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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: AUGUST 31, 1995
ACS ENTERPRISES, INC.
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(EXACT NAME OF REGISTRATION AS SPECIFIED IN ITS CHARTER)
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PENNSYLVANIA 1-11584 23-1976139
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(STATE OR OTHER (COMMISSION FILE (I.R.S. EMPLOYEE
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
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2510 METROPOLITAN DRIVE, TREVOSE, PENNSYLVANIA 19053-6789
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE (215) 396-9400
ITEM 5 - OTHER EVENTS
On August 31, 1995, ACS Enterprises, Inc. (the "Company") executed a $36
million Replacement Revolving Credit Agreement (the "Credit Agreement") with
Banque Indosuez, as Agent, and the lending institutions ("Lending
Institutions") listed therein. A portion of the proceeds of the loan was used
to pay in full the indebtedness of the Company to Banque Paribas pursuant to a
credit agreement dated November 9, 1993, as amended.
On March 28, 1995, the Company entered into a Merger Agreement with CAI
Wireless Systems, Inc. ("CAI"), pursuant to which ACS would become a
wholly-owned subsidiary of CAI (the "Merger"). The Credit Agreement provides
that all indebtedness thereunder must be paid in full upon the consummation of
the Merger. In the event that the Credit Agreement has not been terminated and
the loan is not paid in full, the Credit Agreement provides that on each of
February 29, 1996, May 31, 1996 and August 15, 1996, the Company must issue to
Banque Indosuez and the Lending Institutions warrants to acquire in the
aggregate 100,000 shares of Common Stock of the Company at an exercise price of
75% of the then current fair market value of the Common Stock of the Company,
subject to certain reductions in the exercise price (the "Penalty Warrants").
In connection with the execution of the Credit Agreement, Banque Paribas
transferred to Banque Indosuez warrants to acquire 75,000 shares of Common
Stock of the Company, exercisable on or
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before November 9, 2003, at an exercise price of $7.10 per share. Banque
Indosuez also received a cash fee of $250,000 upon the execution of the Credit
Agreement
A copy of the Credit Agreement is attached hereto and made a part hereof
in the form of Exhibit "A". A copy of the Warrant Agreement for the Penalty
Warrants is attached hereto and made a part hereof in the form of Exhibit "B".
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ACS ENTERPRISES, INC.
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(Registrant)
Date: September 1, 1995 /s/ Charles J. Mallon, CFO
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Charles J. Mallon,
Chief Financial Officer
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EXHIBITS
10.A Replacement Revolving Credit Agreement, dated August 31, 1995, by and
among ACS Enterprises, Inc., ACS Home Systems, Inc. and Apartment
Cable Sytems, Inc. as Borrowers, Banque Indosuez, New York branch, as
agent and collateral agent, and the lending institutions listed
therein.
10.B Form of Warrant
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=============================================================================
REPLACEMENT REVOLVING
CREDIT AGREEMENT
among
ACS ENTERPRISES, INC.,
ACS HOME SYSTEMS, INC.,
APARTMENT CABLE SYSTEMS, INC.
and
BANQUE INDOSUEZ, NEW YORK BRANCH,
AS AGENT,
and
THE LENDING INSTITUTIONS LISTED HEREIN
--------------------
Dated as of August 31, 1995
--------------------
$36,000,000
=============================================================================
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit.......................... 1
1.01 Commitments ........................................ 1
1.02 Minimum Amount of Each Borrowing ................... 2
1.03 Notice of Borrowings ............................... 3
1.04 Disbursement of Funds .............................. 3
1.05 Revolving Notes .................................... 4
1.06 Pro Rata Borrowings ................................ 5
1.07 Interest ........................................... 5
1.08 Capital Requirements ............................... 6
1.09 Total Commitment; Limitations on
Outstanding Revolving Loan Amounts ............... 7
SECTION 2. Commitments ........................................ 7
2.01 Voluntary Reduction of Commitments ................. 7
2.02 Mandatory Adjustments of Commitments,
etc. ............................................. 8
2.03 Commitment Commission .............................. 8
SECTION 3. Payments ........................................... 8
3.01 Voluntary Prepayments .............................. 8
3.02 Mandatory Prepayments .............................. 9
3.03 Method and Place of Payment ........................ 10
3.04 Net Payments ....................................... 11
SECTION 4. Conditions Precedent ............................... 12
4.01 Conditions Precedent to Initial
Revolving Loans .................................. 12
4.02 Conditions Precedent to All Revolving
Loans ............................................ 18
SECTION 5. Representations, Warranties and
Agreements ....................................... 20
5.01 Corporate Status ................................... 20
5.02 Corporate Power and Authority;
Business ......................................... 20
5.03 No Violation ....................................... 21
5.04 Litigation ......................................... 21
5.05 Use of Proceeds .................................... 21
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5.06 Governmental Approvals, etc. ....................... 22
5.07 Investment Company Act ............................. 22
5.08 Public Utility Holding Company Act ................. 22
5.09 True and Complete Disclosure ....................... 23
5.10 Financial Condition; Financial
Statements; Projections .......................... 23
5.11 Security Interests ................................. 25
5.12 Tax Returns and Payments ........................... 25
5.13 ERISA .............................................. 26
5.14 Patents, etc. ...................................... 26
5.15 Compliance with Laws, etc. ......................... 26
5.16 Properties ......................................... 27
5.17 Securities ......................................... 27
5.18 Collective Bargaining Agreements ................... 28
5.19 Indebtedness Outstanding ........................... 28
5.20 Environmental Protection ........................... 28
5.21 Environmental Investigations........................ 30
5.22 Business, System Agreements and Other
Material Agreements............................... 30
SECTION 6. Affirmative Covenants .............................. 31
6.01 Information Covenants .............................. 31
6.02 Books, Records and Inspections ..................... 36
6.03 Maintenance of Property; Insurance ................. 37
6.04 Payment of Taxes ................................... 37
6.05 Corporate Franchises ............................... 38
6.06 Compliance with Statutes, etc. ..................... 38
6.07 Performance of Obligations ......................... 38
6.08 End of Fiscal Years; Fiscal Quarters ............... 38
6.09 Use of Proceeds .................................... 38
6.10 Equal Security for Revolving Loans
and Revolving Notes; No Further
Negative Pledges ................................. 38
6.11 Lender Meeting ..................................... 39
6.12 Pledge of Additional Collateral .................... 39
6.13 Security Interests ................................. 40
6.14 Environmental Events ............................... 40
6.15 Issuance of Warrants ............................... 41
6.16 Regulatory Compliance .............................. 41
6.17 Channel Lease Consent .............................. 42
6.18 Collateral Assignment of Lease
Agreement ........................................ 42
SECTION 7. Negative Covenants ................................. 42
7.01 Changes in Business ................................ 42
7.02 Amendments or Waivers of Certain
Documents ........................................ 42
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7.03 Liens .............................................. 42
7.04 Indebtedness ....................................... 44
7.05 Indebtedness Per Subscriber ........................ 45
7.06 Advances, Investments and Revolving
Loans ............................................ 45
7.07 Prepayments of Indebtedness, etc. .................. 46
7.08 Dividends, etc. .................................... 47
7.09 Transactions with Affiliates ....................... 47
7.10 Minimum Consolidated EBITDA ........................ 47
7.11 Subsidiaries ....................................... 48
7.12 Disposition of Assets .............................. 48
7.13 Contingent Obligations ............................. 50
7.14 ERISA .............................................. 50
7.15 Mergers and Consolidations ......................... 51
7.16 Sale and Lease-Backs ............................... 51
7.17 Sale or Discount of Receivables .................... 51
7.18 Minimum Subscribers ................................ 51
7.19 Additional System Agreements ....................... 51
7.20 Subsequent Transaction ............................. 52
7.21 Maintenance of Licenses ............................ 52
SECTION 8. Events of Default .................................. 52
8.01 Payments ........................................... 52
8.02 Representations, etc. .............................. 52
8.03 Covenants .......................................... 52
8.04 Default Under Other Agreements ..................... 53
8.05 Bankruptcy, etc. ................................... 53
8.06 Security Documents ................................. 54
8.07 Guarantees ......................................... 54
8.08 Judgments .......................................... 54
8.09 Ownership .......................................... 54
SECTION 9. Definitions ........................................ 55
SECTION 10. The Agent .......................................... 76
10.01 Appointment ........................................ 76
10.02 Delegation of Duties ............................... 76
10.03 Exculpatory Provisions ............................. 76
10.04 Reliance by the Agent .............................. 77
10.05 Notice of Default .................................. 78
10.06 Non-Reliance on Agent and Other
Banks ............................................ 78
10.07 Indemnification .................................... 79
10.08 The Agent in Its Individual Capacity ............... 79
10.09 Successor Agent .................................... 79
10.10 Resignation by Agent ............................... 80
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SECTION 11. Miscellaneous ...................................... 81
11.01 Payment of Expenses, etc. .......................... 81
11.02 Right of Set-off ................................... 82
11.03 Notices ............................................ 82
11.04 Benefit of Agreement ............................... 83
11.05 No Waiver; Remedies Cumulative ..................... 85
11.06 Payments Pro Rata .................................. 85
11.07 Calculations; Computations ......................... 86
11.08 Governing Law; Submission to
Jurisdiction; Venue .............................. 86
11.09 Counterparts ....................................... 87
11.10 Effectiveness ...................................... 87
11.11 Headings Descriptive ............................... 87
11.12 Amendment or Waiver ................................ 87
11.13 Survival ........................................... 88
11.14 Domicile of Revolving Loans ........................ 88
11.15 Waiver of Jury Trial ............................... 88
11.16 Independence of Covenants .......................... 88
Schedule 1 - Amounts of Revolving Loans
Annex I - List of Banks
Annex II - Bank Addresses
Annex III - Summary of Corporate Insurance Policies
Annex IV - Schedule of Securities
Annex V - Schedule of Existing Debt
Annex VI - Schedule of Permitted Affiliate Transactions
Annex VII - List of Mortgaged Property
Annex IX - Environmental
Annex X - System
Annex XI - System Exceptions
Annex XII - Violations
Annex XIV - Authorized Officers
Annex XV - Subsidiaries
Annex XVI - Schedule of Channel Lease Consents received in
connection with Existing Credit Agreement and
Channel Leases that only require Notice of
Assignment
Exhibit A - Form of A Revolving Note
Exhibit B - Form of B Revolving Note
Exhibit C-1 - Form of Opinion of Fox, Rothschild, O'Brien &
Frankel
Exhibit C-2 - Form of Opinion of Rini, Coran & Lancellota
Exhibit C-3 - Form of Local Counsel Opinion
Exhibit D - Form of Leasehold Mortgage
Exhibit E - Form of Subsidiary Guarantee
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Exhibit F-1 - Form of Borrowers Securities Pledge Agreement
Exhibit F-2 - Form of Subsidiary Securities Pledge Agreement
Exhibit G - Form of Intellectual Property Security Agreement
Exhibit H-1 - Form of Borrowers General Security Agreement
Exhibit H-2 - Form of Subsidiary General Security Agreement
Exhibit I-1 - Form of Notice of Assignment
Exhibit I-2 - Form of Assignment and Assumption Agreement
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Channel Lease Notices
Exhibit L - Form of Channel Lease Consent
Exhibit M - Form of Warrant
Exhibit N - Form of Registration Rights Agreement
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REPLACEMENT REVOLVING CREDIT AGREEMENT, dated as of
August 31, 1995, among ACS ENTERPRISES, INC., a Pennsylvania
corporation (the "Company"), ACS HOME SYSTEMS, INC., a
Pennsylvania corporation ("Home Systems"), and APARTMENT
CABLE SYSTEMS, INC., a Pennsylvania corporation ("Apartment
Cable" and, together with the Company and Home Systems,
individually a "Borrower" and collectively the "Borrowers"),
the lending institutions listed in Annex I (each a "Bank" and,
collectively, the "Banks") and the New York branch of BANQUE
INDOSUEZ ("Indosuez") as the agent and collateral agent for
the Banks (in such capacity, the "Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined
in Section 9 are used herein as so defined.
WITNESSETH:
WHEREAS, Company owns and operates wireless cable
television systems, also known as multi-channel multipoint
distribution service;
WHEREAS, pursuant to that certain Credit Agreement
dated as of November 9, 1993 (the "Existing Credit Agreement"),
between the Borrowers, the lenders listed therein and Banque
Paribas, as agent, as amended, modified or supplemented, from
time to time, the lenders thereto have made certain loans (the
"Existing Loans") to the Borrowers in an aggregate outstanding
principal amount equal to approximately $21,300,000;
WHEREAS, the Borrowers have requested that the Banks
make Revolving Loans (as defined herein) which shall be used
(i) to replace the Existing Loans and other obligations
outstanding under the Existing Credit Agreement and (ii) for
working capital purposes of the Borrowers, all on the terms and
conditions set forth herein;
WHEREAS, the Banks are willing to make available the
Revolving Loans provided for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitments. Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees in the
case of any Borrowing under the A Revolving Portion, at any
time and from time to time on and after the Closing Date and
prior to the A Revolving Loan Commitment Termination Date, and
in the case of any Borrowing under the B Revolving Portion, at
any time and from time to time on and after the Closing Date
and prior to the B Revolving Loan Commitment Termination Date,
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to make a Revolving Loan or Revolving Loans to the Borrowers,
which Revolving Loans shall be drawn under the Loan Facility
(including the A Revolving Portion and B Revolving Portion
thereof), as set forth below.
(a) Revolving Loans under the A Revolving Portion of
the Loan Facility (each an "A Revolving Loan" and,
collectively, the "A Revolving Loans") (i) shall be made
at any time and from time to time on and after the Closing
Date to the Borrowers, as joint and several obligors, up
to the amount set forth in Section 1.09, (ii) may be
repaid and reborrowed in accordance with the provisions
hereof, (iii) shall not exceed for any Bank at any time
outstanding the A Revolving Loan Commitment of such Bank
at such time and (iv) shall not be made if the aggregate
principal amount of A Revolving Loans then outstanding,
after giving effect to the A Revolving Loan requested by
the relevant Notice of Borrowing, would exceed the Total A
Revolving Loan Commitment.
(b) Revolving Loans under the B Revolving Portion of
the Loan Facility (each a "B Revolving Loan" and,
collectively, the "B Revolving Loans") (i) shall be made
at any time and from time to time on and after the Closing
Date and prior to the B Revolving Loan Commitment
Termination Date to the Borrowers, as joint and several
obligors, up to the amount set forth in Section 1.09,
(ii) may be repaid and reborrowed in accordance with the
provisions hereof, (iii) shall not exceed for any Bank at
any time outstanding the B Revolving Loan Commitment of
such Bank at such time and (iv) shall not be made if the
aggregate principal amount of B Revolving Loans then
outstanding, after giving effect to the B Revolving Loan
requested by the relevant Notice of Borrowing, would
exceed the Total B Revolving Loan Commitment.
