June 3, 1997; and all
modifications or amendments or documents related thereto in effect on the
Petition Date. The LG InfoComm Claims are allowed, for the purposes of this Plan
only, and without
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prejudice to any party's rights to contest the amount, allowability or validity
of such Claims if this Plan is not confirmed or does not become effective, in
the aggregate amount of $42,763,924.55.
1.58 License Subsidiaries means the direct or indirect subsidiaries of
NTI now existing or hereafter formed holding PCS Licenses.
1.59 NPCI means NextWave Personal Communications Inc.
1.60 NPI means NextWave Partners Inc.
1.61 NPPI means NextWave Power Partners Inc.
1.62 NTI means NextWave Telecom Inc.
1.63 NTI Senior Redeemable Preferred Stock means the Redeemable
Preferred Stock of NTI, senior to all other equity securities of NTI, having a
stated value of $100.00 per share, and an aggregate stated value equal to the
total amount of Allowed General Unsecured Claims, to be issued and outstanding
as of the Effective Date and having the rights, privileges and preferences set
forth in the certificate of designation of preferred stock, the form of which
will be submitted to the Bankruptcy Court for approval as a Plan Document.
1.64 NTI Senior Subordinated Notes means the 12% Senior Subordinated
Notes due 2009 of NTI, having a maximum aggregate principal amount of
$225,000,000 to be issued and outstanding on the Effective Date, the form of
which will be submitted to the Bankruptcy Court for approval as a Plan Document.
Such Senior Subordinated Notes shall be secured by a lien on the outstanding
stock of the License Subsidiaries and any proceeds thereof, which lien shall be
subordinate as a silent second lien to any and all liens provided in connection
with Vendor Financing or any subsequent vendor financing, and shall carry the
terms and conditions set forth in the Indenture and the form of NTI Senior
Subordinated Note which will be submitted to the Bankruptcy Court for approval
as Plan Documents. The holders of NTI Senior Subordinated Notes shall have no
right of acceleration or to exercise remedies absent acceleration and the
exercise of remedies by the providers of the Vendor Financing or any vendors
providing financing to the Reorganized Debtors throughout the term of the NTI
Senior Subordinated Notes.
1.65 NTI Series A Convertible Stock means the Series A Convertible
Preferred Stock of NTI, with a stated value of $100.00 per share, to be issued
and outstanding as of the Effective Date and having the rights, privileges and
preferences set forth in the certificate of designation of preferred stock, the
form of which will be submitted to the Bankruptcy Court for approval as a Plan
Document.
1.66 NTI Series B Warrants means the warrants to be issued under the
Plan to purchase shares of NTI Series B Common Stock with an exercise price of
$3.00 per share and an expiration date of the fifth anniversary of the Effective
Date. Each NTI Series B Warrant shall be exercisable
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into one share of NTI Series B Common Stock. The form of warrant agreement will
be submitted to the Bankruptcy Court for approval as a Plan Document.
1.67 NWI means NextWave Wireless Inc.
1.68 Objection Deadline means the date by which objections to Claims
shall be filed with the Bankruptcy Court and served upon the holders of Claims,
which date shall be (i) for Administrative Claims, the date that is thirty (30)
days after a request for payment of such Claim has been filed and served in
accordance with section 5.1.1 of the Plan; and (ii) for all other Claims, the
date that is 180 days after the Effective Date.
1.69 Other Secured Claim means any Secured Claim that is not a Senior
Claim.
1.70 Participant means any holder of a participation interest under the
DIP Loan Agreement.
1.71 PCS Licenses means, collectively, the C, D, E and F Block PCS
licenses held by the Debtors as of the date hereof.
1.72 Person means any individual, corporation, general partnership,
limited partnership, limited liability company, limited liability partnership,
association, joint stock company, joint venture, estate, trust, unincorporated
organization, government or any agency or political subdivision thereof or other
entity.
1.73 Petition Date means June 8, 1998, with respect to NPCI, NPPI, NPI
and NWI, and December 23, 1998, with respect to NTI.
1.74 Plan means this joint Chapter 11 plan of reorganization (including
all documents and supplements related hereto) either in its present form or as
it may hereafter be altered, amended or modified from time to time.
1.75 Plan Documents means all the documents that aid in effectuating
the Plan, substantially in the forms filed with the Bankruptcy Court fifteen
(15) days prior to the Confirmation Hearing, as the same may be amended or
modified, including, but not limited to (i) the FCC C Block Notes; (ii) the FCC
F Block Notes; (iii) the Vendor Financing Documents; (iv) the executed
commitment letters or subscription agreements to purchase shares of NTI Series A
Convertible Preferred Stock; (v) the NTI Senior Subordinated Notes; (vi) the
certificates of designation for the NTI Senior Redeemable Preferred Stock and
the NTI Series A Convertible Preferred Stock; (vii) the NTI Series B Warrants;
(viii) the Indenture; (ix) the Intercreditor Agreement; (x) the amended and
restated certificates of incorporation and bylaws for each of the Reorganized
Debtors; and (xi) all related documents in connection with each of the
foregoing.
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1.76 Plan Securities means, collectively, the NTI Senior Subordinated
Notes, the NTI Senior Redeemable Preferred Stock, the NTI Series A Convertible
Preferred Stock, and the NTI Series B Warrants.
1.77 Prime Rate means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City.
1.78 Priority Non-Tax Claim means any Claim that is entitled to
priority in payment pursuant to sections 507(a) (3), (4), (5), (6), (7) or (9)
of the Bankruptcy Code and that is not an Administrative Claim or a Priority Tax
Claim.
1.79 Priority Tax Claim means any Claim of a governmental unit of the
kind specified in section 507(a)(8) of the Bankruptcy Code.
1.80 Professional Person means any Person retained or to be compensated
by the Debtors pursuant to sections 327, 328, 330, 331, 503(b) or 1103 of the
Bankruptcy Code.
1.81 Reorganized Debtors means the Debtors, as reorganized under and
pursuant to this Plan, from and after the Effective Date; or, if the term
Reorganized is used with respect to an individual Debtor, such individual
Debtor, as reorganized under and pursuant to this Plan, from and after the
Effective Date.
1.82 Samyang means Samyang Merchant Bank.
1.83 Schedules means the schedules of assets and liabilities filed by
the Debtors with the Bankruptcy Court pursuant to section 521(1) of the
Bankruptcy Code as they may have been or may hereafter be amended or
supplemented in accordance with Bankruptcy Rule 1009 or any order of the
Bankruptcy Court.
1.84 Secured Claims means (i) the Senior Claims, and (ii) any other
Claim secured by a lien on collateral to the extent of the value of such
collateral (a) as set forth in this Plan, (b) as agreed to by the holder of such
Claim and the Debtors or (c) as determined by a final order in accordance with
section 506(a) of the Bankruptcy Code, or in the event that such Claim is
subject to setoff under section 553 of the Bankruptcy Code, to the extent of
such setoff.
1.85 Senior Claims means, collectively, the Hanareum Claim, the Bridge
Noteholder Claims, the LG InfoComm Claim, the Hughes Claim and the CDMA
California Partners Claim.
1.86 Statements of Financial Affairs means the statements of financial
affairs accompanying the Schedules filed by the Debtors with the Bankruptcy
Court pursuant to section 521(1) of the Bankruptcy Code as they may have been or
may hereafter be amended or supplemented in accordance with Bankruptcy Rule 1009
or any order of the Bankruptcy Court.