1.02 Minimum Amount of Each Borrowing. The minimum
aggregate principal amount of a Borrowing of A Revolving Loans
or B Revolving Loans shall be $500,000 (other than a Borrowing
such that the total amount of either A Revolving Loans or B
Revolving Loans, as the case may be, to be outstanding after
giving effect to such Borrowing shall be equal to the Total A
Revolving Loan Commitment or Total B Revolving Loan Commitment,
as the case may be) and, if greater, shall be in integral
multiples of $100,000; provided that the Borrowing of the A
Revolving Portion of the Initial Revolving Loans shall be in
the aggregate principal amount of $22,000,000 and the
B Revolving Portion of the Initial Revolving Loans shall be in
the aggregate principal amount of $100,000.
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1.03 Notice of Borrowings. Whenever the Borrowers
desire that the Banks make the Initial Revolving Loans an
Authorized Officer shall give the Agent at the Agent's Office
prior to 11:00 a.m. (New York time) at least two Business Days'
prior written notice (or telephone notice promptly confirmed in
writing) of each such Borrowing. Whenever the Borrowers desire
that the Banks make Revolving Loans after the Closing Date, an
Authorized Officer shall give the Agent at the Agent's Office
prior to 11:00 a.m. (New York time) at least two Business Days'
prior written notice (or telephone notice promptly confirmed in
writing) of each such Borrowing. Each such notice, which shall
be substantially in the form of Exhibit J hereto (each a
"Notice of Borrowing"), shall be irrevocable, shall be deemed a
representation by the Borrowers that all conditions precedent
to such Borrowing have been satisfied and shall specify (i) the
Borrower(s) to which such Revolving Loans are proposed to be
made, (ii) the aggregate principal amount in U.S. dollars of
the Revolving Loans to be made pursuant to such Borrowing, all
of which shall be specified in such manner as is necessary to
comply with all limitations on A Revolving Loans or B Revolving
Loans outstanding hereunder, and (iii) the date of Borrowing
(which shall be a Business Day).
The Agent shall as promptly as practicable give each
Bank written notice (or telephonic notice promptly confirmed in
writing) of each proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters covered by
the Notice of Borrowing.
1.04 Disbursement of Funds. (a) No later than 1:00
P.M. (New York time) on the date specified in each Notice of
Borrowing, each Bank will make available to the Agent in New
York its pro rata portion of each Borrowing requested to be
made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is
to fund under any Borrowing on or after the Closing Date in
immediately available funds to the Agent to the account
specified therefor by the Agent or if no account is so
specified at the Agent's Office and the Agent will make such
funds available to the Borrower(s) by depositing to the account
specified therefor by the Borrowers or if no account is so
specified to their account at the Agent's Office the aggregate
of the amounts so made available. Unless the Agent shall have
been notified by any Bank prior to the date of any such
Borrowing that such Bank does not intend to make available to
the Agent its portion of the Borrowing or Borrowings to be made
on such date, the Agent may assume that such Bank has made such
amount available to the Agent on such date of Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole
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discretion and without any obligation to do so) make available
to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Bank
and the Agent has made such corresponding amount available to
the Borrower, the Agent shall be entitled to recover such
amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Borrowers, and
the Borrowers shall immediately pay such corresponding amount
to the Agent. The Agent shall also be entitled to recover from
such Bank or the Borrowers, as the case may be, interest on
such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Agent to
the Borrower(s) to the date such amount is recovered by the
Agent, at a rate per annum equal to (x) if paid by such Bank,
the Federal Funds Rate or (y) if paid by the Borrowers, the
then applicable rate of interest, calculated in accordance with
Section 1.07, for the respective Revolving Loans. The Agent
shall also be entitled to recover from any Bank an amount equal
to any other losses incurred by the Agent as a result of the
failure of such Bank to provide such amount as provided in this
Agreement.
(c) Nothing herein shall be deemed to relieve any
Bank from its obligation to fulfill its Commitment hereunder or
to prejudice any rights which the Borrowers may have against
any Bank as a result of any default by such Bank hereunder.
1.05 Revolving Notes. (a) The Borrowers'
obligation to pay the principal of and interest on all the
Revolving Loans made to them by each Bank shall be joint and
several, and shall be evidenced (i) if A Revolving Loans, by a
promissory note (each, an "A Revolving Note" and, collectively,
the "A Revolving Notes") duly executed and delivered by the
Borrowers, substantially in the form of Exhibit A hereto, each
with blanks appropriately completed in conformity herewith, and
(ii) if B Revolving Loans, by a promissory note (each, a "B
Revolving Note" and, collectively, the "B Revolving Notes")
duly executed and delivered by the Borrowers substantially in
the form of Exhibit B hereto, with blanks appropriately
completed in conformity herewith.
(b) The A Revolving Note of the Borrowers issued to
each Bank shall (i) be executed by the Borrowers, (ii) be
payable to the order of such Bank and be dated the Closing
Date, (iii) be in a stated principal amount equal to the A
Revolving Loan Commitment to such Bank and be payable in the
aggregate principal amount of the A Revolving Loans evidenced
thereby, (iv) mature, with respect to each Loan evidenced
thereby, on the A Revolving Maturity Date, (v) be subject to
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mandatory prepayment as provided in Section 3.02, (vi) bear
interest as provided in the appropriate clause of Section 1.07
and (vii) be entitled to the benefits of this Agreement and the
other applicable Credit Documents.
(c) The B Revolving Note of the Borrowers issued to
each Bank shall (i) be executed by the Borrowers, (ii) be
payable to the order of such Bank and be dated the Closing
Date, (iii) be in a stated principal amount equal to the B
Revolving Loan Commitment of such Bank and be payable in the
aggregate principal amount of the B Revolving Loans evidenced
thereby, (iv) mature, with respect to each B Revolving Loan
evidenced thereby, on the B Revolving Maturity Date, (v) be
subject to mandatory prepayment as provided in Section 3.02,
(vi) bear interest as provided in the appropriate clause of
Section 1.07 and (vii) be entitled to the benefits of this
Agreement and the other applicable Credit Documents.
(d) Each Bank will note on its internal records the
amount of each Revolving Loan made by it and each payment in
respect thereof and will, prior to any transfer of any of its
Revolving Notes, endorse on the reverse side thereof the
outstanding principal amount of Revolving Loans evidenced
thereby. Failure to make any such notation shall not affect
the Borrowers' obligations hereunder or under the other
applicable Credit Documents in respect of such Revolving Loans.
1.06 Pro Rata Borrowings. All Borrowings under this
Agreement shall be loaned by the Banks pro rata on the basis of
their A Revolving Loan Commitment or B Revolving Loan
Commitment, as the case may be. All Borrowings under this
Agreement (other than the Borrowing of Initial Revolving Loans)
shall be loaned pro rata from the A Revolving Portion and the B
Revolving Portion. No Bank shall be responsible for any
default by any other Bank in its obligation to make Revolving
Loans hereunder and each Bank shall be obligated to make the
Revolving Loans provided to be made by it hereunder, regardless
of the failure of any other Bank to fulfill its commitments
hereunder.
1.07 Interest. (a) The unpaid principal amount of
each Revolving Loan shall bear interest from the date of
Borrowing thereof until maturity (whether by acceleration or
otherwise) at a floating rate per annum which shall at all
times be the Prime Rate in effect from time to time plus
(i) from the Closing Date until November 30, 1995, 4.0%,
(ii) from December 1, 1995 until February 29, 1996, 4.5%,
(iii) from March 1, 1996 until May 31, 1996, 5%, and (iv) from
June 1, 1996 until the Final Maturity Date, 5.5%.
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(b) The unpaid principal amount of each Revolving
Loan, upon the occurrence and during the continuance of an
Event of Default, overdue principal and, to the extent
permitted by law, overdue interest in respect of each Revolving
Loan shall bear interest at a rate per annum equal to the rate
of interest applicable thereto plus 2%.
(c) Interest shall accrue from and including the
date of any Borrowing to but excluding the date of any
repayment thereof and shall be payable (i) monthly in arrears
on the last Business Day of each month beginning September 30,
1995, and (ii) on any prepayment (on the amount prepaid), at
maturity (whether by acceleration or otherwise) and, after such
maturity, on demand. Notwithstanding the foregoing, interest
payable at the rate provided in Section 1.07(b) shall be
payable on demand.
(d) All computations of interest hereunder shall be
made in accordance with Section 11.07(b).
1.08 Capital Requirements. If any Bank shall have
determined that the adoption or effectiveness after the
Effective Date of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by such Bank or such Bank's parent with any request
or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or
comparable agency (including in each case any such change
proposed or published prior to the date hereof but taking
effect thereafter), has or would have the effect of reducing
the rate of return on such Bank's or such Bank's parent's
capital or assets as a consequence of such Bank's obligations
hereunder to a level below that which such Bank or such Bank's
parent could have achieved but for such adoption, effectiveness
or change or as a consequence of an increase in the amount of
capital required to be maintained by such Bank (including in
each case, without limitation, with respect to any Bank's
Revolving Loan), then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrowers
shall pay to such Bank such additional amount or amounts as
will compensate such Bank or such Bank's parent, as the case
may be, for such reduction. Each Bank, upon determining in
good faith that any additional amounts will be payable pursuant
to this Section 1.08, will give prompt written notice thereof
to the Borrowers, which notice shall set forth in reasonable
detail the basis of the calculation of such additional amounts,
although any delay in giving any notice shall not release or
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diminish any of the Borrowers' obligations to pay additional
amounts pursuant to this Section 1.08.
1.09 Total Commitment; Limitations on Outstanding
Revolving Loan Amounts. The original amount of the (i) Total
Commitment is $36,000,000, (ii) Total A Revolving Loan
Commitment is $22,000,000, and (iii) Total B Revolving Loan
Commitment is $14,000,000. Anything contained in this
Agreement to the contrary notwithstanding, (a) in no event
shall the sum of the aggregate principal amount of all A
Revolving Loans and B Revolving Loans of any Bank at any time
exceed such Bank's portion of the Total Commitment and (b) in
no event shall the sum of the aggregate principal amount of all
A Revolving Loans and B Revolving Loans from all Banks at any
time exceed the Total Commitment.
SECTION 2. Commitments.
2.01 Voluntary Reduction of Commitments. Upon at
least one Business Day's prior written notice (or telephonic
notice promptly confirmed in writing) to the Agent at the
Agent's Office (which notice the Agent shall promptly transmit
to each of the Banks), the Borrowers shall have the right to
terminate the unutilized portion of the Total A Revolving Loan
Commitment or the Total B Revolving Loan Commitment, in whole
or in part, available to the Borrowers; provided that (x) any
such termination shall apply pro rata between the Total A
Revolving Loan Commitment and the Total B Revolving Loan
Commitment based on the then unutilized portion of the Total A
Revolving Loan Commitment and Total B Revolving Loan
Commitment, respectively, (y) any such termination shall apply
to proportionately and permanently reduce the A Revolving Loan
Commitment and B Revolving Loan Commitment, as the case may be,
of each of the Banks and (z) any partial reduction pursuant to
this Section 2.01 shall be in the amount of at least $500,000
and integral multiples of $100,000 in excess of that amount;
provided, further, that the Total A Revolving Loan Commitment
shall not be reduced to an amount less than the aggregate A
Revolving Loans then outstanding and the Total B Revolving Loan
Commitment shall not be reduced to an amount less than the
aggregate B Revolving Loans then outstanding.
2.02 Mandatory Adjustments of Commitments, etc.
(a) The Total A Revolving Loan Commitment shall terminate on
the A Revolving Loan Commitment Termination Date and the Total
B Revolving Loan Commitment shall terminate on the B Revolving
Loan Commitment Termination Date.
(a) The Total A Revolving Loan Commitment and Total
B Revolving Loan Commitment shall be permanently reduced in the
<PAGE> 14
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amount and at the time of any payment on the Revolving Loans
required to be applied to the Revolving Loans pursuant to
Section 3.02(B)(a) in the manner provided for in
Section 3.02(B)(a).
2.03 Commitment Commission. The Borrowers, jointly
and severally, agree to pay the Agent a commitment commission
("Commitment Commission") for the account of each Bank for the
period from and including the Closing Date to but not including
the date the Total Commitment has been terminated, computed at
a rate equal to 1/2% per annum on the daily average Unutilized
Commitment of such Bank. Accrued Commitment Commission shall
be due and payable monthly in arrears on the last Business Day
of each month commencing September 30, 1995 and on the later of
the A Revolving Loan Commitment Termination Date and the B
Revolving Loan Commitment Termination Date, based on the actual
number of days elapsed over a year of 365 days.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Borrowers shall
have the right to prepay Revolving Loans in whole or in part
from time to time on the following terms and conditions:
(i) the Borrowers shall give the Agent at the Agent's Office
written notice (or telephonic notice promptly confirmed in
writing) of their intent to prepay the Revolving Loans and the
amount of such prepayment, which notice shall be given by the
Borrowers at least one Business Day prior to the date of such
prepayment and which notice shall promptly be transmitted by
the Agent to each of the Banks, (ii) each partial prepayment
shall be in an aggregate principal amount of at least $500,000
and integral multiples of $100,000 in excess of that amount and
(iii) each prepayment in respect of any Revolving Loans made
pursuant to a Borrowing shall be applied pro rata between the A
Revolving Loans and the B Revolving Loans based on the
aggregate amount of A Revolving Loans and B Revolving Loans
then outstanding; provided, that, if the Revolving Loans are
prepaid, in whole or in part, after October 31, 1995, the
Borrowers shall pay to the Agent, for the ratable account of
the Banks, a redemption fee equal to the greater of (i)
$400,000 or (ii) 3% of the amount that (x) the maximum amount
of Revolving Loans outstanding at any time exceeds (y) the
Existing Loans.
<PAGE> 15
-9-
3.02 Mandatory Prepayments.
(A) Requirements:
(a) The Borrowers shall prepay the outstanding
principal amount of the A Revolving Loans or B Revolving
Loans on any date on which the aggregate outstanding
principal amount of such Revolving Loans (after giving
effect to any other repayments or prepayments on such day)
exceeds the Total A Revolving Loan Commitment or the Total
B Revolving Loan Commitment in the amount of such excess.
(b) On the date of receipt by any of the Borrowers
of Net Cash Proceeds or Net Financing Proceeds, an amount
equal to such Net Cash Proceeds or Net Financing Proceeds
shall be applied as provided in Section 3.02(B)(a).
(c) On the date of the receipt thereof by any of the
Borrowers, an amount equal to 100% of the proceeds
received by such Borrowers (net of underwriting discounts
and commissions and other costs and expenses directly
associated therewith) of the sale after the Closing Date
of equity securities shall be applied as provided in Sec-
tion 3.02(B)(a); provided that this Section 3.02(A)(c)
shall not apply to warrants and options issued by the
Company and outstanding on the date hereof.