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1.87 Substantial Consummation means (i) the transfer of all or
substantially all of the property proposed by the Plan to be transferred; (ii)
assumption by the Debtors or their successors under the Plan of the business or
management of all or substantially all of the property dealt with by the Plan;
and (iii) commencement of distribution under the Plan, all of which shall be
deemed to have occurred on the Effective Date and include, but not be limited
to, issuance of the Plan Securities, execution of the Plan Documents and any
funding thereunder, and the commencement of payment of Allowed Claims.
1.88 Suspension Interest means the entire amount of unpaid interest
that accrued during the period (i) beginning with the grant date of NPCI's C
Block PCS licenses through and including March 31, 1998 and (ii) beginning with
the grant date of NPPI's F Block PCS licenses through and including March 31,
1998.
1.89 TC means TELE*Code Inc.
1.90 Vendor Financing means the financing to be provided to the Debtors
by equipment vendors in connection with the build out of the Debtors' PCS
network and related expenditures, pursuant to the terms and conditions of the
Vendor Financing Documents.
1.91 Vendor Financing Documents means the documents governing the
financing to be provided to the Reorganized Debtors in connection with the build
out of their PCS network and related expenditures, the form of which will be
submitted to the Bankruptcy Court for approval as a Plan Document.
1.92 Voting Deadline means the date set by the Bankruptcy Court by
which Ballots for accepting or rejecting the Plan must be received by the
Debtors for tabulating such Ballots.
1.93 Withheld Distribution Amount means such amounts of property as the
Reorganized Debtors shall withhold from distribution to holders of Claims or
Equity Interests on account of Disputed Claims, in an amount sufficient to
distribute to the holder of each such Claim or Equity Interest its entitlement
to the Cash or Plan Securities to be distributed hereunder, pending the
allowance or disallowance of such Claim or Equity Interest, in whole or in part.
ARTICLE II
INTERPRETATION AND CONSTRUCTION
2.1 Interpretation. Unless otherwise specified herein, all section,
article and exhibit references in this Plan are to the respective section in,
article of, and exhibit to, this Plan, as the same may be amended, waived or
modified from time to time. All headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the provisions of the
Plan.
2.2 Construction and Application of Bankruptcy Code Definitions. Unless
otherwise defined herein, words and terms defined in section 101 of the
Bankruptcy Code shall have the same
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meanings when used in this Plan. Words or terms used but not defined herein
shall have the meaning ascribed to that term or word, if any, in the Bankruptcy
Code. The rules of construction contained in section 102 of the Bankruptcy Code
shall apply to the construction of the Plan.
2.3 Other Terms. The words "herein," "hereof," "hereto," "hereunder,"
and other words of similar import refer to the Plan as a whole and not to any
particular article, section, subsection or clause contained in the Plan.
2.4 Plan Documents. The Plan Documents are incorporated into and made a
part of this Plan as if set forth in full herein.
ARTICLE III
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
The following tables designate the classes of Claims against and Equity
Interests in each of the Debtors and specify which of those classes are (i)
impaired or unimpaired by the Plan in accordance with section 1124 of the
Bankruptcy Code, (ii) entitled to vote to accept or reject the Plan in
accordance with section 1126 of the Bankruptcy Code, and (iii) deemed to reject
the Plan.
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<PAGE>
3.1 NTI Classes
<TABLE>
<CAPTION>
- --------------- ------------------------------------------------------------ ---------------- ------------------
Entitled to
Class Designation Impairment Vote
----- ----------- ---------- ----
<S> <C> <C> <C>
Class 1A Priority Non-Tax Claims unimpaired No
Class 1B Administrative Convenience Claims impaired Yes
Class 1C Other Secured Claims unimpaired No
Class 1D LG InfoComm Claim impaired Yes
Class 1E Hughes Claim impaired Yes
Class 1F CDMA California Partners Claim impaired Yes
Class 1G Hanareum Claim impaired Yes
Class 1H Bridge Noteholder Claims impaired Yes
Class 1I General Unsecured Claims impaired Yes
Class 1J Intercompany Claims impaired No (deemed to
reject)
Class 1K Existing NTI Series A Common Stock impaired Yes
Class 1L Existing NTI Series B Common Stock impaired Yes
Class 1M Existing Options/Warrants impaired Yes
- --------------- ------------------------------------------------------------ ---------------- ------------------
3.2 NPCI Classes
- --------------- ------------------------------------------------------------ ---------------- ------------------
Entitled to
Class Designation Impairment Vote
----- ----------- ---------- ----
Class 2A Priority Non-Tax Claims unimpaired No
Class 2B Administrative Convenience Claims impaired Yes
Class 2C Other Secured Claims unimpaired No
Class 2D FCC NPCI Claim unimpaired No
Class 2E LG InfoComm Claim impaired Yes
Class 2F Hughes Claim impaired Yes
Class 2G General Unsecured Claims impaired Yes
Class 2H Intercompany Claims impaired No (deemed to
reject)
Class 2I Equity Interests unimpaired No
- --------------- ------------------------------------------------------------ ---------------- -----------------
3.3 NPI Classes
- --------------- ------------------------------------------------------------ ---------------- ------------------
Entitled to
Class Designation Impairment Vote
----- ----------- ---------- ----
Class 3A Priority Non-Tax Claims unimpaired No
Class 3B Administrative Convenience Claims impaired Yes
Class 3C Other Secured Claims unimpaired No
Class 3D Hanareum Claim impaired Yes
Class 3E Bridge Noteholder Claims impaired Yes
Class 3F General Unsecured Claims impaired Yes
Class 3G Intercompany Claims impaired No (deemed to
reject)
Class 3H Equity Interests unimpaired No
- -------------- ------------------------------------------------------------ ---------------- -----------------
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<PAGE>
3.4 NPPI Classes
- --------------- ------------------------------------------------------------ ---------------- ------------------
Entitled to
Class Designation Impairment Vote
----- ----------- ---------- ----
Class 4A Priority Non-Tax Claims unimpaired No
Class 4B Administrative Convenience Claims impaired Yes
Class 4C Other Secured Claims unimpaired No
Class 4D FCC NPPI Claim unimpaired No
Class 4E Hanareum Claim impaired Yes
Class 4F Bridge Noteholder Claims impaired Yes
Class 4G General Unsecured Claims impaired Yes
Class 4H Intercompany Claims impaired No (deemed to
reject)
Class 4I Equity Interests unimpaired No
- --------------- ---------------------------------------------------------- ------------------ ------------------
3.5 NWI Classes
- --------------- ------------------------------------------------------------ ---------------- ------------------
Entitled to
Class Designation Impairment Vote
----- ----------- ---------- ----
Class 5A Priority Non-Tax Claims unimpaired No
Class 5B Administrative Convenience Claims impaired Yes
Class 5C Other Secured Claims unimpaired No
Class 5D Hanareum Claim impaired Yes
Class 5E Bridge Noteholder Claims impaired Yes
Class 5F General Unsecured Claims impaired Yes
Class 5G Intercompany Claims impaired No (deemed to
reject)
Class 5H Equity Interests unimpaired No
- --------------- ---------------------------------------------------------- ----------------- -----------------
</TABLE>
3.6 Administrative Claims and Priority Tax Claims. Pursuant to section
1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims
shall not be classified for purposes of voting or receiving distributions under
the Plan. Instead, all such Claims shall be treated separately as unclassified
Claims on the terms set forth in Article V of the Plan.
ARTICLE IV
TREATMENT OF CLAIMS AND EQUITY INTERESTS
4.1 Classes 1A, 2A, 3A, 4A and 5A - Priority Non-Tax Claims. Except to
the extent that a holder of an Allowed Priority Non-Tax Claim against any of the
Debtors has agreed to a different treatment of such Claim, each such holder
shall receive on the Distribution Date, in full satisfaction of such Claim, Cash
in an amount equal to such Claim.
4.2 Classes 1B, 2B, 3B, 4B, and 5B - Administrative Convenience Claims.
In lieu of treatment under Classes 1I, 2G, 3F, 4G or 5F of the Plan, and in full
satisfaction of any and all such Claims in the aggregate, the holder of an
Allowed Administrative Convenience Claim against any of the Debtors shall
receive, on the Distribution Date, Cash equal to the amount of such Allowed
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Administrative Convenience Claim. An election by the holder of a General
Unsecured Claim to reduce its Claim to $20,000 so as to be treated as an
Administrative Convenience Claim, shall be made in the space provided on the
Ballot and, as a condition to such election being valid, such holder must (i)
elect to have all Claims of such holder against all of the Debtors, in the
aggregate, reduced to a total of $20,000 and (ii) vote to accept the Plan. In no
event shall the holder of an Allowed Administrative Convenience Claim receive
more than $20,000 in the aggregate.
4.3 Classes 1C, 2C, 3C, 4C and 5C - Other Secured Claims. Each holder
of an Allowed Secured Claim (other than the holders of the Senior Claims) shall
receive, at the option of the Reorganized Debtors, either (i) the collateral
securing such Allowed Secured Claim, (ii) Cash in an amount equal to the value
of the collateral securing such Allowed Secured Claim, or (iii) the treatment
required under section 1124(2) of the Bankruptcy Code for such Claim to be
unimpaired.
4.4 Class 2D - FCC NPCI Claim. The FCC shall receive, on account of the
FCC NPCI Claim, a lump sum payment on the Distribution Date of Suspension
Interest, Deferred Interest and accrued installment payments pursuant to the
terms of the FCC C Block Notes. Thereafter the FCC shall receive deferred Cash
payments on an installment basis, as and when due, in accordance with the terms
and provisions of the FCC C Block Notes. The FCC shall retain its liens on
NPCI's C Block PCS licenses. At the FCC's election, prior to the Voting
Deadline, in lieu of the above treatment, the FCC shall receive, in full and
final satisfaction and settlement of all claims against NPCI and in exchange for
a dismissal with prejudice of all pending litigation between NPCI and the FCC,
whether on appeal or otherwise, a lump sum cash payment of $548,846,194 on or
before September 30, 2000.
4.5 Class 4D - FCC NPPI Claim. The FCC shall receive, on account of the
FCC NPPI Claim, a lump sum payment on the Distribution Date of Suspension
Interest, Deferred Interest and accrued installment payments pursuant to the
terms of the FCC F Block Notes. Thereafter, the FCC shall receive deferred Cash
payments on an installment basis, as and when due, in accordance with the terms
and provisions of the FCC F Block Notes. The FCC shall retain its lien on NPPI's
F Block PCS licenses.
4.6 Classes 1G, 3D, 4E and 5D - Hanareum Claims. The holders of Allowed
Claims in Classes 1G, 3D, 4E and 5D shall receive on the Distribution Date, in
full satisfaction of such Claims and subject to the Intercreditor Agreement (i)
NTI Senior Subordinated Notes having a principal amount equal to the amount of
such Allowed Claims and (ii) a pro rata distribution of 3,500,000 NTI Series B
Warrants.
4.7 Classes 1D and 2E - LG InfoComm Claims. The holders of Allowed
Claims in Classes 1D and 2E will receive on the Distribution Date, in full
satisfaction of such Claims, (i) Cash in an amount equal to 77% of such Allowed
Claims, in the aggregate and (ii) 1,000,000 NTI Series B Warrants, in the
aggregate.
4.8 Class 1F - CDMA California Partners Claim. Each holder of an
Allowed Claim in Class 1F will receive on the Distribution Date, in full
satisfaction of such Claim and subject to the
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<PAGE>
Intercreditor Agreement, NTI Senior Subordinated Notes having a principal amount
equal to the amount of such Allowed Claim.
4.9 Class 1E - Hughes Claims. The holder of Allowed Claims in Class 1E
shall receive on the Distribution Date, in full satisfaction of such Claims,
Cash in an amount equal to 75% of such Allowed Claims, in the aggregate.
4.10 Classes 1H, 3E, 4F, and 5E - Bridge Noteholders Claims. Each
holder of an Allowed Claim in Classes 1H, 3E, 4F and 5E shall receive on the
Distribution Date, in full satisfaction of such Claim and subject to the
Intercreditor Agreement (i) NTI Senior Subordinated Notes having a principal
amount equal to the amount of such Allowed Claim and (ii) a pro rata
distribution of 32,000,000 NTI Series B Warrants.
4.11 Classes 1I, 2G, 3F, 4G and 5F - General Unsecured Claims. Each
holder of an Allowed General Unsecured Claim shall receive on the Distribution
Date, in full satisfaction of such Claim (i) shares of NTI Senior Redeemable
Preferred Stock having a stated value equal to the amount of such Allowed Claim
and (ii) a pro rata distribution of 3,500,000 NTI Series B Warrants.
4.12 Classes 1J, 2H, 3G, 4H and 5G - Intercompany Claims. On the
Effective Date, all Intercompany Claims shall be extinguished and the holders of
such Claims shall neither receive nor retain any property under the Plan on
account of such Claims.
4.13 Classes 2I, 3H, 4I and 5H - Equity Interests in NPCI, NPPI, NPI
and NWI. The legal, equitable and contractual rights of the holders of Equity
Interests in NPCI, NPPI, NPI and NWI shall remain unaltered.
4.14 Class 1K - Existing NTI Series A Common Stock. Holders of Existing
NTI Series A Common Stock shall retain their existing stock, subject to the
rights, privileges and preferences of the holders of Plan Securities.
4.15 Class 1L - Existing NTI Series B Common Stock. Holders of Existing
NTI Series B Common Stock shall retain their existing stock, subject to the
rights, privileges and preferences of the holders of Plan Securities.
4.16 Class 1M - Existing Options/Warrants. Each holder of an Existing
Option/Warrant shall be entitled to exercise such Existing Options/Warrants
prior to the Voting Deadline in accordance with the procedures specified on the
Ballot. On the Effective Date, all unexercised Existing Options/Warrants shall
be extinguished and terminated.
4.17 Conversion Rights. Each holder of an Allowed Claim having a
contractual right to convert such Claim into shares of Existing NTI Series B
Common Stock may exercise such conversion right for all or any portion of such
Claim at any time prior to the Voting Deadline, to be effective on the Effective
Date, in accordance with the terms and provisions of the documents underlying
such Claim, as modified by the procedures specified in the Disclosure Statement;
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<PAGE>
provided, however, that such conversion rights shall be limited by the Debtors,
in their sole discretion, to the extent necessary to avoid any violation of any
FCC rule, regulation or requirement in effect at the time of such conversion.