(d) On the date of receipt thereof by any of the
Borrowers, an amount equal to 100% of any insurance
proceeds received, less any portion of such proceeds not
in excess of $100,000 that is promptly applied to repair
or replace the damaged property in respect of which such
proceeds were received (provided, that if the damaged
property constituted Collateral, any such replacement
property shall be made subject to the Lien of the Security
Documents), shall be applied as provided in Section
3.02(B)(a).
(e) If any of the Mortgaged Property is the subject
of a Taking or Destruction and the Borrowers have elected
not to effect a Restoration or neither the Collateral
Agent nor the Borrowers have elected to effect a
Restoration, in each case, in accordance with the
provisions of the applicable Mortgage, then on the first
Business Day following the last day the Borrowers can
elect to effect a Restoration (in the event that a
Borrower has the right to make such an election) or, in
the event that the Borrowers do not have the right to make
an election to effect a Restoration, the day the
Collateral Agent has notified the Borrowers that a
<PAGE> 16
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Restoration will not be required in the case of any of the
Mortgaged Property being the subject of a Taking or
Destruction, an amount equal to the applicable Net Award
or Net Proceeds, as the case may be, as a result of such
Taking or Destruction shall be applied as provided in
Section 3.02(B)(a).
(f) On the date of the receipt thereof by any of the
Borrowers, an amount equal to 100% of any tax refund made
to such Borrower shall be applied as provided in
Section 3.02(B)(a).
(B) Application:
(a) Prepayments to be applied pursuant to this
Section 3.02(B)(a) shall be applied (i) to prepay A
Revolving Loans and B Revolving Loans in the amount
prepaid on a pro rata basis between the A Revolving
Portion and the B Revolving Portion based on the aggregate
amount of A Revolving Loans and B Revolving Loans then
outstanding and (ii) to reduce the Total A Revolving Loan
Commitment and the Total B Revolving Loan Commitment in
the amount prepaid on a pro rata basis between the Total A
Revolving Loan Commitment and the Total B Revolving Loan
Commitment; and
(b) With respect to each prepayment of Revolving
Loans required by Section 3.02(A), the Borrowers shall
give the Agent two Business Days notice. All prepayments
shall include payment of accrued interest on the principal
amount so prepaid and shall be applied to the payment of
interest before application to principal.
3.03 Method and Place of Payment. (a) Except as
otherwise specifically provided herein, all payments under this
Agreement shall be made to the Agent, for the ratable account
of the Banks entitled thereto, not later than 1:00 P.M. (New
York time) on the date when due and shall be made in
immediately available funds in lawful money of the United
States of America to the account specified therefor by the
Agent or if no account has been so specified at the Agent's
Office, it being understood that written notice by a Borrower
to the Agent to make a payment from the funds in such
Borrower's account at the Agent's Office shall constitute the
making of such payment to the extent of such funds held in such
account. The Agent will thereafter cause to be distributed on
the same day (if payment is actually received by the Agent in
New York prior to 1:00 P.M. (New York time) on such day) funds
relating to the payment of principal or interest ratably to the
Banks entitled to receive any such payment in accordance with
<PAGE> 17
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the terms of this Agreement. If and to the extent that any
such distribution shall not be so made by the Agent in full on
the same day (if payment is actually received by the Agent
prior to 1:00 P.M. (New York time) on such day), the Agent
shall pay to each Bank its ratable amount thereof and each such
Bank shall be entitled to receive from the Agent, upon demand,
interest on such amount at the Prime Rate for each day from the
date such amount is paid to the Agent until the date the Agent
pays such amount to such Bank.
(b) Any payments under this Agreement which are made
by any Borrower later than 1:00 P.M. (New York time) shall be
deemed to have been made on the next succeeding Business Day.
Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable
during such extension at the applicable rate in effect
immediately prior to such extension.
3.04 Net Payments. (a) All payments by the
Borrowers under this Agreement or under any Credit Document
shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that all such payments
(after deduction or withholding for or on account of any
present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any
political subdivision or taxing authority thereof, other than
any tax on or measured by the income of a Bank pursuant to the
income tax laws of the United States or of any other
jurisdiction (collectively, "Taxes")) shall not be less than
the amounts otherwise specified to be paid under this Agreement
and/or any Credit Document. A certificate as to the
calculation of any additional amounts payable to a Bank under
this Section 3.04 submitted to the Borrowers by such Bank
shall, absent manifest error, be final, conclusive and binding
for all purposes upon all parties hereto. With respect to each
deduction or withholding for or on account of any Taxes, the
Borrowers shall promptly furnish to each Bank such
certificates, receipts and other documents as may be required
(in the reasonable judgment of such Bank) to establish any tax
credit to which such Bank may be entitled. In respect of
amounts payable to such Bank pursuant to this Section 3.04, the
Borrowers shall also reimburse each Bank, upon the written
request of such Bank, for taxes imposed on or measured by the
net income of such Bank pursuant to the laws of the United
States of America, any State or political subdivision thereof,
or the jurisdiction in which such Bank is incorporated, or a
jurisdiction in which the principal office or lending office of
such Bank is located, or under the laws of any political
<PAGE> 18
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subdivision or taxing authority of any such jurisdiction, as
such Bank shall determine are or were payable by such Bank.
(b) Without prejudice to the provisions of
clause (a) of this Section 3.04, if any Bank, or the Agent on
its behalf, is required by law to make any payment on account
of Taxes on or in relation to any sum received or receivable
under this Agreement and/or the other Credit Documents by such
Bank, or the Agent on its behalf, or any liability for Tax in
respect of any such payment is imposed, levied or assessed
against any Bank, or the Agent on its behalf, the Borrowers
will promptly indemnify such Person against such Tax payment or
liability, together with any interest, penalties and reasonable
expenses (including counsel fees and expenses) payable or
incurred in connection therewith, including any tax of any Bank
arising by virtue of payments under this clause (b), computed
in a manner consistent with clause (a) of this Section 3.04. A
certificate by such Bank, or the Agent on its behalf, as to the
calculation and amount of such payments shall, absent manifest
error, be final, conclusive and binding upon all parties hereto
for all purposes.
SECTION 4. Conditions Precedent.
4.01 Conditions Precedent to Initial Revolving
Loans. The obligations of the Banks to make the Initial
Revolving Loans to the Borrowers hereunder are subject, at the
time of the making of such Initial Revolving Loans, to the
substantially contemporaneous satisfaction of the following
conditions:
(a) Officer's Certificate. On the Closing Date, the
Agent shall have received certificates dated such date signed
by an appropriate officer of each of the Borrowers stating that
all of the applicable conditions set forth in this Section 4.01
and Section 4.02 (in each case disregarding any reference
therein that such condition be deemed satisfactory by the Agent
and/or the Required Banks) have been satisfied or waived as of
such date.
(b) Opinions of Counsel. On the Closing Date, the
Agent shall have received an opinion or opinions addressed to
each of the Banks and dated the Closing Date, each in form and
substance satisfactory to the Agent, from (i) Fox, Rothschild,
O'Brien & Frankel, counsel to the Borrowers, which opinion
shall address the matters contained in Exhibit C-1 hereto,
(ii) Rini, Coran & Lancellota, special FCC counsel to the
Borrowers, which opinion shall address the matters set forth in
Exhibit C-2 hereto, and (iii) appropriate local counsel to the
Borrowers with respect to the Guarantees and the Security
<PAGE> 19
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Documents, which opinions shall address the matters contained
in Exhibit C-3.
(c) Corporate Proceedings. All corporate and legal
proceedings and all instruments and agreements in connection
with the transactions contemplated by the Credit Documents
shall be satisfactory in form and substance to the Agent, and
the Agent shall have received all information and copies of all
certificates, documents and papers, including records of
corporate proceedings and governmental approvals, if any, which
the Agent reasonably may have requested from any of the
Borrowers or any Affiliate of either thereof in connection
therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
Without limiting the foregoing, the Agent shall have received
(i) resolutions of the Board of Directors of each of the
Borrowers and any Affiliate thereof approving and authorizing
such documents and actions as are contemplated hereby in form
and substance reasonably satisfactory to the Agent including
without limitation the execution and delivery of all Credit
Documents to be executed by such Person, certified by its
corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment, and
(ii) signature and incumbency certificates of officers of each
of the Borrowers and any Affiliate thereof executing
instruments, documents or agreements required to be executed in
connection with this Agreement.
(d) Organizational Documentation, etc. On or prior
to the Closing Date, the Banks shall have received copies of
true and complete certified copies of the following documents
of each of the Borrowers, the provisions of which shall be
reasonably satisfactory to the Agent:
(i) Copies of each such Person's respective
Certificate or Articles of Incorporation, which shall be
certified and be accompanied by a good standing
certificate, if any, from the jurisdiction of its
organization and good standing certificates, if any, from
the jurisdictions in which it is qualified to do business
as a foreign corporation, each to be dated a recent date
prior to the Closing Date; and
(ii) Copies of each such Person's respective By-
laws, certified as of the Closing Date by its corporate
secretary.
(e) Revolving Notes. There shall have been
delivered to the Agent for the account of each of the Banks the
A Revolving Notes and B Revolving Notes executed by the
<PAGE> 20
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respective Borrowers in the amounts and maturities and as
otherwise provided herein.
(f) Certain Fees. All costs, fees and expenses
(including, without limitation, legal fees and expenses)
payable to Indosuez by the Borrowers pursuant to the letter
agreement between the Borrowers and Indosuez dated August 9,
1995, shall have been paid in full and the Borrowers shall have
paid or have caused to be paid the commitment and other fees
and expenses (including, without limitation, reasonable
documented legal fees and expenses) contemplated hereby and/or
in connection with the other Documents.
(g) Conditions Relating to Mortgaged Property and
Real Property. On or prior to the Closing Date, the Borrowers
shall have caused to be delivered to the Agent, on behalf of
the Banks, the following documents and instruments:
(i) a Mortgage encumbering each Mortgaged Property
in favor of the Agent, for the benefit of the Banks, duly
executed and acknowledged by the Borrower that is the
owner of or holder of an interest in such Mortgaged
Property, and otherwise in form for recording in the
recording office of each political subdivision or foreign
jurisdiction where each such Mortgaged Property is
situated, together with such certificates, affidavits,
questionnaires or returns as shall be required in
connection with the recording or filing thereof to create
a Lien under applicable law, and such UCC-1 financing
statements and other similar statements as are
contemplated by the counsel opinions described in Section
4.01(b)(iii) in respect of such Mortgage, all of which
shall be in form and substance satisfactory to the Agent,
and any other instruments necessary to grant a mortgage
Lien under the laws of any applicable jurisdiction, which
Mortgage and financing statements and other instruments
shall be effective to create a first priority Lien on such
Mortgaged Property subject to no Liens other than Prior
Liens;
(ii) with respect to each Mortgaged Property, such
consents, approvals, amendments, supplements, estoppels,
tenant subordination agreements or other instruments as
necessary or required to consummate the transactions
contemplated hereby or as shall reasonably be deemed
necessary by the Agent in order for the owner or holder of
the fee or leasehold interest constituting such Mortgaged
Property to grant the Lien contemplated by the Mortgage
with respect to such Mortgaged Property;
<PAGE> 21
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(iii) with respect to each Mortgaged Property,
policies or certificates of insurance as required by the
Mortgage relating thereto, which policies or certificates
shall comply with the insurance requirements contained in
such Mortgage;
(iv) with respect to each Real Property and each
Mortgaged Property, UCC, judgment and tax lien searches
(or foreign jurisdiction equivalents) confirming that the
personal property comprising a part of such Real Property
or Mortgaged Property is subject to no Liens other than
Prior Liens;
(v) evidence acceptable to the Agent of payment by
the appropriate Borrower of all applicable title insurance
expenses, search and examination charges, survey costs and
related charges, mortgage recording taxes and fees,
charges, costs and expenses required for the recording of
the Mortgages;
(vi) with respect to each Real Property or Mortgaged
Property, copies of all Leases, subleases, leases in which
a Borrower holds the tenant's interest or other agreements
relating to possessory interests. To the extent any of
the foregoing affect any Mortgaged Property, such
agreement shall be subordinate to the Mortgage to be
recorded against such Mortgaged Property and otherwise
acceptable to the Agent;
(vii) with respect to each Mortgaged Property, an
Officers' Certificate or other evidence satisfactory to
the Agent that as of the date thereof there (x) has been
issued and is in effect a valid and proper certificate of
occupancy or other local equivalent, if any, for the use
then being made of such Mortgaged Property and that there
is not outstanding any citation, violation or similar
notice indicating that such Mortgaged Property contains
conditions which are not in compliance with local codes or
ordinances relating to building or fire safety or
structural soundness, (y) has not occurred any Taking or
Destruction of any Mortgaged Property or Real Property and
(z) are no disputes regarding boundary lines, location,
encroachment or possession of any Real Property or
Mortgaged Property and no state of facts existing which
could give rise to any such claim; and (viii) with respect
to each Mortgaged Property, a policy of title insurance
(or commitment to insure executed by the Title Company)
insuring the Lien of such Mortgage as a valid first
priority mortgage Lien on such Mortgaged Property
described therein in an amount not less than 100% of the
<PAGE> 22
-16-
fair market value thereof, each of which policy or
policies shall (a) be issued by the Title Company, (b) be
supplemented by endorsements (to the extent available
under applicable law at a commercially reasonable rate)
reasonably requested by the Collateral Agent and (c)
contain no exceptions to title other than exceptions for
Prior Liens applicable to such Mortgaged Property.
(h) Financial Statements, etc. Prior to the Closing
Date, the Agent shall have received audited financial
statements including a balance sheet and statements of income
and cash flow of each of the Borrowers for the twelve months
ended December 31, 1994, together with unqualified opinions of
Ernst & Young, and unaudited financial statements for the six
months ended June 30, 1995, and the pro forma financial
statements (including an opening balance sheet) of each of the
Borrowers as at August 31, 1995 after giving effect to the
Borrowings under this Agreement. The Borrowers shall have
delivered to the Agent financial projections with respect to
the Borrowers, accompanied by a statement by the Borrowers that
such projections are based on assumptions believed by the
Borrowers in good faith to be reasonable as to the future
financial performance of the Borrowers, satisfactory to the
Required Banks.
(i) Insurance. Set forth on Annex III is a summary
of all insurance policies maintained by the Borrowers and their
respective Subsidiaries, and the insurance coverage provided
for the Borrowers by such insurance policies shall be
reasonably satisfactory to the Required Banks.
(j) Indebtedness, etc. On or prior to the Closing
Date and except as set forth on Annex V, the Borrowers shall
have received all necessary consents or waivers or amended,
supplemented or otherwise modified, repaid or defeased their
outstanding Indebtedness in a manner and on terms reasonably
satisfactory to the Agent such that there exists no default or
potential default (as a result of the consummation of the
transactions contemplated hereby) with respect to such
Indebtedness or under any note, evidence of indebtedness,
mortgage, deed of trust, security document or other agreement
relating to such Indebtedness and such indentures, notes,
evidences of indebtedness, mortgages, deeds of trust or other
agreements relating to such Indebtedness shall not contain any
restriction on the ability of any of the Borrowers to enter
into the Mortgages, Pledge Agreements or other Security
Documents or the granting of any Lien in favor of the Banks in
connection therewith, or contain any financial covenants,
agreements or tests applicable to any of the Borrowers.
Annex VIII sets forth a true list of all Liens other than
<PAGE> 23
-17-
Permitted Encumbrances on the property of the Borrowers as of
the Closing Date.
(k) Security Documents and Guarantees. The Security
Documents and the Guarantees shall have been duly executed and
delivered by the respective parties thereto and there shall
have been delivered to the Agent (i) certificates representing
all Pledged Securities (if certificated), together with
executed and undated stock powers and/or assignments in blank,
(ii) evidence of the filing of appropriate financing statements
or comparable documents under the provisions of the UCC,
applicable domestic or local laws, rules or regulations in each
of the offices where such filing is necessary or appropriate to
grant to the Agent a perfected first priority Lien on such
Collateral superior to and prior to the rights of all third
persons and subject to no other Liens, (iii) certified copies
of Requests for Information (Form UCC-11 or the equivalent), or
equivalent reports or lien search reports listing all effective
financing statements or comparable documents which name any
Borrower or Subsidiary Guarantor as debtor and which are filed
in those jurisdictions in which any of the Collateral is
located and the jurisdictions in which any Borrower's or
Subsidiary Guarantor's principal place of business is located,
none of which shall encumber the Collateral covered or intended
or purported to be covered by the Security Documents and
(iv) evidence of the completion of all recordings and filings
of each Security Document related to Mortgaged Property and
delivery of such other security and other documents as may be
necessary or, in the opinion of Agent, desirable to perfect the
Liens created, or purported or intended to be created, by the
Security Documents.
(l) Consents, etc. All material governmental and
third party approvals and consents, if any, in connection with
the transactions contemplated by the Credit Documents, and in
either case otherwise referred to herein or therein to be
completed on or before the Closing Date shall have been
obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by
any competent authority. There shall not exist any judgment,
order, injunction or other restraint issued or filed with
respect to the making of the Loans hereunder.
(m) Channel Lease Notices/Consents. The Borrowers
shall have delivered to the Agent (i) evidence satisfactory to
the Agent that the Borrowers delivered to each owner and lessor
of each System Agreement listed on Annex XVI hereto a Channel
Lease Notice, substantially in the form of Exhibit K hereto,
and (ii) evidence satisfactory to the Agent that a Channel
Lease Consent, substantially in the form of Exhibit L hereto,
<PAGE> 24
-18-
has been delivered to each owner and lessor of each System
Agreement other than those described above in (i).
(n) UCC-1 Amendments. There shall have been
delivered to the Agent evidence of the filing of amendments to
the financing statements filed by CAI Wireless System, Inc. as
secured party in each office where a financing statement has
been filed naming CAI Wireless Systems, Inc. as secured party,
stating that, notwithstanding that CAI filed a financing
statement prior to the Agent, (i) the Agent has a perfected
first priority Lien on the Collateral superior and prior to the
rights of CAI and (ii) the obligations under the promissory
note dated August 10, 1995 executed by the Company are
subordinate to the Obligations under this Agreement.
(o) Registration Rights Agreement. The Registration
Rights Agreement shall have been duly executed and delivered by
the respective parties thereto.
The acceptance of the proceeds of each Borrowing of
Initial Revolving Loans shall constitute a representation and
warranty by each Borrower to each of the Banks that all of the
applicable conditions specified above have been satisfied or
waived as of that time and that, at the time of a Borrowing of
such Initial Revolving Loan and the conditions specified in
Section 4.02 have been satisfied or waived. All of the
certificates, legal opinions and other documents and papers
referred to in this Section 4.01, unless otherwise specified,
shall be delivered to the Agent at the Agent's Office (or such
other location as may be specified by the Agent) for the
account of each of the Banks and in sufficient counterparts for
each of the Banks and shall be satisfactory in form and
substance to the Agent.
4.02 Conditions Precedent to All Revolving Loans.
The obligation of the Banks to make all Revolving Loans is
subject, at the time of each such Revolving Loan, to the
satisfaction of the following conditions:
(a) Effectiveness. This Agreement shall have become
effective as provided in Section 11.10.
(b) No Default; Representations and Warranties. At
the time of the making of each Revolving Loan and also after
giving effect thereto (i) there shall exist no Default or Event
of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at
such time shall be true and correct in all material respects
with the same effect as though such representations and
warranties had been made on and as of the date of the making of
<PAGE> 25
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such Revolving Loan, unless such representation and warranty
expressly indicates that it is being made as of any other
specific date in which case on and as of such other date.
(c) Adverse Change, etc. (i) Since June 30, 1995,
nothing shall have occurred or become known which the Required
Banks or the Agent shall have determined has a Materially
Adverse Effect.
(ii) All material governmental and third party
approvals and consents (including, without limitation, all
material approvals and consents required in connection with any
environmental statutes, rules or regulations), if any, in con-
nection with the conduct of the business of each Borrower or
its respective Subsidiaries shall have been obtained and remain
in effect.
(iii) There shall not exist any judgment, order,
injunction or other restraint issued or filed with respect to
the making of any Revolving Loans hereunder the effect of which
judgment, order, injunction or restraint is adverse to any
Bank.
(d) Documentation and Opinions of Counsel. The
Agent shall have received such documentation and opinion or
opinions, addressed to each of the Banks, from counsel to each
Borrower as may be reasonably required, with reasonable notice
under the circumstances, by and shall be reasonably
satisfactory to the Agent from (i) such counsel to each
Borrower, (ii) FCC counsel and (iii) appropriate local counsel,
which opinions shall cover such matters as reasonably requested
by, and be in form and substance satisfactory to, the Agent.
(e) Margin Rules. On the date of each Borrowing of
Revolving Loans, neither the making of any Revolving Loan nor
the use of the proceeds thereof will violate the provisions of
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
(f) Real Property Disclosure. Each Borrower shall
have made all notifications, registrations, and filings in
accordance with all State, Local and Foreign Real Property
Disclosure Requirements applicable to the Real Property,
including the use of forms provided by state or local agencies,
where such forms exist, whether to the Borrowers or to or with
the state or local agency.
The acceptance of the proceeds of each Borrowing of
Revolving Loans shall constitute a representation and warranty
by each Borrower to each of the Banks that all of the
<PAGE> 26
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applicable conditions specified in Section 4.02 have been
satisfied or waived.
All of the certificates, legal opinions and other
documents and papers referred to in this Section 4.02, unless
otherwise specified, shall be delivered to the Agent at the
Agent's Office (or such other location as may be specified by
the Agent) for the account of each of the Banks and in
sufficient counterparts for each of the Banks and shall be
satisfactory in form and substance to the Agent.
SECTION 5. Representations, Warranties and
Agreements. In order to induce the Banks to enter into this
Agreement and to make the Revolving Loans provided for herein,
the Borrowers jointly and severally make the following
representations and warranties to, and agreements with, the
Banks, all of which shall survive the execution and delivery of
this Agreement and the making of the Revolving Loans (with the
execution and delivery of this Agreement and the making of each
Revolving Loan thereafter being deemed to constitute a
representation and warranty that the matters specified in this
Section 5 are true and correct in all material respects as of
the date of each such Revolving Loan unless such representation
and warranty expressly indicates that it is being made as of
any specific date):
5.01 Corporate Status. Each Borrower and each of
its respective Subsidiaries (i) is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its organization; (ii) has the requisite
corporate or other organizational power and authority and has
obtained all requisite governmental licenses, authorizations,
consents and approvals to own and operate its property and
assets and to transact the business in which it is engaged and
presently proposes to engage, except for those governmental
licenses, authorizations, consents or approvals the failure of
which to be so obtained would not have a Materially Adverse
Effect and (iii) is duly qualified and is authorized to do
business and is in good standing in all jurisdictions where it
is required to be so qualified and where the failure to be so
qualified would have a Materially Adverse Effect.
5.02 Corporate Power and Authority; Business. Each
Borrower and each of its respective Subsidiaries has the
requisite corporate power and authority to execute, deliver and
carry out the terms and provisions of the Documents to which it
is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of the
Documents to which it is a party. Each Borrower and each of
its respective Subsidiaries has duly executed and delivered
<PAGE> 27
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each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such
Person enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
5.03 No Violation. Except as disclosed on Annex
XII, neither the execution, delivery and performance by any
Borrower or its respective Subsidiaries of this Agreement or
the other Documents to which it is a party nor compliance with
the terms and provisions hereof and thereof, nor the
consummation of the transactions contemplated herein and
therein (i) will contravene any applicable provision of any
law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of any
of the terms, covenants, conditions or provisions of, or
constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or
the obligation to create or impose) any Lien upon any of the
property or assets of any Borrower or its respective
Subsidiaries pursuant to the terms of any indenture, mortgage,
deed of trust, agreement or other instrument to which any
Borrower or its respective Subsidiaries is a party or by which
it or any of its property or assets is bound or to which it may
be subject or (iii) will violate any provision of the charter
or by-laws of any Borrower or its respective Subsidiaries,
except, in each case, where such contravention, conflict,
inconsistency, breach, default, creation, imposition,
obligation or violation would not have a Materially Adverse
Effect.
5.04 Litigation. Except as disclosed on Annex XI,
there are no actions, judgments, suits or proceedings pending
or, to the Borrowers' knowledge, threatened with respect to any
Borrower or its respective Subsidiaries as to which there is a
reasonable likelihood of a Materially Adverse Effect.
5.05 Use of Proceeds. (a) All the proceeds of all
Revolving Loans to be made hereunder shall be utilized to make
payments as set forth in the recitals hereto; provided that
Borrowers may use the proceeds of Revolving Loans to make
interest payments under this Agreement.
(b) Neither the making of any Revolving Loan
hereunder, nor the use of the proceeds thereof, will violate or
be inconsistent with the provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
<PAGE> 28
-22-
5.06 Governmental Approvals, etc. Except with
respect to the consents referenced in Section 4.01(m)(ii), no
order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by,
any third party or any governmental or public body or
authority, or by any subdivision thereof, including but not
limited to any radio, television or other license, permit,
certificate or approval granted or issued by the FCC or any
other Governmental Authority (including without limitation any
MDS, MMDS, OFS, ITFS, business radio, earth station or
experimental licenses or permits issued by the FCC) (other than
those orders, consents, approvals, licenses, authorizations or
validations which have previously been obtained or made and
except for filings to perfect security interests granted
pursuant to the Security Documents, all of which will be
accomplished on or prior to the Closing Date), is required to
authorize or is required in connection with (i) the execution,
delivery and performance of any Document or the transactions
contemplated therein or (ii) the legality, validity, binding
effect or enforceability of any Document; provided, however, to
the extent the performance of any Document or the transactions
contemplated therein involves a transfer of control or
assignment of any license, permit, certificate or other
authorization issued by the FCC, then FCC approval may be
required prior to such transfer of control or assignment. At
the time of the making of the Revolving Loans, there does not
exist any judgment, order, injunction or other restraint issued
or filed with respect to the making of Revolving Loans or the
performance by the Borrowers or their respective Subsidiaries
of their respective obligations under the Documents.
5.07 Investment Company Act. Neither the Borrowers
nor any of their respective Subsidiaries is, or will be after
giving effect to the transactions contemplated hereby, an
"investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended, or subject to any federal or
local statute or regulation limiting its ability to incur
indebtedness for money borrowed or guarantee such indebtedness
as contemplated hereby or by any other Credit Document.
5.08 Public Utility Holding Company Act. Neither
the Borrowers nor any of their respective Subsidiaries is, or
will be after giving effect to the transactions contemplated
hereby, a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as
amended.
<PAGE> 29
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5.09 True and Complete Disclosure. All factual
information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of the Borrowers in writing to any
Bank (including, without limitation, all information contained
in the Credit Documents and the Evaluation Materials) for
purposes of or in connection with this Agreement or any
transaction contemplated herein is (or was, on the date of
making any Revolving Loans), and all other such factual
information (taken as a whole) hereafter furnished by or on
behalf of any such Person in writing to any Bank will be, true
and accurate in all material respects on the date as of which
such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such
information not misleading at such time in light of the
circumstances under which such information was provided. The
projections and pro forma financial information contained in
such materials are based on good faith estimates and
assumptions believed by such Persons to be reasonable at the
time made, it being recognized by the Banks that such
projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by
any such projections may differ from the projected results.
There is no fact known to any Borrower which materially and
adversely affects the business, operations, property, assets,
nature of assets, liabilities, condition (financial or
otherwise) or prospects of any Borrower, which has not been
disclosed herein or in such other documents, certificates and
written statements furnished to the Banks for use in connection
with the transactions contemplated hereby.
5.10 Financial Condition; Financial Statements;
Projections. (a) None of the Borrowers is entering into the
arrangements contemplated hereby and by the other Credit
Documents, or intends to make any transfer or incur any
obligations hereunder or thereunder with actual intent to
hinder, delay or defraud either present or future creditors.
On and as of the Closing Date, on a pro forma basis after
giving effect to the Indebtedness incurred and Liens and
Guarantees created, or to be created, by each Borrower, (w) the
Borrowers do not expect that final judgments against any of
them in actions for money damages with respect to pending or
threatened litigation will be rendered at a time when, or in an
amount such that, such Person will be unable to satisfy any
such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in
any such actions and the earliest reasonable time at which such
judgments might be rendered and the cash available to each
Borrower, after taking into account all other anticipated uses
of the cash of such Borrower (including the payments on or in
respect of debts (including its Contingent Obligations));
<PAGE> 30
-24-
(x) no Borrower or its respective Subsidiaries will have
incurred or intends to, or believes that it will, incur debts
beyond its ability to pay such debts as such debts mature
(taking into account the timing and amounts of cash to be
received by such Person from any source, and of amounts to be
payable on or in respect of debts of such Person and the
amounts referred to in the preceding clause (w)); (y) each
Borrower and its respective Subsidiaries, after taking into
account all other anticipated uses of the cash of such Person,
anticipates being able to pay all amounts on or in respect of
debts of such Person when such amounts are required to be paid;
and (z) each Borrower and its respective Subsidiaries will have
sufficient capital with which to conduct its present and
presently proposed business and the property of such Borrower
and its respective Subsidiaries does not constitute
unreasonably small capital with which to conduct its present or
proposed business. For purposes of this Section 5.10, "debt"
means any liability on a claim, and "claim" means a (i) right
to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(b) The Borrowers have heretofore delivered to the
Banks audited financial statements including a balance sheet,
statements of income, of cash flow and of stockholders' equity
of each Borrower for the twelve months ended December 31, 1994,
together with unqualified opinions of Ernst & Young, and
unaudited financial statements for each Borrower for the months
ended June 30, 1995. All the financial statements for each
Borrower referred to in the preceding sentence were prepared in
accordance with GAAP consistently applied and fairly present
the financial position of such Borrower for the period covered
thereby, except in the case of interim financial statements for
normal year-end adjustments and the absence of footnote
disclosures. Except as contemplated hereby, since December 31,
1994 no event or events have occurred that are likely to have a
Materially Adverse Effect.