Confirmation of the Plan is a "liquidity event", as that term is defined in the
Debtors' outstanding securities and instruments, thereby triggering, inter alia,
conversion or vesting. For purposes of treatment under the Plan, the portion of
an Allowed Claim that is converted into shares of Existing NTI Series B Common
Stock shall cease to be an Allowed Claim and shall receive the treatment
accorded to Class 1L. Any portion of an Allowed Claim subject to conversion
under this section 4.17, but not so converted shall continue to be an Allowed
Claim in the appropriate Class for the amount not converted and receive the
treatment accorded to the holders of Allowed Claims in such Class.
ARTICLE V
TREATMENT OF UNCLASSIFIED CLAIMS
5.1 Administrative Claims. All Administrative Claims against the
Debtors shall be treated as follows:
5.1.1 Time for Filing. All holders of Administrative Claims
(other than the DIP Loan Claim), including Professional Persons holding
Fee Claims, shall file with the Bankruptcy Court a request for payment
of such Claims within sixty (60) days after the Confirmation Date. Any
such request must be served on the Debtors and their counsel and must,
at a minimum, set forth (i) the name of the holder of the Claim; (ii)
the amount of the Claim; and (iii) the basis for the Claim. A failure
to file any such request in a timely fashion will result in the
Administrative Claim in question being discharged and its holder
forever barred from asserting such Claim against the Debtors.
5.1.2 Allowance. An Administrative Claim (other than the DIP
Loan Claim) for which a request for payment has been properly filed
shall become an Allowed Administrative Claim unless an objection is
filed by the Objection Deadline. If an objection is timely filed, the
Administrative Claim in question shall become an Allowed Administrative
Claim only to the extent so allowed by final order of the Bankruptcy
Court.
5.1.3 Payment. Except to the extent that a holder of an
Allowed Administrative Claim has agreed to a different treatment of
such Claim, each holder of an Allowed Administrative Claim (other than
the DIP Loan Claim) shall receive on the Distribution Date, on account
of such holder's Claim, Cash in an amount equal to the amount of such
holder's Allowed Claim.
5.1.4 DIP Loan Claims. Each holder of a DIP Loan Claim shall
receive, in full satisfaction of such Claim (i) shares of NTI Series A
Convertible Preferred Stock having a stated value equal to two (2)
times the aggregate principal amount outstanding under the DIP Loan
Agreement as of the Effective Date and (ii) Cash in an amount equal to
accrued interest
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<PAGE>
and any other amounts payable under the DIP Loan Agreement (except
principal) on the Effective Date.
5.2 Priority Tax Claims. Except to the extent that a holder of an
Allowed Priority Tax Claim has agreed to a different treatment of such Claim,
each holder of an Allowed Priority Tax Claim shall receive on account of such
Claim deferred Cash payments over a six-year period having a value, as of the
Effective Date, equal to the amount of such Allowed Claim. The first of such
deferred Cash payments shall be made on the Distribution Date and thereafter,
shall be made on the anniversary of the Distribution Date in each succeeding
year up to and including the sixth anniversary of the Distribution Date.
5.3 Confirmation Bonus Pool. On the Effective Date, shares from a pool
of up to 6,900,000 shares of NTI Series B Common Stock will be granted to
Current Active Employees or consultants as a confirmation bonus. The allocation
of such shares shall be determined prior to the Confirmation Hearing by NTI's
current Board of Directors, after consultation with the Committee and such other
constituencies who have been involved in the Chapter 11 Cases as the Board deems
appropriate.
ARTICLE VI
ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY
ONE OR MORE CLASSES OF CLAIMS OR EQUITY INTERESTS
6.1 Classes Entitled to Vote. Each impaired class of Claims shall be
entitled to vote separately to accept or reject the Plan as provided in the
order entered by the Bankruptcy Court governing the voting and balloting
procedures applicable to the Plan. Any unimpaired class of Claims shall be
deemed to have accepted the Plan. Any class of Claims or Equity Interests that
will not receive or retain any property on account of such Claims or Equity
Interests shall be deemed to have rejected the Plan.
6.2 Class Acceptance Requirement. A class of Claims shall have accepted
the Plan if it is accepted by at least two-thirds (2/3) in amount and more than
one-half (1/2) in number of the Allowed Claims in such class that have voted on
the Plan.
6.3 Confirmation Requirements. The confirmation requirements of section
1129 of the Bankruptcy Code must be satisfied separately with respect to NPCI,
NPPI, NPI, NWI and NTI. Therefore, if the Plan is not confirmed as to each of
NPCI, NPPI, NPI, NWI and NTI, the Plan shall not be confirmed as to any of the
Debtors.
6.4 Cramdown. If any class of Claims shall fail to accept the Plan in
accordance with section 1126(c) of the Bankruptcy Code, the Debtors intend to
request that the Bankruptcy Court confirm the Plan in accordance with section
1129(b) of the Bankruptcy Code.
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<PAGE>
ARTICLE VII
FUNDING OF THE PLAN AND MEANS FOR IMPLEMENTATION
7.1 Vendor Financing. The Reorganized Debtors are authorized to enter
into and consummate the Vendor Financing Documents and are authorized to form
additional affiliates, as necessary, to facilitate the same.
7.2 Working Capital - Issuance of NTI Series A Convertible Preferred
Stock. New investors will provide a minimum of $225,000,000 and a maximum of
$750,000,000 of working capital to the Reorganized Debtors, subject to the
Reorganized Debtors' sole discretion to increase such amount, in exchange for
the issuance of shares of NTI Series A Convertible Preferred Stock. New
investors who commit to purchase shares of NTI Series A Convertible Preferred
Stock by executing a subscription agreement on or before the date that is ten
(10) business days following the entry of an order approving the Disclosure
Statement shall, in addition to their NTI Series A Convertible Preferred Stock,
receive NTI Series B Warrants to purchase that number of shares equal to two
percent (2%) of the total amount of each new investor's investment accepted by
the Debtors divided by three (3). The Debtors or the Reorganized Debtors, as the
case may be, are (i) authorized to issue the NTI Series A Convertible Preferred
Stock, (ii) authorized to and have the sole and exclusive right to determine the
appropriate investment amount and how many shares of NTI Series A Convertible
Preferred Stock, in the aggregate to issue, based upon their assessment of the
timing and amount of working capital needs, subject to the minimum amount of
$225,000,000, and (iii) authorized to borrow or issue such debt or equity
securities in the future as may be appropriate to finance their operations, so
long as such actions do not contravene the terms of any then outstanding Plan
Securities or the provisions of the then effective certificates of incorporation
of the Reorganized Debtors.
7.3 Boards of Directors. The initial boards of directors of the
Reorganized Debtors shall, at a minimum, be their current boards of directors,
the identities of which are disclosed in the Disclosure Statement. Each of the
Debtors' respective Boards of Directors shall have the President and Chief
Executive Officer of each of the other respective Debtors as a member. There
shall be a minimum of one outside director on each of the Compensation Committee
and the Audit Committee of the Reorganized Debtors. The subsequent tenure and
manner of selection of directors shall be as provided in the certificates of
incorporation and bylaws of the Reorganized Debtors.
7.4 Other Officers. The initial corporate officers of the Reorganized
Debtors shall be their current corporate officers, the identity of which is
disclosed in the Disclosure Statement. The boards of directors of the
Reorganized Debtors shall determine the subsequent selection of officers as
provided in the certificates of incorporation and bylaws of the Reorganized
Debtors.