(c) As of the Closing Date, except as fully
reflected or reserved against in the financial statements and
the notes thereto described in Section 5.10(b), there were no
liabilities or obligations with respect to any Borrower or any
of their respective Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether
or not due) which, any individually or in aggregate, would be
<PAGE> 31
-25-
material to such Borrower or any of their respective
Subsidiaries. As of the Closing Date, the Borrowers do not
know of any basis for the assertion against any Borrower or any
of their respective Subsidiaries of any liability or obligation
of any nature whatsoever that is not fully reflected in the
financial statements described in Section 5.10(b), except as
incurred by any Borrower or any of their respective
Subsidiaries which, either individually or in the aggregate,
could reasonably be expected to be material to such Borrower or
any of their respective Subsidiaries.
5.11 Security Interests. The Security Documents
will create, in favor of the Collateral Agent for the benefit
of the Banks, as security for the obligations purported to be
secured thereby, a valid and enforceable perfected first
priority security interest in and Lien upon all of the
Collateral, superior to and prior to the rights of all third
persons and subject to no other Liens except Prior Liens
applicable to such Collateral. The mortgagor under each
Mortgage has good and marketable title to the Mortgaged
Property free and clear of all Liens other than Prior Liens.
The respective pledgor or assignor, as the case may be, has (or
on and after the time it executes the respective Security
Document, will have) good and marketable title to all items of
Collateral (other than real property subject to a Mortgage)
covered by such Security Document free and clear of all Liens
except Prior Liens. No filings or recordings are required in
order to perfect the security interests created under any
Security Document except for filings or recordings required in
connection with any such Security Document which shall have
been made prior to or contemporaneously with the execution and
delivery thereof.
5.12 Tax Returns and Payments. Each of the
Borrowers and each of its respective Subsidiaries has filed all
tax returns required to be filed by it and has paid all
material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those
contested in good faith and for which adequate reserves have
been established. Each of the Borrowers and each of its
respective Subsidiaries has paid, or has provided adequate
reserves (in accordance with GAAP) for the payment of, all
federal, state, local and foreign income taxes (including,
without limitation, franchise taxes based upon income)
applicable for all prior fiscal years and for the current
fiscal year to the date hereof. The Borrowers know of no
proposed tax assessment against any Borrower or any of its
respective Subsidiaries that could reasonably be expected to
have a Materially Adverse Effect which is not being actively
contested in good faith by such Person to the extent affected
<PAGE> 32
-26-
thereby in good faith and by appropriate proceedings; provided
that such reserves or other appropriate provisions, if any, as
shall be required in conformity with GAAP shall have been made
or provided therefor.
5.13 ERISA. (a) Each Borrower, its respective
Subsidiaries and its respective ERISA Affiliates are in
compliance in all material respects with all applicable
provisions of ERISA and the regulations and published
interpretations thereunder with respect to all employee benefit
plans. None of the Borrowers, its respective Subsidiaries nor
their respective ERISA Affiliates maintains or contributes to,
or during the last five years has maintained or contributed to,
any Pension Plan or Multiemployer Plan.
(b) Assuming that no portion of the Revolving Loans
to be advanced hereunder is attributable, directly or
indirectly, to the assets of any employee benefit plan, the
execution, performance and delivery of the Credit Documents by
any party thereto will not involve any prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of
the Code for which an exemption therefrom is not available.
As used in this Section 5.13, the term "employee
benefit plan" has the meaning specified in Section 3(3) of
ERISA.
5.14 Patents, etc. Each Borrower and its respective
Subsidiaries owns or possesses adequate licenses or other
rights to use all patents, patent applications, trademarks,
trademark applications, servicemarks, servicemark applications,
trade names, copyrights, trade secrets and know-how
(collectively, the "Intellectual Property"), that are necessary
for the operation of its respective businesses as presently
conducted and as proposed to be conducted. No claim is pending
or threatened to the effect that any Borrower and its
respective Subsidiaries infringes upon or conflicts with the
asserted rights of any other person under any Intellectual
Property, and there is no basis for any such claim (whether or
not pending or threatened). No claim is pending or threatened
to the effect that any such Intellectual Property owned or
licensed by any Borrower and its respective Subsidiaries or
which any Borrower and its respective Subsidiaries otherwise
has the right to use is invalid or unenforceable by such
Borrower and its respective Subsidiaries, and there is no basis
for any such claim (whether or not pending or threatened).
5.15 Compliance with Laws, etc. Except as disclosed
on Annex XI, each Borrower, its respective Subsidiaries and the
operation of the System is in compliance with all material laws
<PAGE> 33
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and regulations, including without limitation those relating to
pollution and environmental control, equal employment
opportunity and employee safety, the Communications Act, and
all rules and regulations and published policies of the FCC and
the Copyright Office, in all jurisdictions in which it is
presently doing business, and each Borrower and its respective
Subsidiaries will comply with all such laws and regulations
which may be imposed in the future in jurisdictions in which it
may then be doing business other than those non-compliance with
which would not have a Materially Adverse Effect. The
Borrowers and their Subsidiaries have executed written
retransmission consent agreements with all broadcast television
stations from which such agreements are needed for the carriage
of such stations on the System pursuant to 47 C.F.R. Section
76.64, have recorded or deposited with and paid to the
Copyright Office all material notices, Statements of Account,
royalty fees and other documents and instruments and sums
required, if any, under Title 17 of the United States Code and
the rules and regulations thereunder with respect to the
System, and have filed all material applications, reports or
other information and have made all payments required under the
rules and regulations of the FCC, the FAA or any other federal
or state agency or entity having jurisdiction over the
operations of the System.
5.16 Properties. Each Borrower and its respective
Subsidiaries has good and marketable title to and beneficial
ownership of all material properties owned by it, including
after the Closing Date all property reflected in the most
recent balance sheet referred to in Section 5.10(b) (except as
sold or otherwise disposed of since the date of such balance
sheet in the ordinary course of business), free and clear of
all Liens, other than Permitted Encumbrances. Each Borrower
and its respective Subsidiaries holds all material licenses,
permits, leases, certificates of occupancy or operation and
similar certificates and clearances of municipal and other
authorities necessary to own and operate the System in the
manner and for the purposes currently operated by such party.
Each Real Property and each Mortgaged Property is suitable for
its intended purposes and is served by such utilities as are
necessary for the operation thereof. There are no actual, or
to the best knowledge of the Borrowers, threatened or alleged
defaults of a material nature with respect to any leases of
Real Property under which any Borrower is lessor or lessee.
5.17 Securities. Except as set forth on Annex IV,
there are not, as of the Closing Date, any existing options,
warrants, calls, subscriptions, convertible or exchangeable
securities, rights, agreements, commitments or arrangements for
any Person to acquire any capital stock of the Borrowers or any
<PAGE> 34
-28-
other securities convertible into, exchangeable for or
evidencing the right to subscribe for any such capital stock.
5.18 Collective Bargaining Agreements. There are
not currently, and at the Closing Date there will be no,
collective bargaining or similar agreements applicable to any
Borrower.
5.19 Indebtedness Outstanding. Set forth on Annex V
hereto is a list and description of (a) all Indebtedness of the
Borrowers (other than the Revolving Loans) that will be
outstanding immediately after the Closing Date and (b) all
Indebtedness of the Borrowers that will be repaid, defeased,
transferred or otherwise terminated on or prior to the Closing
Date.
5.20 Environmental Protection. Except as would not
reasonably be expected to have a Materially Adverse Effect:
(a) Each Borrower and its respective Subsidiaries
has obtained all permits, licenses and other
authorizations (hereinafter collectively referred to as
"Authorizations") which are required with respect to the
current operation of its business, assets and the use,
ownership and operation of Real Property under any
Environmental Law and each such Authorization is in full
force and effect.
(b) Each Borrower and its respective Subsidiaries is
in compliance with all terms and conditions of the
Authorizations specified in subsection 5.20(a) above, and
are also in compliance with, and not subject to liability
under, any Environmental Law (including, without
limitation, compliance with standards, schedules and
timetables therein), including without limitation those
arising under the Resource Conservation and Recovery Act
of 1976, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization
Act of 1986 ("CERCLA"), the Federal Water Pollution
Control Act, as amended, the Federal Clean Air Act, as
amended, and the Toxic Substances Control Act.
(c) Except as disclosed on Annex IX hereto, there is
no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for
information pending or, to the knowledge of the Borrowers,
threatened against any Borrower or its respective
Subsidiaries under any Environmental Law.
<PAGE> 35
-29-
(d) No Lien has been recorded under any
Environmental Law with respect to any assets, facility or
Real Property owned, operated, leased or controlled by any
of the Borrowers or any of their respective Subsidiaries.
(e) None of the Borrowers nor their respective
Subsidiaries has received notice that it has been
identified as a potentially responsible party under CERCLA
or any comparable state or foreign law nor has any Credit
Party received any notification that any hazardous
substances or any pollutant or contaminant, as defined in
CERCLA and its implementing regulations, or any toxic
substance, hazardous waste, hazardous constituents,
hazardous materials, asbestos or asbestos containing
material, petroleum, including crude oil and any fractions
thereof, or other wastes, chemicals, substances or
materials regulated by any Environmental Laws
(collectively "Hazardous Materials") that it or any of its
respective predecessors in interest has used, generated,
stored, treated, handled, transported or disposed of or
arranged for transport for disposal or treatment of has
been found at any site at which any governmental agency or
private party is conducting or planning to conduct an
investigation or other action pursuant to any
Environmental Law.
(f) Except as disclosed on Annex IX hereto, there
have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
disposing or dumping) of Hazardous Materials by any
Borrower or its respective Subsidiaries on, at, upon, into
or from any of the Real Properties or facilities thereon.
Except as disclosed on Annex IX annexed hereto, to the
best knowledge of the Borrowers after due inquiry, there
have been no such releases on, at, upon, under, from or
into any real properties adjacent to any of the Real
Properties that, through soil, air, surface water or
groundwater migration or contamination, may be located on,
in or under such Real Properties.
(g) There is no asbestos in, on, or at any Real
Property or any facility or equipment of any Borrower or
its respective Subsidiaries.
(h) No Real Property of any Borrower or its
respective Subsidiaries is (i) listed or proposed for
listing on the National Priorities List under CERCLA or is
(ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List
<PAGE> 36
-30-
promulgated pursuant to CERCLA, or on any comparable list
maintained by any foreign, state or local governmental
authority having jurisdiction over any such Real Property.
(i) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions
or plans which may interfere with or prevent compliance by
any of the Borrowers or any of their respective
Subsidiaries with any Environmental Law, or which may give
rise to any liability under any Environmental Law,
including, without limitation, liability under CERCLA or
similar state, local or foreign laws, or otherwise form
the basis of any claim, action, demand, suit, proceeding,
hearing or notice of violation, study or investigation,
based on or related to the manufacture, processing,
distribution, use, generation, treatment, storage,
disposal, transport, shipping or handling, or the
emission, discharge, release or threatened release into
the environment, of any Hazardous Materials.
5.21 Environmental Investigations. All
environmental investigations, assessments, studies, audits or
reviews conducted of which the Borrowers have actual knowledge
in relation to the current or prior business of any Borrower or
its respective Subsidiaries or any Real Property or facility
now or previously owned or leased by any Borrower or its
respective Subsidiaries have been delivered to the Agent.
5.22 Business, System Agreements and Other Material
Agreements. (a) Annex X attached hereto accurately and
completely lists, with respect to the System, all System
Agreements and other material agreements with respect to the
System (copies of which have been delivered to the Agent)
presently in effect in connection with the present or
anticipated conduct of the business of the Borrowers and their
Subsidiaries.
(b) Except as disclosed on Annex XI hereto, (i) the
Borrowers and their Subsidiaries have obtained and possess all
System Agreements, patents, copyrights, certificates of
confirmation, licenses, permits, trademarks, and trade names,
or rights thereto, necessary to conduct their business
substantially as now conducted or proposed to be conducted
(except where the failure to obtain any of the foregoing would
be reasonably likely not to have a Materially Adverse Effect),
and, to the Borrowers' knowledge, the Borrowers and their
Subsidiaries are not in violation of any valid rights of others
with respect to any of the foregoing; (ii) each of the
foregoing is in full force and effect, has been validly
assigned to, issued in the name of, or grants lease rights to
<PAGE> 37
-31-
the Borrowers, the Borrowers and their Subsidiaries have
fulfilled and performed all of their material obligations with
respect thereto, and the Borrowers know of the occurrence of no
event, investigation or threatened investigation which permits,
or after passage of time or giving of notice or both would
permit, revocation or termination of any of the foregoing;
(iii) all consents necessary to the assignment of the System
Agreements to the Borrowers or their Subsidiaries, as the case
may be, have been approved by final orders of all Governmental
Authorities and other Persons as to which all applicable
administrative and judicial appeal, review and reconsideration
periods have expired; (iv) no other license, permit or
franchise is necessary to the operation by the Borrowers or
their Subsidiaries, as the case may be, of the System as now
conducted or proposed to be conducted; and (v) the Borrowers
and their Subsidiaries have obtained or possess all licenses,
leases, conduit use, equipment rental and microwave or
satellite relay agreements necessary for the operation of the
System as required by the System Agreements.
(c) Except as disclosed on Annex XI hereto, as of
the Closing Date, (i) each System Agreement listed under
Annex X hereto is in full force and effect and no other
approval, application, filing, registration, consent or other
action of any Governmental Authority (except for FCC
requirements) is required to enable the Borrowers to operate
under any such System Agreement and (ii) neither the Borrowers
nor, to the Borrowers' knowledge, any other Person has received
any notice from any Governmental Authority or other Person with
respect to any breach of any covenant under, or any default
with respect to, any such System Agreement or with respect to
any breach of any covenant under, or any default with respect
to, any license or permit issued to the licensor or lessor to
such System Agreement.
SECTION 6. Affirmative Covenants. Each Borrower
covenants and agrees that on the Closing Date and thereafter
for so long as this Agreement is in effect and until the Total
Commitment has terminated and the Revolving Loans together with
interest and fees are paid in full and all other Obligations
incurred hereunder, to the extent due and payable, are paid in
full:
6.01 Information Covenants. The Borrowers will
furnish or cause to be furnished to each Bank:
(a) As soon as available and in any event within 90
days after the close of each fiscal year of each Borrower,
the consolidating and consolidated balance sheets of such
Borrower and its Subsidiaries as at the end of such fiscal
<PAGE> 38
-32-
year and the related consolidating and consolidated
statements of income, of stockholders' equity and of cash
flows for such fiscal year, setting forth comparative
consolidating and consolidated figures for the preceding
fiscal year and a report on such consolidated balance
sheets and financial statements by independent certified
public accountants of recognized national standing, which
report shall not be qualified as to the scope of audit or
as to the status of such Borrower and its Subsidiaries as
a going concern and shall state that such consolidated
financial statements present fairly the consolidated
financial position of such Borrower and its Subsidiaries
as at the dates indicated and the results of their
operations and their cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with
prior years (except for such changes with which the
independent certified public accountants concur) and the
examination by such accountants was conducted in
accordance with generally accepted auditing standards.
(b) As soon as available and in any event within 45
days after the close of each of the first three quarterly
accounting periods in each fiscal year of each Borrower,
commencing with the fiscal quarter ending on September 30,
1995, the consolidating and consolidated balance sheet of
such Borrower and its Subsidiaries as at the end of such
quarterly period and the related consolidating and
consolidated statements of income, of stockholders' equity
and of cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day
of such quarterly period, and in each case setting forth
comparative consolidating and consolidated figures for the
related periods in the prior fiscal year, subject to
normal year-end audit adjustments.
(c) As soon as practicable and in any event within
30 days after the end of the first full month ending after
the Closing Date, (i) the consolidating and consolidated
balance sheet of each Borrower and its Subsidiaries as at
the end of such period and (ii) the related statements of
income and cash flows of such Borrower and its
Subsidiaries, in each case for such fiscal month and for
the period from the beginning of the then current fiscal
year to the end of such fiscal month, setting forth in
comparative form the corresponding periods of the prior
fiscal year.
(d) Together with each delivery of financial
statements of each Borrower and its Subsidiaries pursuant
to subsection (a) above, a written statement by the
<PAGE> 39
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independent public accountants giving the report thereon
(i) stating that their audit examination has included a
review of the terms of Sections 6, 7, 8 and 9 of this
Agreement as they relate to accounting matters but without
having conducted any special auditing procedures in
connection therewith, (ii) stating whether, in connection
with their audit examination, any condition or event which
constitutes a Default or Event of Default has come to
their attention, and if such a condition or event has come
to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall
not be liable by reason of any failure to obtain knowledge
of any such Default or Event of Default that would not be
disclosed in the course of their audit examination, and
(iii) stating that based on their audit examination
nothing has come to their attention which causes them to
believe that as of the end of such fiscal year of such
Borrower there existed a Default or an Event of Default
related to the breach of any covenant set forth in Section
6 or 7 as they relate to accounting matters and if such a
condition or event has come to their attention, specifying
the nature and period of existence thereof and what action
the Borrowers have taken, are taking and propose to take
with respect thereto.
(e) At least 30 days prior to the commencement of
each fiscal year, budgets of each Borrower in reasonable
detail for each month of such fiscal year, as customarily
prepared by management for its internal use, setting
forth, with appropriate discussion, the principal assump-
tions upon which such budgets are based. Together with
each delivery of financial statements pursuant to Sec-
tions 6.01(a), (b) and (c), a comparison of the current
year to date financial results against the budgets
required to be submitted pursuant to this subsection (e)
shall be presented.
(f) At the time of the delivery of the financial
statements provided for in Sections 6.01(a), (b) and (c),
certificates of the chief financial officer, controller,
chief accounting officer or other Authorized Officer of
each of the Borrowers, respectively, to the effect that no
Default or Event of Default exists, or, if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what actions have been or will be taken
in respect thereof, which certificate shall be accompanied
by a Compliance Certificate in a form reasonably
acceptable to the Agent setting forth the calculations
required to establish whether the Borrowers were in
compliance with the covenants in this Agreement (including
<PAGE> 40
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without limitation the covenants set forth in Sections
7.05 and 7.10 inclusive) as at the end of such fiscal
period or year, as the case may be.
(g) Promptly upon receipt thereof, a copy of each
annual "management letter" submitted to any Borrower by
its independent accountants in connection with any annual
audit made by them of the books of such Borrower or any of
its Subsidiaries.
(h) Promptly upon their becoming available, copies
of all consolidating and consolidated financial
statements, reports, notices and proxy statements sent or
made available generally by the Borrowers or any
Subsidiary of the Borrowers to its security holders in
their capacity as such (other than to the Borrowers or
another Subsidiary) of all regular and periodic reports
and all registration statements and prospectuses, if any,
filed by the Borrowers or any of its Subsidiaries with any
securities exchange or with the SEC and of all press
releases and other statements made available generally by
the Borrowers or any Subsidiary of the Borrowers to the
public concerning material developments in the business of
the Borrowers and its Subsidiaries.
(i) Promptly upon any officer of any of the
Borrowers obtaining knowledge (w) of any condition or
event which constitutes a Default or Event of Default, or
becoming aware that any Bank has given any notice or taken
any other action with respect to a claimed Default or
Event of Default under this Agreement, (x) that any Person
has given any notice to any of the Borrowers or taken any
other action with respect to a claimed default or event or
condition of the type referred to in Section 8.04, or
(y) of a material adverse change in the business,
operations, properties, assets, nature of assets,
condition (financial or otherwise) or prospects of any
Borrower and its Subsidiaries, taken as a whole, an
Officers' Certificate specifying the nature and period of
existence of any such condition or event, or specifying
the notice given or action taken by such holder or Person
and the nature of such claimed Default, Event of Default,
event or condition, or material adverse change, and what
action the Borrowers have taken, are taking and propose to
take with respect thereto.
(j) (w) Promptly upon any officer of any of the
Borrowers obtaining knowledge of the institution of, or
written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or
<PAGE> 41
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affecting any Borrower or its respective Subsidiaries or
any property of any Borrower or its respective
Subsidiaries not previously disclosed to the Banks, which
action, suit, proceeding, governmental investigation or
arbitration seeks (or in the case of multiple actions,
suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations
or circumstances which seek) recovery from any Borrower or
its respective Subsidiaries aggregating $250,000 or more
(exclusive of claims covered by insurance policies unless
the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims),
or which pertains to a License issued by the FCC, or any
other government agency or entity, to the Borrowers or
their Subsidiaries, the Borrowers shall give notice
thereof to the Banks and provide such other information as
may be reasonably available to enable the Banks and their
counsel to evaluate such matters; (x) as soon as
practicable and in any event within 45 days after the end
of each fiscal quarter, the Borrowers shall provide a
quarterly report to the Banks covering the institution of,
or written threat of, any action, suit, proceeding,
governmental investigation or arbitration (not previously
reported) against or affecting any Borrower or its
respective Subsidiaries or any property of any Borrower or
its respective Subsidiaries not previously disclosed to
the Banks, which action, suit, proceedings, governmental
investigation or arbitration seeks (or in the case of
multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same
general allegations or circumstances which seek) recovery
from any Borrower or its respective Subsidiaries
aggregating $250,000 or more (exclusive of claims covered
by insurance policies unless the insurers of such claims
have disclaimed coverage or reserved the right to disclaim
coverage on such claims), and shall provide such other
information at such time as may be reasonably available to
enable the Banks and their counsel to evaluate such
matters; (y) in addition to the requirements set forth in
clauses (w) and (x) of this Section 6.01(j), the Borrowers
upon request shall promptly give notice of the status of
any action, suit, proceeding, governmental investigation
or arbitration covered by a report delivered to the Banks
pursuant to clause (w) or (x) above to the Banks and
provide such other information as may be reasonably
available to them to enable the Banks and their counsel to
evaluate such matters and (z) promptly upon any officer of
the Borrowers obtaining knowledge of any dispute in
respect of or the institution of, or written threat of,
any action, suit, proceeding, governmental investigation
<PAGE> 42
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or arbitration in respect of any material contract of any
Borrower or its respective Subsidiaries, the Borrowers
shall give notice thereof to the Banks and shall provide
such other information as may be reasonably available to
enable the Banks and their counsel to evaluate such
matters.
(k) Within 30 days of the last day of each fiscal
year of the Borrowers, the report in form and substance
reasonably satisfactory to Agent and the Required Banks
outlining all material insurance coverage maintained as of
the date of such report by each Borrower and outlining all
material insurance coverage planned to be maintained by
each Borrower in the subsequent fiscal year.
(l) To the extent reasonably requested by the Agent,
as soon as practicable and in any event within ten days of
the later of such request and the making of any such
amendment or waiver, copies of amendments or waivers with
respect to Indebtedness of any Borrower.
(m) As soon as reasonably possible, and in any event
within 15 days after the end of each month, a statement
signed by an Authorized Officer of the Borrowers setting
forth in reasonable detail as to the System (i) the number
of Subscribers as at the end of such month, (ii) the fees
paid by Subscribers during such month and the revenue per
Subscriber during such month, (iii) the number of
Subscribers terminating service during such month,
(iv) the number of new Subscribers for such month and
(v) the churn rate for such month.
(n) With reasonable promptness, such other
information and data with respect to any Borrower or its
respective Subsidiaries or any other similar entity in
which the Borrowers have an investment as from time to
time may be reasonably requested by any Bank.
6.02 Books, Records and Inspections. Each Borrower
will keep true books of records and accounts in which full and
correct entries will be made of all of its business transactions,
and will reflect in its financial statements adequate accruals
and appropriations to reserves, all in accordance with GAAP.
Each Borrower and its respective Subsidiaries will permit officers
and designated representatives of the Agent or any Bank to visit
and inspect any of the properties or assets of any Borrower or
its respective Subsidiaries in whomsoever possession, and to
examine the books of account of any Borrower or its respective
Subsidiaries and discuss the affairs, finances and accounts of any
Borrower or its respective
<PAGE> 43
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Subsidiaries with, and be advised as to the same by, its
officers and independent accountants (in the presence of such
officers), all at such reasonable times and intervals and to
such reasonable extent as the Agent or any Bank may reasonably
request.
6.03 Maintenance of Property; Insurance. (a) Each
Borrower and its respective Subsidiaries will exercise
commercially reasonable efforts to maintain or cause to be
maintained in good repair, working order and condition (subject
to normal wear and tear) all properties used in its businesses
and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof and will
maintain and renew as necessary all licenses, permits and other
clearances necessary to use and occupy such properties,
including without limitation all licenses, permits and other
Authorizations issued by the FCC.
(b) Subject to the provisions of subsection 6.03(c)
below, each Borrower and its respective Subsidiaries will
maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties
and business against loss or damage of the kinds customarily
insured against by corporations of established reputation
engaged in the same or similar businesses and similarly
situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations
to the extent that such types and such amounts of insurance are
available at commercially reasonable rates. Each Borrower and
its respective Subsidiaries will furnish to each Bank, upon
reasonable request, information as to the insurance carried,
and will not cancel, without replacement, any such insurance
without the reasonable consent of the Required Banks.
(c) Each Borrower and its respective Subsidiaries
will maintain in full force the insurance coverages specified
in the Mortgages and the other Security Documents.
6.04 Payment of Taxes. Each Borrower and its
respective Subsidiaries will pay and discharge all material
taxes, assessments and governmental charges or levies imposed
upon it or upon its income or profits, or upon any properties
belonging to it, including any fees imposed or required by the
FCC, the Copyright Office or any other government agency or
entity, prior to the date on which material penalties attach
thereto, and all lawful claims which, if unpaid, might become a
Lien or charge upon any properties of such Borrower or any of
its respective Subsidiaries or cause a failure or forfeiture of
title thereto; provided that no Borrower or any of its
respective Subsidiaries shall be required to pay any such tax,
<PAGE> 44
-38-
assessment, charge, levy or claim that is being contested in
good faith and by proper proceedings promptly instituted and
diligently conducted, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset that
may become subject to such Lien, if it has maintained adequate
reserves with respect thereto in accordance with and to the
extent required under GAAP.
6.05 Corporate Franchises. Each Borrower and its
respective Subsidiaries will do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence, rights and authority, except where such failure to
keep in full force and effect such rights and authority would
not have a Materially Adverse Effect.
6.06 Compliance with Statutes, etc. Each Borrower
and its respective Subsidiaries will comply with all applicable
statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the
ownership of its property (including (i) applicable statutes,
regulations, orders and restrictions relating to the protection
of the environment and (ii) the Communications Act) other than
those non-compliance with which could not reasonably be
expected to have a Materially Adverse Effect.
6.07 Performance of Obligations. Each Borrower and
its respective Subsidiaries will perform in all material
respects all of its respective obligations under the terms of
each mortgage, indenture, security agreement, other debt
instrument and material contract by which it is bound or to
which it is a party, except where such nonperformance would not
have a Materially Adverse Effect.
6.08 End of Fiscal Years; Fiscal Quarters. Each
Borrower will, for financial reporting purposes, and will cause
each of its Subsidiaries to, have its (i) fiscal years end on
December 31, and (ii) fiscal quarters end on March 31, June 30,
September 30, and December 31.
6.09 Use of Proceeds. All proceeds of the Revolving
Loans shall be used substantially as provided in the recitals
of this Agreement; provided that the Borrowers may use the
proceeds of Revolving Loans to make interest payments under
this Agreement.
6.10 Equal Security for Revolving Loans and
Revolving Notes; No Further Negative Pledges. (a) If any
Borrower or any of its respective Subsidiaries shall create or
assume any Lien upon any of its property or assets, whether now
<PAGE> 45
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owned or hereafter acquired and whether or not such property or
assets constitutes Collateral, other than Permitted
Encumbrances (unless prior written consent to the creation or
assumption thereof shall have been obtained from the Agent and
the Required Banks), it shall make or cause to be made effec-
tive provisions whereby the Obligations will be secured by such
Lien equally and ratably with any and all other Indebtedness
thereby secured as long as any such Indebtedness shall be
secured; provided that this covenant shall not be construed as
consent by the Agent and the Required Banks to any violation by
the Borrowers of the provisions of Section 7.03.
(b) Except with respect to prohibitions against
other encumbrances on specific property encumbered to secure
payment of particular Indebtedness permitted hereunder (which
Indebtedness relates solely to the acquisition or improvement
of such specific property), none of the Borrowers nor any of
their respective Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.11 Lender Meeting. The Borrowers will participate
in a meeting of the Banks once during each fiscal year
(commencing with the fiscal year ending December 31, 1995) to
be held at a location and a time selected by the Borrowers and
reasonably acceptable to the Agent.