7.5 Certificates of Incorporation and Bylaws. The amended and restated
certificates of incorporation and bylaws of the Reorganized Debtors shall be
filed as Plan Documents and shall be their current charters and bylaws, as
amended to, inter alia, prohibit the issuance of non-voting
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equity securities (other than any warrants) as required by section 1123(a)(6) of
the Bankruptcy Code, subject to further amendment as permitted by applicable
law.
7.6 Stock Option Plan. The Incentive Option Shares shall be reserved
for management, consultant and/or employee incentive programs to be implemented
by the Board of Directors of Reorganized NTI, as it may deem appropriate and
shall be granted pursuant to a stock option plan and/or stock option agreements
containing such terms and conditions as shall be determined by the Board of
Directors of Reorganized NTI. Such Incentive Option Shares shall be exercisable
at $1.50 per share, or such other price as the Board of Directors may establish,
and vest on a pro rata basis during the 48 months following the Effective Date.
The stock option plan and/or stock option agreements shall be submitted to the
Bankruptcy Court for approval as a Plan Document.
7.7 Securities Exemption. It is an integral and essential element of
this Plan that the issuance of Plan Securities pursuant to this Plan to the
holders of Allowed Claims, and the subsequent exercise of NTI Series B Warrants
by such holders or transferees to purchase the securities issuable thereunder
and the conversion of the NTI Series A Convertible Preferred Stock pursuant to
its terms by such holders or transferees, shall be exempt from registration
under the Securities Act of 1933, as amended, pursuant to section 1145 of the
Bankruptcy Code or, with respect to NTI Series A Convertible Preferred Stock and
NTI Series B Warrants issued to Persons other than such holders of Allowed
Claims, pursuant to Section 4(2) of the Securities Act of 1933. Any such
securities issued to an "affiliate" of the issuer of Plan Securities within the
meaning of the Securities Act of 1933 or any Person the Debtors reasonably
determine to be an "underwriter," and which does not agree to resell such
securities only in "ordinary trading transaction," within the meaning of section
1145(b)(1) of the Bankruptcy Code, shall be subject to such transfer
restrictions and bear such legends as shall be appropriate to ensure compliance
with the Securities Act of 1933.
ARTICLE VIII
DISTRIBUTIONS
8.1 Date of Distributions. Any distributions and deliveries to be made
under the Plan shall be made on the Distribution Date.
8.2 Disbursing Agent. All distributions under this Plan shall be made
by the Reorganized Debtors, as Disbursing Agent, or any other entity designated
by any of the Reorganized Debtors as Disbursing Agent commencing on the
Effective Date.
8.3 Rights and Powers of Disbursing Agent. The Disbursing Agent shall
be empowered to (i) effect all actions and execute all agreements, instruments
and other documents necessary to perform its duties under this Plan; (ii) make
all distributions contemplated hereby; (iii) employ professionals to represent
it with respect to its responsibilities; and (iv) exercise such other powers as
may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant
to this Plan, or as deemed by the Disbursing Agent to be necessary and proper to
implement the provisions hereof.
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8.4 De Minimis Distributions. No distribution of less than one hundred
dollars ($100.00) in Cash or Plan Securities shall be made to any holder of an
Allowed Claim or Equity Interest. Such undistributed consideration shall be
retained by the Reorganized Debtor from which such distribution was to be made.
8.5 Fractional Shares. No fractional shares of Plan Securities or Cash
in lieu thereof shall be distributed. For purposes of distribution, fractional
shares of Plan Securities shall be rounded down to the nearest whole number.
8.6 DIP Loan Participants. For purposes of the distributions under this
Plan, each Participant under the DIP Loan Agreement shall be treated as a lender
thereunder and shall receive its pro rata share of any distribution from the
Disbursing Agent.
8.7 Means of Payment. Payments made pursuant to the Plan shall be in
Cash unless stated otherwise.
8.8 Delivery of Distributions. Subject to Bankruptcy Rule 9010,
distributions to holders of Allowed Claims and Allowed Equity Interests shall be
made at the address of each such holder as set forth on the proofs of claim or
proofs of equity interest filed by such holders (or at the last known address of
such holder as of the Confirmation Date if no proof of claim or proof of equity
interest is filed or if the Debtors have been notified in writing of a change of
address). If any distribution to the holder of an Allowed Claim or Allowed
Equity Interest is returned as undeliverable, no further distributions to such
holder shall be made unless and until the Reorganized Debtors are notified of
such holder's then current address, at which time all missed distributions shall
be made to such holder without post-Effective Date interest. All Claims for
undeliverable distributions shall be made on or before the later of (i) the
second anniversary of the Effective Date; or (ii) ninety (90) days after the
date on which such Claim becomes Allowed. After such date, all unclaimed
property shall revert to the Reorganized Debtors or their successors and the
Claim of any holder with respect to such property shall be discharged and
forever barred.
8.9 Time Bar to Payments. Checks issued by the Reorganized Debtors in
respect of Allowed Claims shall be null and void if not negotiated within six
(6) months after the date of issuance thereof. Requests for reissuance of any
check shall be made directly to the Reorganized Debtors by the holder of the
Allowed Claim with respect to which such check originally was issued. Any claim
in respect of such a voided check shall be made on or before the later of (i)
the second anniversary of the Effective Date; or (ii) ninety (90) days after the
date of issuance of such check. After such date, all Claims in respect of void
checks shall be discharged and forever barred.
8.10 Surrender of Instruments. As a condition to receiving any
distribution under this Plan, each holder of an Existing Option/Warrant, an LG
InfoComm Claim, a Hughes Claim, a CDMA California Partners Claim, a Hanareum
Claim and/or a Bridge Noteholder Claim shall surrender any and all promissory
notes, options, warrants and any and all other and related documents evidencing
such Claim or Equity Interest to the Disbursing Agent. Any such holder that
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<PAGE>
fails to (i) surrender such instrument or (ii) execute and deliver an affidavit
of loss and/or indemnity reasonably satisfactory to the Disbursing Agent before
the first anniversary of the Effective Date shall be deemed to have forfeited
all rights and claims and may not participate in any distribution under this
Plan.
ARTICLE IX
PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS
9.1 Objection Deadline. Objections to Claims shall be filed with the
Bankruptcy Court and served upon the holders of each of the Claims to which
objections are made by the Objection Deadline.
9.2 Prosecution of Objections. On and after the Effective Date, except
as the Bankruptcy Court may otherwise order, the filing, litigation, settlement
or withdrawal of all objections shall be the exclusive right of the Reorganized
Debtors, except that objections to Fee Claims may be made by parties in interest
in accordance with the Bankruptcy Rules.
9.3 No Distributions Pending Allowance. Notwithstanding any other
provision of the Plan, no payment or distribution shall be made in respect of
any Claim or portion thereof to the extent it is a Disputed Claim, unless and
until such Disputed Claim becomes an Allowed Claim. The Reorganized Debtors
shall withhold from the property to be distributed on the Distribution Date the
Withheld Distribution Amount, which shall be an amount sufficient to be
distributed on account of Claims that are not Allowed Claims as of the Effective
Date. Each holder of a Disputed Claim shall receive a distribution on the
Effective Date for the part of such Claim that is not a Disputed Claim.