6.12 Pledge of Additional Collateral. Subject to
Section 6.10(b), promptly, and in any event within 30 days
after the acquisition of assets of the type that would have
constituted Collateral (if the person acquiring such assets had
executed an appropriate Security Document on the Closing Date)
at the Closing Date (the "Additional Collateral"), the
Borrowers will, and will cause its respective Subsidiaries to,
take all necessary action, including delivering to the Agent an
amended Annex X to this Agreement and an amended Schedule D to
the General Security Agreements, and the filing of appropriate
financing statements under the provisions of the UCC,
applicable foreign, domestic or local laws, rules or regu-
lations in each of the offices where such filing is necessary
or appropriate to grant to the Collateral Agent a perfected
Lien in such Collateral pursuant to and to the full extent
required by the Security Documents and this Agreement. In the
event that any Borrower or its respective Subsidiaries acquires
an interest in Real Property, the Borrowers or their respective
Subsidiaries, as the case may be, will take such actions and
execute such documents as the Agent shall require to confirm
the Lien of a Mortgage, if applicable, or to create a new
Mortgage (including, without limitation, satisfaction of the
conditions set forth in subsections (b)(iii) and (g) of Section
<PAGE> 46
-40-
4.01). All actions taken by the parties in connection with the
pledge of Additional Collateral, including, without limitation,
costs of counsel for the Agent, shall be for the account of the
Borrowers, which shall pay all sums due on demand.
6.13 Security Interests. (a) The Borrowers shall,
as promptly as possible use their best efforts to, and cause
their Subsidiaries to use their best efforts to, provide the
Banks a perfected first priority Lien in all License Agreements
of the Borrowers and their Subsidiaries. Each Borrower and its
respective Subsidiaries will perform any and all acts and
execute any and all documents (including, without limitation,
the execution, amendment or supplementation of any financing
statement and continuation statement) for filing in any
appropriate jurisdiction under the provisions of the UCC, local
law or any statute, rule or regulation of any applicable
jurisdiction which are necessary in order to maintain or
confirm in favor of the Collateral Agent for the benefit of the
Banks a valid and perfected Lien on the Collateral and any
Additional Collateral, subject to no Liens except for Prior
Liens. The Borrowers shall, and shall cause their Subsidiaries
to, as promptly as practicable after the filing of any
financing statements, deliver to the Agent acknowledgment
copies of, or copies of lien search reports confirming the
filing of, financing statements duly filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable
judgment of the Agent, desirable to perfect the Lien created,
or purported or intended to be created, by each Security
Document.
(b) The parties recognize that as of the date of
this Agreement, the Borrowers may not be permitted under the
rules, regulations and policies of the FCC to provide the Banks
a perfected first priority Lien in any Licenses issued by the
FCC to the Borrowers or their Subsidiaries. At any time when
the Borrowers or their Subsidiaries are permitted under the
FCC's rules, regulations or policies to provide the Banks a
perfected first priority Lien in any Licenses issued by the FCC
to Borrower or their Subsidiaries, the Borrowers or their
Subsidiaries shall promptly take any and all actions necessary
to implement the provisions of this Section 6.13 so as to give
the Banks a perfected first priority Lien in any and all
Licenses issued by the FCC to the Borrowers or their
Subsidiaries.
6.14 Environmental Events. (a) The Borrowers will
promptly give notice to the Agent upon becoming aware thereof
(i) of any violation of any Environmental Law, (ii) of any
inquiry, proceeding, investigation or other action under any
Environmental Law, including without limitation a request for
<PAGE> 47
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information or a notice of potential environmental liability
from any foreign, federal, state or local environmental agency
or board or any other Person, or (iii) of the discovery of the
release of any Hazardous Material at, on, under or from any of
the Real Properties or any facility or equipment thereat in
excess of reportable or allowable standards or levels under any
Environmental Law, or in a manner and/or amount which could
reasonably be expected to result in liability under any
Environmental Law, in each case as to which there is a
reasonable possibility of a Materially Adverse Effect.
(b) In the event of the presence of any Hazardous
Material on any of the Real Properties which is in violation
of, or which could reasonably be expected to result in
liability under, any Environmental Law, in each case which
could reasonably be expected to have a Materially Adverse
Effect, each Borrower, upon discovery thereof, shall take all
necessary steps to initiate and expeditiously complete all
responsive, corrective and other action to mitigate and
eliminate any such adverse effect, and shall keep the Agent
informed of its actions and the results of such actions.
(c) The Borrowers shall provide the Agent with
copies of any notice, submittal or documentation provided by or
to any Borrower or any of its respective Subsidiaries to any
governmental authority or third party under any Environmental
Law if the matter which is the subject of the notice, submittal
or other documentation could reasonably be expected to result
in a Materially Adverse Effect. Such notice, submittal or
documentation shall be provided to the Agent promptly and, in
any event, within 5 Business Days after such material is
provided to the governmental authority or third party.
6.15 Issuance of Warrants. If on any Trigger Date
this Agreement has not been terminated in accordance with its
terms and all Indebtedness under this Agreement has not been
repaid, the Company shall issue to the Agent, for the ratable
account of the Banks, on each such Trigger Date a warrant to
purchase from the Company at the Initial Exercise Price 100,000
shares of Common Stock, in the form of Exhibit M hereto, except
for such changes therein as shall have been approved by the
Required Banks.
6.16 Regulatory Compliance. The Borrowers and their
Subsidiaries shall at all times operate the System in material
compliance with the terms of any Licenses issued to the
Borrowers or their Subsidiaries by the FCC or any other
governmental entity or agency, and shall file with the FCC, the
Copyright Office, or any other governmental entity or agency,
all applications, reports, Statements of Account or other
<PAGE> 48
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documents required to be filed in connection with the operation
of the System, to renew any License or to maintain the
effectiveness and validity of any License.
6.17 Channel Lease Consent. The Borrowers shall use
their reasonable best efforts to deliver to the Agent the
Channel Lease Consent referred to in Section 4.01(m)(ii)
executed by each such owner and lessor, substantially in the
form of Exhibit L hereto.
6.18 Collateral Assignment of Lease Agreement. If
the transactions contemplated by the Merger Agreement have not
been consummated prior to October 31, 1995, the Company will
use its reasonable best efforts to get Channel Communications
of Ohio, Inc. to acknowledge a collateral assignment of the
License Agreement dated October 31, 1985 between Channel
Communications of Ohio, Inc. and MetroCable, Inc., as successor
to Metropolitan Cablevision, Inc.
SECTION 7. Negative Covenants. Each Borrower hereby
covenants and agrees that as of the Closing Date and thereafter
for so long as this Agreement is in effect and until the Total
Commitment has been terminated and the Revolving Loans together
with interest and all other Obligations incurred hereunder, to
the extent due and payable are paid in full:
7.01 Changes in Business. No Borrower will
materially alter the character of its business from that con-
ducted by such Borrower at the Closing Date.
7.02 Amendments or Waivers of Certain Documents. No
Borrower or its respective Subsidiaries will amend or otherwise
change the terms of any Existing Debt without the prior written
consent of the Required Banks.
7.03 Liens. No Borrower or its respective
Subsidiaries will directly or indirectly create, incur, assume
or permit or suffer to exist any Lien upon or with respect to
any item constituting Collateral, whether now owned or
hereafter acquired, or sell any such Collateral subject to an
understanding or agreement, contingent or otherwise, to
repurchase such Collateral or assign any right to receive
income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any
similar recording or notice statute, except for the Lien of the
Security Document relating thereto, Prior Liens applicable
thereto and other Liens expressly permitted by such Security
Document. No Borrower or its respective Subsidiaries will
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of such Borrower or its
<PAGE> 49
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respective Subsidiaries which does not constitute Collateral
whether now owned or hereafter acquired, or sell any such
property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets
or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice
statute, except the following, which are herein collectively
referred to as "Permitted Encumbrances":
(a) Liens for taxes, assessments or governmental
charges or claims not yet delinquent or Liens for taxes,
assessments or governmental charges or claims being
contested in good faith and by appropriate proceedings for
which adequate reserves, as may be required by GAAP, have
been established;
(b) Liens in respect of property or assets of any
Borrower or its respective Subsidiaries imposed by law
(i) which were incurred in the ordinary course of
business, such as carriers', warehousemen's and mechanics'
Liens and other similar Liens arising in the ordinary
course of business, and (x) which do not in the aggregate
materially detract from the value of such property or
assets or materially impair the use thereof in the
operation of the business of any Borrower or its
respective Subsidiaries or (y) which are being contested
in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture
or sale of the property or asset subject to such Lien or
(ii) which do not relate to material liabilities of any
Borrower or its respective Subsidiaries and do not in the
aggregate materially detract from the value of the
property and assets of the Borrowers and their respective
Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or
judgment (including judgment or appeal bonds) not in
excess of $100,000 in the aggregate for a Borrower and its
respective Subsidiaries (exclusive of any amount
adequately covered by insurance as to which the insurance
company has acknowledged coverage) unless the judgment it
secures shall, within 60 days after the entry thereof, not
have been discharged or execution thereof not stayed
pending appeal, or shall not have been discharged within
30 days after the expiration of any such stay;
(d) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
<PAGE> 50
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unemployment insurance and other types of social security,
or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money
bonds and other similar obligations incurred in the
ordinary course of business (exclusive of obligations in
respect of the payment for borrowed money or the
equivalent);
(e) Subject to the provisions of Section 7.16 and,
with respect to any Mortgaged Property, to the provisions
of any applicable Mortgage, Leases with respect to the
assets or properties of any Borrower or its respective
Subsidiaries entered into in the ordinary course of such
Borrower's or Subsidiary's business and subordinate in all
respects to the Liens granted and evidenced by the
Security Documents;
(f) Easements, rights of way, restrictions, minor
defects or irregularities in title not interfering in any
material respect with the business of any Borrower or its
respective Subsidiaries, in each case incurred in the
ordinary course of business and which do not materially
impair for its intended purposes the use or value of the
Real Property to which it relates; and
(g) Liens upon real or tangible personal property
acquired by any Borrower or its respective Subsidiaries
after the date hereof; provided that (i) any such Lien is
created solely for the purpose of securing Indebtedness
representing, or incurred to finance, the cost of the item
of property subject thereto, (ii) the principal amount of
the Indebtedness secured by such Lien is at least 70%, and
does not exceed 100% of the fair value (as determined in
good faith by the board of directors of the appropriate
entity) of the respective property at the time it was so
acquired, (iii) such Lien does not extend to or cover any
other property other than such item of property and (d)
the incurrence of such Indebtedness secured by such Lien
is permitted by Section 7.04.
7.04 Indebtedness. No Borrower or its respective
Subsidiaries will contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit
Documents; provided that the aggregate Indebtedness
incurred pursuant to this Agreement shall in no event
exceed the Total Commitment;
<PAGE> 51
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(b) Existing Debt and any refinancing thereof;
provided that any such refinancing of Existing Debt shall
be on terms which, both taken as a whole and specifically
as such terms relate to the identity of the obligors,
repayments of principal, covenants, events of default and
security in property of the debtor, are in each event no
more favorable to the creditors than the correlative terms
of the Existing Debt;
(c) Intercompany Indebtedness;
(d) $500,000 of Indebtedness in the aggregate for
the Borrowers incurred to finance the cost of the
acquisition of real or personal tangible property
(including Capital Leases); provided that such
Indebtedness shall be at least 70% and shall not exceed
100% of the fair value of such property; and provided,
further, that such Indebtedness is not secured by any Lien
other than a Lien referred to in clause (g) of
Section 7.03;
(e) Contingent Obligations permitted by
Section 7.13;
(f) other unsecured Indebtedness not exceeding
$250,000 in the aggregate for the Borrowers and their
respective Subsidiaries at any time outstanding.
7.05 Indebtedness Per Subscriber. The Borrowers
will not, and will not permit their respective Subsidiaries to,
allow Indebtedness per Subscriber to exceed the amount set
forth below for each of the periods set forth below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From the Closing Date until
December 31, 1995............................... $325
Three months ending March 31, 1996................ 350
Three months ending June 30, 1996 ................ 375
From July 1, 1996 until the Final
Maturity Date .................................. 400
</TABLE>
7.06 Advances, Investments and Revolving Loans. No
Borrower or its respective Subsidiaries will lend money or
credit or make advances to any Person, or purchase or acquire
any stock, obligations or securities of, or any other interest
in, or make any capital contribution to any Person, except:
(a) investments in Cash and Cash Equivalents;
<PAGE> 52
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(b) receivables owing to them and advances to
customers and suppliers, in each case if created, acquired
or made in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(c) investments (including debt obligations)
received in connection with the bankruptcy or
reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the
ordinary course of business;
(d) the acceptance of a form of consideration other
than Cash or Cash Equivalents in connection with the sale
or disposition of assets to the extent provided in Section
7.16;
(e) any purchase or acquisition of stock or other
securities expressly permitted by Sections 7.07 and 7.08
hereof; and
(f) additional loans, advances and/or investments of
a nature not contemplated by the foregoing clauses (a)
through (e); provided that all loans, advances and
investments made pursuant to this clause (h) shall not
exceed $150,000 in the aggregate at any time outstanding
for all Borrowers and their respective Subsidiaries; and
provided, further, that all Securities or other
instruments evidencing such loans, investments or advances
shall be pledged pursuant to an appropriate Security
Document in the event that such Securities or other
instruments shall have been acquired for aggregate
consideration in excess of $100,000.
7.07 Prepayments of Indebtedness, etc. No Borrower
or its respective Subsidiaries will: (a) after the issuance
thereof, amend or modify (or permit the amendment or
modification of) any of the terms or provisions, to the extent
any such amendment or modification would be adverse to the
issuer thereof or to the interests of the Banks, of any of the
Indebtedness (or any agreement relating thereto) of the type
described in Section 7.04(b) or (c); (b) make (or give any
notice in respect of) any payment or prepayment or redemption
or acquisition for value of (including, without limitation, by
way of depositing with any trustee with respect thereto money
or securities before such Indebtedness is due for the purpose
of paying such Indebtedness when due) or exchange of any such
Indebtedness; and/or (c) amend, modify or change any of its
respective organizational documents, or any agreement entered
into by such Borrower or Subsidiary with respect to its capital
<PAGE> 53
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stock, or enter into any new agreement with respect to the
capital stock of such Borrower or Subsidiary the result of
which is reasonably likely to be adverse to the interests of
the Banks; provided that this Section 7.07(c) shall not
restrict the Borrowers' ability to consummate public offerings
under the Securities Act otherwise in compliance with this
Agreement.