9.4 Late Filed Claims. Unless otherwise provided in a final order of
the Bankruptcy Court entered on or before the Objection Deadline, any Claim for
which a proof of Claim is filed after the Bar Date shall be deemed disallowed.
The holder of a Claim that is disallowed pursuant to this section 9.4 shall not
receive any distribution on account of such claim and the Reorganized Debtors
shall not need to take any affirmative action for such Claim to be deemed
disallowed.
9.5 Distributions Relating to Disputed Claims. At such time as all or
any portion of a Disputed Claim becomes an Allowed Claim, the Withheld
Distribution Amount, together with the actual interest or dividends earned on
account of such property, shall be released and delivered to the holder of such
Claim on account of the allowance of such Disputed Claim or any portion thereof.
To the extent that all or a portion of a Disputed Claim is disallowed, the
holder of such Claim shall not receive any distribution on account of the
portion of such Claim that is disallowed. The Withheld Distribution Amount
attributable to the disallowed portion of a Disputed Claim shall be retained by
the applicable Reorganized Debtor. In no event, however, shall the holder of an
Allowed Claim be entitled to receive more than the allowed amount of such Claim.
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<PAGE>
ARTICLE X
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
10.1 Rejection of Executory Contracts. All executory contracts and
unexpired leases to which the Debtors are a party which (i) have not previously
been assumed or rejected pursuant to a final order of the Bankruptcy Court; (ii)
are not subject to a pending motion to assume or reject as of the Confirmation
Date; or (iii) are not listed on the Contract Notice shall be deemed rejected by
the Debtors as of the Confirmation Date.
10.2 Cure of Defaults. As to any executory contract or unexpired lease
assumed by the Debtors, the Debtors shall, pursuant to the provisions of
sections 1123(a)(5)(G) and 1123(b)(2) of the Bankruptcy Code and consistent with
the requirements of section 365 of the Bankruptcy Code, cure all defaults under
any such executory contract or unexpired lease within sixty (60) days following
Effective Date.
10.3 Rejection Claims. Any Person that is a party to an executory
contract or unexpired lease with the Debtors that is rejected on or after the
Confirmation Date shall file any Claim for damages as a result of such rejection
within thirty (30) days after the date of such rejection or any such Claim shall
be discharged and forever barred.
ARTICLE XI
CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVENESS
11.1 Conditions to Confirmation. Confirmation of the Plan shall not
occur unless the following conditions have been satisfied or waived by the
Debtors:
11.1.1 The Bankruptcy Court shall have entered the
Confirmation Order, in a form and substance acceptable to the Debtors;
11.1.2 The Debtors shall have received commitments in the
minimum amount of $225,000,000 for the purchase of NTI Series A
Convertible Preferred Stock; and
11.1.3 The Bankruptcy Court shall have approved the Plan
Documents, in a form reasonably acceptable to the Committee.
11.2 Conditions to Effective Date. The Effective Date of the Plan shall
not occur unless and until each of the following conditions have been satisfied
or waived by the Debtors:
11.2.1 The Bankruptcy Court shall have entered a Confirmation
Order, the effect of which shall not have been stayed by a court of
competent jurisdiction;
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<PAGE>
11.2.2 The Debtors shall have received a minimum of
$225,000,000 for the purchase of shares of NTI Series A Convertible
Preferred Stock; and
11.2.3 All Plan Documents shall have been executed and
delivered by the parties thereto, or receipt thereof waived by the
Debtors, and any conditions to the effectiveness of the Plan Documents
shall have been satisfied or waived, as provided therein.
11.3 Waiver of Conditions. Any of the foregoing conditions may be
waived by the Debtors with the consent of the Committee, which consent shall not
be unreasonably withheld, in whole or in part, without notice, at any time,
without an order of the Bankruptcy Court and without any formal action other
than proceeding to consummate this Plan.
ARTICLE XII
RETENTION OF JURISDICTION
12.1 Jurisdiction of the Bankruptcy Court. On or after the Effective
Date, the Bankruptcy Court shall retain and have exclusive jurisdiction over all
matters arising in, arising under and related to the Chapter 11 Cases to the
fullest extent permitted by law for, among other things, the following purposes:
12.1.1 To hear and determine any and all pending applications
for the rejection, assumption or assignment of any executory contracts
or unexpired leases and the allowance of Claims resulting therefrom;
12.1.2 To hear and determine any motion, application,
adversary proceeding, contested matter and other litigated matter
pending on the Confirmation Date;
12.1.3 To hear and determine any causes of actions or claims
retained by the Reorganized Debtors pursuant to section 15.2, whether
or not any contested matter or adversary proceeding with respect to
such causes of action has been commenced as of the Confirmation Date;
12.1.4 To ensure that distributions to holders of Claims are
accomplished as provided in the Plan;
12.1.5 To consider Claims or the allowance, classification,
priority, compromise, estimation or payment of any Claim,
Administrative Claim or Equity Interest;
12.1.6 To enter, implement or enforce such orders as may be
appropriate in the event the Confirmation Order is for any reason
stayed, reversed, revoked, modified or vacated;
12.1.7 To hear and determine all Fee Applications;
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<PAGE>
12.1.8 To hear and determine any application to modify this
Plan in accordance with section 1127 of the Bankruptcy Code, to remedy
any defect or omission or reconcile any inconsistency in this Plan, the
Disclosure Statement or any order of the Bankruptcy Court, including
the Confirmation Order, in such a manner as may be necessary to carry
out the purposes and effects thereof;
12.1.9 To issue injunctions, enter and implement other orders
and take such other actions as may be necessary or appropriate to
restrain interference by any Person with the consummation,
implementation or enforcement of this Plan, the Confirmation Order or
any other order of the Bankruptcy Court;
12.1.10 To hear and determine disputes arising in connection
with the execution, interpretation, implementation, consummation or
enforcement of the Plan;
12.1.11 To take any action and issue such orders as may be
necessary to construe, enforce, implement, execute and consummate the
Plan or to maintain the integrity of the Plan following consummation;
12.1.12 To determine such other matters and for such other
purposes as may be provided in the Confirmation Order;
12.1.13 To hear and determine any matters concerning state,
local and federal taxes, including matters arising under or with
respect to sections 346, 505, and 1146 of the Bankruptcy Code;
12.1.14 To hear and determine any other matters related hereto
and not inconsistent with the Bankruptcy Code and title 28 of the
United States Code; and
12.1.15 To enter a final decree closing the Chapter 11 Cases.
12.2 Failure of Bankruptcy Court to Exercise Jurisdiction. If for any
reason the Bankruptcy Court abstains from exercising or refuses or declines to
exercise jurisdiction over any matter arising in, arising under or related to
the Chapter 11 Cases, including the matters set forth in section 12.1, such
abstention, refusal or declination shall have no effect on the exercise of
jurisdiction by any other court which has jurisdiction over such matter.
ARTICLE XIII
EFFECTS OF CONFIRMATION; PROPERTY AND DISCHARGE
13.1 Discharge of Claims and Termination of Certain Equity Interests.
Except as otherwise provided herein or in the Confirmation Order, the rights
afforded in the Plan and the payments and distributions to be made hereunder
shall discharge all existing debts and Claims, and
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<PAGE>
terminate all Equity Interests, of any kind, nature or description whatsoever
against or in the Debtors or any of their assets or properties to the fullest
extent permitted by section 1141 of the Bankruptcy Code. Except as provided in
the Plan, upon the Effective Date, all existing Claims against the Debtors and
Equity Interests in the Debtors, shall be, and shall be deemed to be, discharged
and terminated, and all holders of Claims and Equity Interests shall be
precluded and enjoined from asserting against the Reorganized Debtors, or any of
their assets or properties, any other or further Claim or Equity Interest based
upon any act or omission, transaction, or other activity of any kind or nature
that occurred prior to the Effective Date, whether or not such holder has filed
a proof of Claim or proof of Equity Interest.
13.2 Discharge of Debtors. Upon the Effective Date and in consideration
of the distributions to be made hereunder, except as otherwise expressly
provided herein, each holder (as well as any trustees and agents on behalf of
each holder) of a Claim or Equity Interest and any affiliate of such holder
shall be deemed to have forever waived, released and discharged the Debtors, to
the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from
any and all Claims, rights and liabilities that arose prior to the Effective
Date. Upon the Effective Date, all such Persons shall be forever precluded and
enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or
asserting any such discharged Claim against or terminated Equity Interest in the
Reorganized Debtors.
13.3 Exculpations. Neither the Debtors, the Disbursing Agent, the
Committee nor any of their respective members, officers, directors, employees,
agents, attorneys or professionals shall have or incur any liability to any
holder of any Claim or Equity Interest for any act or omission arising out of or
in connection with the Chapter 11 Cases, the confirmation of the Plan, the
consummation of the Plan, or the administration of the Plan or property to be
distributed under the Plan, except for willful misconduct or gross negligence.
13.4 Injunction Against Interference With Plan. Upon the entry of the
Confirmation Order, all holders of Claims and Equity Interests and other parties
in interest, along with their respective present or former employees, agents,
officers, directors or principals, shall be enjoined from taking any actions to
interfere with the implementation or consummation of this Plan.
13.5 Vesting of Assets. Upon the Effective Date, pursuant to sections
1141(b) and (c) of the Bankruptcy Code, all property of the Debtors' bankruptcy
estates shall vest in the Reorganized Debtors free and clear of all Claims,
liens, encumbrances, charges and other interests, except as provided herein. The
Reorganized Debtors may operate their business free of any restrictions imposed
by the Bankruptcy Code and, in all respects, as if there were no pending cases
under any chapter or provision of the Bankruptcy Code, except as provided
herein.
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<PAGE>
ARTICLE XIV
SETTLEMENT AND COMPROMISE OF CERTAIN CLAIMS
14.1 Amount of Allowed Claims. Under the Plan, (i) the Bridge
Noteholders Claims shall be Allowed at $174,327,294.98, in the aggregate, (ii)
the Hughes Claims shall be Allowed at $44,718,333.33, in the aggregate, (iii)
the Hanareum Claims shall be Allowed at $40,095,311.73, in the aggregate and
(iv) the LG InfoComm Claims shall be Allowed at $42,763,924.55 , in the
aggregate, each in full and final satisfaction of any and all such Claims
against the Debtors. Each Bridge Noteholder shall have an Allowed Claim in an
amount equal to such holder's pro rata share of the Allowed Bridge Noteholders
Claim based upon the principal amount of Bridge Notes held by such Bridge
Noteholder. Bridge Noteholders shall receive the treatment set forth in section
4.10 of the Plan.
14.2 Release. In exchange for the settlement and compromise set forth
in this Article XIV and the treatment set forth in this Plan, the Debtors shall,
and upon the Confirmation Date, hereby do, release the Bridge Noteholders,
Hughes, Hanareum and LG InfoComm from any and all claims arising out of, in
connection with or relating to the Bridge Noteholders Claims, the Hughes Claims,
the Hanareum Claims and the LG InfoComm Claims, including, but not limited to,
all causes of action arising under Chapter 5 of the Bankruptcy Code, as
discussed in section XIV(B)(2)(c) of the Disclosure Statement.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Dissolution of Committee. The Committee shall dissolve within
sixty (60) days following the Effective Date, unless otherwise ordered by the
Bankruptcy Court.
15.2 Retention of Claims and Causes of Action. Pursuant to section
1123(b)(3) of the Bankruptcy Code, and except as otherwise provided herein, the
Reorganized Debtors will retain and may enforce any and all claims and causes of
action of the Debtors, including, but not limited to, any claims for
contribution or indemnification, and any claims to recover preferences or
fraudulent conveyances pursuant to sections 544, 547, 548, and 550 of the
Bankruptcy Code.
15.3 Payment of Statutory Fees. On the Effective Date, and thereafter
as may be required, the Reorganized Debtors shall pay all fees payable pursuant
to 28 U.S.C. ss. 1930 and prepare and submit such post-Confirmation reports as
may be required with respect thereto.
15.4 Recognition of Guaranty Rights. The classification of and manner
of satisfying all Claims and Equity Interests under the Plan take into
consideration (i) the existence of guaranties by the Debtors of obligations of
other Persons, and (ii) the fact that the Debtors may be joint obligors with
each other or other Persons, with respect to an obligation. All Claims against
any of the
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<PAGE>
Debtors based upon any such guaranties or joint obligations shall be discharged
in the manner provided in the Plan.
15.5 Recognition of Subordination Rights. Except as otherwise provided
in the Plan, all Claims based upon any claimed contractual subordination rights
pursuant to any provision of the Bankruptcy Code or other applicable law, shall
be deemed satisfied by the distributions under the Plan to holders of Allowed
Claims having any such contractual subordination rights. The distributions to
the various classes of Claims under the Plan shall not be subject to levy,
garnishment, attachment or like legal process for any holder of a Claim or
Equity Interest by reason of any claimed contractual subordination rights or
otherwise of the holder of a Claim or Equity Interest against the holder of
another Claim or Equity Interest, except as expressly provided in the Plan. On
the Effective Date, all holders of Claims shall be deemed to have waived any and
all contractual subordination rights that they may have with respect to such
distributions, and the Bankruptcy Court shall permanently enjoin, effective as
of the Effective Date, all such holders from enforcing or attempting to enforce
any such subordination rights with respect to such distributions.
15.6 Setoff Rights. In the event that the Debtors have a claim of any
nature whatsoever against the holder of a Claim, the Debtors may, but are not
required to, setoff against the Claim (and any payments or other distributions
to be made in respect of such Claim hereunder) their claim against the holder,
unless any such claim is or will be released under the Plan. Neither the failure
to set off nor the allowance of any Claim under the Plan shall constitute a
waiver or release by the Debtors of any claim that the Debtors have against the
holder of a Claim.
15.7 Substantial Consummation. On the Effective Date, the Plan shall be
deemed to be substantially consummated under sections 1101(2) and 1127(b) of the
Bankruptcy Code.
15.8 Revocation. The Debtors reserve the right to revoke and withdraw
the Plan prior to the Confirmation Date. If the Debtors revoke or withdraw the
Plan, then the Plan shall be null and void and, in such event, nothing contained
herein shall be deemed to (i) constitute a waiver or release of any Claim by or
against the Debtors or any other Person; (ii) prejudice in any manner the rights
of the Debtors or any other Person; (iii) constitute an allowance of any Claim
or Claims that have been Allowed herein for the purposes hereof; or (iv)
constitute any admissions by the Debtors or any other Person in any further
proceedings involving the Debtors.
15.9 Amendments.
15.9.1 Plan Modifications. This Plan may be amended, modified
or supplemented by the Debtors or the Reorganized Debtors before or
after the Confirmation Date and before Substantial Consummation of the
Plan with the consent of the Committee, which consent shall not be
unreasonably withheld, in the manner provided by section 1127 of the
Bankruptcy Code or as otherwise permitted by law without additional
disclosure pursuant to section 1125 of the Bankruptcy Code, except as
the Bankruptcy Court may otherwise direct; provided, however, that the
Debtors shall provide any party requesting notice of all amendments,
modifications or supplements with appropriate written notice of
A-28
<PAGE>
the same. In addition, after the Confirmation Date, so long as such
action does not adversely affect the treatment of holders of Claims or
Equity Interests under the Plan, the Debtors may institute proceedings
in the Bankruptcy Court to remedy any defect or omission or reconcile
any inconsistencies in the Plan, the Disclosure Statement or the
Confirmation Order, and with respect to such matters as may be
necessary to carry out the purposes and effects of the Plan.
15.9.2 Other Amendments. Prior to the Effective Date the
Debtors may make appropriate technical non-material adjustments and
modifications to this Plan or the Disclosure Statement without further
order or approval of the Bankruptcy Court, provided that such technical
adjustments and modifications do not adversely affect the treatment of
holders of Claims or Equity Interests.
15.10 Binding Effect. The Plan shall be binding upon and inure to the
benefit of the Debtors, the holders of Claims, the holders of Equity Interests,
and their respective successors and assigns, and the Intercreditor Agreement
shall be binding upon and inure to the benefit of the signatories thereto and
their respective successors and assigns; provided, however, that if the Plan is
not confirmed or the Effective Date does not occur, the Plan shall be null and
void and nothing contained herein or in the Disclosure Statement shall be deemed
to (i) constitute a waiver, acknowledgment or release of any Claim by or against
or any Equity Interest in the Debtors or any other Person; (ii) prejudice in any
manner the rights of the Debtors, their respective estates or any other Person;
or (iii) constitute any admission by the Debtors or any other Person with
respect to any matter set forth herein or in the Disclosure Statement, including
any liability on any Claim or the propriety of the classification thereof.
15.11 Compliance with Regulations. Notwithstanding anything contained
herein to the contrary, the right to acquire or transfer Plan Securities shall
be limited, in the Debtors' sole discretion, to ensure compliance with FCC
rules, regulations and requirements in effect at the time of such acquisition or
transfer.
15.12 No Attorneys' Fees. No attorneys' fees shall be paid by Debtors
with respect to any Claim or Equity Interest except as specified herein or as
provided by the Confirmation Order or other final order of the Bankruptcy Court.
15.13 Time. In computing any period of time prescribed or allowed by
this Plan, unless otherwise set forth herein or determined by the Bankruptcy
Court, the provisions of Bankruptcy Rule 9006 shall apply.
15.14 Notices. Any notice required or permitted to be given hereunder
shall be in writing and served upon the following parties so as to be received
by 4:00 p.m. New York time on or before the date required:
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<PAGE>
NextWave Telecom Inc.
3 Skyline Drive
Hawthorne, New York 10532
Attn: Frank A. Cassou, Esq.
Facsimile: (914) 345-1141
- and -
Andrews & Kurth L.L.P.
1717 Main Street, Suite 3700
Dallas, Texas 75201
Attn: Deborah L. Schrier-Rape, Esq.
Facsimile: (214) 659-4401
- and -
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Michael F. Walsh, Esq.
Facsimile: (212) 310-8942
- and -
Kasowitz, Benson, Torres & Friedman, L.L.P.
1301 Avenue of the Americas
New York, NY 10019
Attn: David M. Friedman, Esq.
Facsimile: (212) 506-1800
15.15 Severability. If the Bankruptcy Court determines that any
provision of the Plan is unenforceable either on its face or as applied to any
Claim or Equity Interest, the Debtors may modify the Plan in accordance with
section 15.9 of the Plan so that such provision shall not be applicable to the
holder of any Claim or Equity Interest. Any such determination of
unenforceability shall not (i) limit or affect the enforceability and operative
effect of any other provisions of the Plan; or (ii) require the resolicitation
of any acceptance or rejection of the Plan unless otherwise ordered by the
Bankruptcy Court.
15.16 Ordinary Course. From and after the Effective Date, the
Reorganized Debtors are authorized to and may enter into all transactions,
including, but not limited to, the retention of professionals, and pay any fees
and expenses incurred thereby and in connection therewith in the ordinary course
of business without the need for Bankruptcy Court approval.
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<PAGE>
15.17 Governing Law. Except to the extent the Bankruptcy Code or
Bankruptcy Rules are applicable, this Plan, the Plan Documents and any
agreements, documents, and instruments executed in connection therewith shall be
governed by, and construed and enforced in accordance with the laws of the State
of New York, without giving effect to the principles of conflicts of law
thereof, except as may otherwise be provided in such agreements, documents, and
instruments.
Dated: New York, New York Respectfully submitted,
July 27, 1999
COUNSEL FOR THE DEBTORS NEXTWAVE WIRELESS INC., NEXTWAVE
POWER PARTNERS INC., NEXTWAVE
PARTNERS INC., NEXTWAVE PERSONAL
COMMUNICATIONS INC., NEXTWAVE
TELECOM INC.
- ------------------------------- -------------------------------------
Deborah L. Schrier-Rape Frank A. Cassou
Texas State Bar No. 00785635 Executive Vice President/Secretary
Jason S. Brookner (JB 6166)
ANDREWS & KURTH L.L.P.
1717 Main Street, Suite 3700
Dallas, Texas 75201
Telephone: (214) 659-4400
Facsimile: (214) 659-4401
SPECIAL CORPORATE AND FINANCE
COUNSEL FOR THE DEBTORS
- --------------------------------
Michael F. Walsh (MW 8000)
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
A-31
CROSS-REFERENCE TABLE*
Trust Indenture Act Section Indenture Section
310 (a)(1)......................................................7.10
(a)(2) .....................................................7.10
(a)(3)......................................................N.A.
(a)(4)......................................................N.A.
(a)(5)......................................................7.10
(b).........................................................7.10
(c).........................................................N.A.
311 (a).........................................................7.11
(b).........................................................7.11
(c).........................................................N.A.
312 (a).........................................................2.05
(b)........................................................13.03
(c)........................................................13.03
313 (a).........................................................7.06
(b).........................................................7.06
(b)(1)......................................................N.A.
(b)(2)................................................7.06; 7.07
(c)........................................................13.02
(d).........................................................7.06
314 (a)..................................................4.03; 13.05
(b).........................................................N.A.
(c)(1).....................................................13.04
(c)(2).....................................................13.04
(c)(3)......................................................N.A.
(d).........................................................N.A.
(e)........................................................11.05
(f).........................................................N.A.
315 (a).........................................................7.01
(b).........................................................7.05
(c).........................................................7.01
(d).........................................................7.01
(e).........................................................6.11
316 (a)(last sentence)..........................................2.09
(a)(1)(A)...................................................6.05
(a)(1)(B)...................................................6.04
(a)(2)......................................................N.A.
(b).........................................................6.07
(c).........................................................2.12
317 (a)(1)......................................................6.08
(a)(2)......................................................6.09
(b).........................................................2.04
318 (a)........................................................13.01
(b).........................................................N.A.
(c)........................................................13.01
N.A. means not applicable.
3$j402.DOC