7.08 Dividends, etc. No Borrower or its respective
Subsidiaries will declare or pay any dividends or return any
capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for any consideration, any
shares of any class of its capital stock now or hereafter
outstanding (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or make
any loans or advances to Affiliates, or set aside any funds for
any of the foregoing purposes (all of the foregoing,
"Dividends"), except that (i) any Borrower or its respective
Subsidiaries may pay Dividends to its parent corporation if
such parent corporation is a Borrower or a Wholly-Owned
Subsidiary of a Borrower, and (ii) any Borrower may incur
Intercompany Indebtedness.
7.09 Transactions with Affiliates. No Borrower or
its respective Subsidiaries will enter into any transaction or
series of transactions, whether or not in the ordinary course
of business, with any Affiliate other than on terms and
conditions substantially as favorable to such Borrower as would
be obtainable by such Borrower at the time in a comparable
arm's-length transaction with a Person other than an Affiliate;
provided that in no event may any Borrower engage in any
Affiliate transaction listed on Annex VI or make any payment
thereunder upon the occurrence and during the continuance of an
Event of Default (or an event which with notice or the lapse of
time would become an Event of Default).
7.10 Minimum Consolidated EBITDA. The Borrowers
will maintain a Consolidated EBITDA of at least the amount set
forth below for the fiscal quarter ending on each date listed
below:
<TABLE>
<CAPTION>
Minimum EBITDA
Fiscal Quarter Ending ($ millions)
--------------------- --------------
<S> <C>
December 31, 1995..................... $1.00
March 31, 1996........................ 1.25
June 30, 1996......................... 1.50
</TABLE>
<PAGE> 54
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7.11 Subsidiaries. The Borrowers shall not form,
acquire or permit any Person to become a Subsidiary of the
Borrowers or their Subsidiaries other than those set forth on
Annex XV unless such Subsidiary has executed a Subsidiary
Guarantee and such Subsidiary and the holder of such
Subsidiary's capital stock has executed such Security Documents
as are necessary or desirable, in the sole judgment of the
Agent, to grant to the Banks a perfected first priority Lien in
all of the assets of such Person, in each case in form and
substance acceptable to the Agent.
7.12 Disposition of Assets. (a) No Borrower or its
respective Subsidiaries will dispose of all or any part of its
interest in any asset, except that such Borrower or Subsidiary
may sell assets so long as either (i) such sales are approved
by the Required Banks and the sales price thereof is, in the
reasonable judgment of the Agent, at least equal to the fair
market value of such assets, (ii) such sales are for at least
the fair market value of such assets and the aggregate amount
of such asset sales is less than $250,000 in any 12-month
period and, in any such case, the Borrowers comply with the
mandatory prepayment provisions and, in the case of Collateral,
so long as the conditions to the release of Collateral
described herein and in the applicable Security Documents are
met, (iii) such sales are of inventory in the ordinary course
of business, (iv) such sales are (A) of obsolete equipment,
(B) for at least the fair market value of such equipment,
(C) not in excess of $100,000 individually or $250,000 per year
in the aggregate and (D) the proceeds of such sales are used
within 90 days of such sales to (1) purchase equipment used in
substantially similar lines of business or (2) to repay
Indebtedness under this Credit Agreement pursuant to
Section 3.02.
The consideration received by any Borrower or its
respective Subsidiaries from each sale of assets permitted
above shall be received in whole at the time of sale and at
least 70% of the consideration from each sale shall consist of
Cash or Cash Equivalents. Any non-cash proceeds received from
the sale of assets shall be pledged pursuant to and in
accordance with the applicable Security Documents and shall
constitute Collateral.
(b) Upon compliance with the conditions in subsec-
tion (a) of this Section 7.12, the Release Conditions and the
Partial Release Conditions (each as hereinafter defined), the
Borrowers shall be entitled to receive from the Collateral
Agent an instrument in form and substance reasonably
satisfactory to the Borrowers (each, a "Release"), releasing
the Lien of the Mortgage with respect to all or any portion of
<PAGE> 55
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a Mortgaged Property (each, a "Released Property"). The
Borrowers shall exercise their rights under this Section by
delivering to the Collateral Agent a notice (each, a "Release
Notice"), which shall refer to this Section, describe with
particularity the proposed Released Property and be accompanied
by (i) four counterparts of the Release fully executed and
acknowledged by all necessary parties other than Collateral
Agent, (ii) executed counterparts of UCC or other applicable
termination statements necessary to terminate the Lien of the
applicable Mortgage and (iii) an Officer's Certificate
certifying that no Default or Event of Default shall have
occurred and the parties executing any and all documents in
connection with the Release (other than the Collateral Agent)
were duly authorized to do so (collectively, the "Release
Conditions"). In the event the proposed Released Property
consists of less than all of the Mortgaged Property subject to
a single Mortgage, the Partial Release Conditions must be
satisfied in order for the Borrowers to receive the Release.
(c) The Collateral Agent's obligation to deliver a
Release in respect of less than all of the Mortgaged Property
subject to a single Mortgage shall be contingent upon the
satisfaction of the conditions in subsection (a) of this Sec-
tion 7.12 and the Release Conditions as well as the following
conditions (collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other
disposition of and release of the Lien of the applicable
Mortgage with respect to the proposed Released Property,
the remaining Mortgaged Property shall have utility
services and access to public roads, and other
transportation structures sufficient and necessary for the
continued use of such Mortgaged Property in the manner
utilized prior to the Release;
(ii) following the sale, transfer or other
disposition of the proposed Released Property, the
remaining Mortgaged Property shall comply in all respects
with applicable laws, rules, regulations and ordinances
relating to environmental protection, zoning, land use,
configuration and building and workplace safety;
(iii) following the sale, transfer or other
disposition of the proposed Released Property, the value
of the remaining Mortgaged Property shall not be less than
the value of such remaining Mortgaged Property prior to
the Release;
(iv) the Title Company shall have issued an
endorsement to the Banks' title insurance policy relating
<PAGE> 56
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to the Mortgaged Property confirming that after the
proposed release, the Lien of the applicable Mortgage
continues unimpaired as a first priority Lien upon the
remaining Mortgaged Property subject only to Prior Liens;
(v) the Borrowers shall cause to have been delivered
to Collateral Agent an Officer's Certificate certifying
that the conditions set forth in subsections (i)
through (iv) have been satisfied.
(d) Collateral Agent shall execute, acknowledge (if
applicable) and deliver to the Borrowers counterparts of the
documents described in subsection (b)(i) and (ii) within
45 days after receipt by Collateral Agent of a Release Notice
provided that the Release Conditions and the Partial Release
Conditions (if applicable) have been satisfied. The Borrowers
shall (i) execute, deliver, obtain and record such instruments
as Collateral Agent may require, including, without limitation,
amendments to the Security Documents or this Agreement and
(ii) deliver to Collateral Agent such evidence of the
satisfaction of the Release Conditions and the Partial Release
Conditions as Collateral Agent may require. The Borrowers
shall reimburse Collateral Agent, Agent and the Banks upon
demand for all costs or expenses incurred in connection with
any actions taken pursuant to this Section 7.12.
7.13 Contingent Obligations. No Borrower or its
respective Subsidiaries will, directly or indirectly, create or
become or be liable with respect to any Contingent Obligation
except:
(i) guarantees resulting from endorsement of
negotiable instruments for collection in the ordinary
course of business;
(ii) Obligations of each Borrower to or for the
benefit of the Banks hereunder or under the other Credit
Documents; and
(iii) other Contingent Obligations not to exceed
$100,000 in the aggregate for all Borrowers outstanding at
any one time.
7.14 ERISA. No Borrower will adopt, or allow any of
its respective ERISA Affiliates to adopt, a Pension Plan and no
Borrower will become obligated to contribute to, or allow any
of its ERISA affiliates to become obligated to contribute to,
any Multiemployer Plan.
<PAGE> 57
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7.15 Mergers and Consolidations. No Borrower will
merge or consolidate with or into any other entity.
7.16 Sale and Lease-Backs. Unless a permitted
disposition of Assets under Section 7.12 hereof, no Borrower or
its respective Subsidiaries will directly or indirectly become
or thereafter remain liable as lessee or as guarantor or other
surety with respect to the lessee's obligations under any
lease, whether an Operating Lease or a Capital Lease, of any
property (whether real or personal or mixed), whether now owned
or hereafter acquired, (i) which any Borrower or its respective
Subsidiaries has sold or transferred or is to sell or transfer
to any other Person or (ii) which any Borrower or its
respective Subsidiaries intends to use for substantially the
same purpose as any other property which has been or is to be
sold or transferred by any Borrower or its respective
Subsidiaries to any Person in connection with such lease, if in
the case of clause (i) or (ii) above, such sale and such lease
are part of the same transaction or a series of related
transactions or such sale and such lease occur within one year
of each other or are with the same other Person.
7.17 Sale or Discount of Receivables. No Borrower
or its respective Subsidiaries will sell, with or without
recourse, or discount (other than in connection with trade
discounts in the ordinary course of business consistent with
past practice) or otherwise sell for less than the face value
thereof, notes or accounts receivable.
7.18 Minimum Subscribers. The Borrowers shall not
allow the number of Subscribers to which it provides service to
fall below the number of Subscribers set forth below, for the
markets set forth below:
Number of
Period Subscribers
- ------ -----------
Philadelphia, Pennsylvania area............................... 50,000
Cleveland, Ohio area.......................................... 24,000
Bakersfield, California area.................................. 9,000
7.19 Additional System Agreements. No Borrower or
any of its Subsidiaries shall enter into any System Agreement
after the Closing Date unless such System Agreement shall be
assignable by its terms as Pledged Collateral pursuant to the
General Security Agreements; provided that this Section 7.19
shall not apply to System Agreements which are unassignable
<PAGE> 58
-52-
pursuant to the Communications Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
7.20 Subsequent Transaction. The Company shall not
engage in a Subsequent Transaction (as defined in the Merger
Agreement) with a party other than CAI Wireless Systems, Inc.
prior to 180 days after the termination of the Merger
Agreement.
7.21 Maintenance of Licenses. No Borrower or any of
its Subsidiaries shall take any action which violates any
rules, regulations or policies of any government agency or
entity, including without limitation the FCC, FAA and the
Copyright Office, or shall fail to act where such action or
failure to act causes or permits, or may cause or permit, any
License issued to a Borrower or any of its Subsidiaries to
lapse, to be modified in any manner that would have a
Materially Adverse Effect or to become impaired in any manner.
SECTION 8. Events of Default. Upon the occurrence
and during the continuance of any of the following specified
events (each an "Event of Default"):
8.01 Payments. Any of the Borrowers shall
(i) default in the payment when due of any principal of the
Revolving Loans, (ii) default, and such default shall continue
for two or more Business Days, in the payment when due of any
interest on the Revolving Loans or under any other Credit
Document or (iii) fail to pay any other amounts owing hereunder
for five days after receiving notice from the Agent or any Bank
of such default; or
8.02 Representations, etc. Any representation,
warranty or statement made or deemed made by any Borrower or
its respective Subsidiaries herein or in any other Credit
Document or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which
made or deemed made; or
8.03 Covenants. Any Borrower shall (a) default in
the due performance or observance by it of any term, covenant
or agreement contained in Section 6.10, 6.12, 6.13, 6.15, 6.16
or Section 7 hereof or Section 1.1 of any Mortgage or (b) de-
fault in the due performance or observance by it of any other
material term, covenant or agreement contained in this
Agreement or any Security Document (other than those referred
to in Section 8.01, 8.02 or clause (a) of this Section 8.03)
and such default shall continue unremedied for a period of at
least fifteen days after the date of such default; or
<PAGE> 59
-53-
8.04 Default Under Other Agreements. (a) Any
Borrower or its respective Subsidiaries shall (i) default in
any payment with respect to any Indebtedness (other than
Obligations) having a principal amount in excess of $250,000
individually or $500,000 in the aggregate for all such Persons,
beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or
(ii) default in the observance or performance of any agreement
or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to
cause any such Indebtedness to become due prior to its stated
maturity; or (b) any such Indebtedness of any Borrower or its
respective Subsidiaries shall be declared to be due and
payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity
thereof; or
8.05 Bankruptcy, etc. Any Borrower or its
respective Subsidiaries shall commence a voluntary case
concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against any Borrower or its respective
Subsidiaries and the petition is not controverted within 10
days, or is not dismissed or stayed within 60 days, after
commencement of the case; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of any Borrower or its
respective Subsidiaries; or any Borrower or its respective
Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction whether now or hereafter in effect relating
to any Borrower or its respective Subsidiaries; or there is
commenced against any Borrower or its respective Subsidiaries
any such proceeding which remains undismissed and unstayed for
a period of 60 days; or any Borrower or its respective
Subsidiaries is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding
is entered; or any Borrower or its respective Subsidiaries
suffers any appointment of any custodian or the like for it or
any substantial part of its property to continue undischarged
or unstayed for a period of 60 days; or any Borrower or its
respective Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by any
<PAGE> 60
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Borrower or its respective Subsidiaries for the purpose of
effecting any of the foregoing; or
8.06 Security Documents. Any Security Document
shall cease to be in full force and effect, or shall cease to
give the Collateral Agent the Liens, rights, powers and
privileges purported to be created thereby, in favor of the
Collateral Agent, superior to and prior to the rights of all
third Persons and subject to no Liens other than Prior Liens
and Liens expressly permitted by the applicable Security
Document; or
8.07 Guarantees. (i) Any Guarantee or any
provisions thereof shall cease to be in full force or effect in
all material respects, or the Guarantor thereunder or Person
acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such Guarantee or
the Guarantor shall default in the due performance or
observance of any term, covenant or agreement for the payment
of money on its part to be performed or observed pursuant to
any Guarantee; or
8.08 Judgments. One or more judgments or decrees
shall be entered against any Borrower or its respective
Subsidiaries involving a liability of $250,000 or more in the
case of any one such judgment or decree and $500,000 or more in
the aggregate for all such judgments and decrees for all such
Persons (in either case in excess of the amount covered by
insurance as to which the insurance company has acknowledged
coverage) and (i) any such judgments or decrees shall not have
been vacated, discharged, bonded or enforcement thereof stayed
pending appeal within 60 days from the entry thereof or
(ii) any enforcement proceeding therefor shall have been
commenced; or
8.09 Ownership. (i) Any "person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as such term is used
in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have beneficial ownership of all
shares that such person has a right to acquire, whether such
right is exercisable immediately or only after the passage of
time), directly or indirectly, of 30% or more of the total
voting power of the Voting Stock of any of the Borrowers;
(ii) individuals who constituted the Board of Directors of any
of the Borrowers on the Closing Date (together with any new
directors whose proposal for election by the shareholders of
any of the Borrowers was approved by a vote of 51% of the
directors of any of the Borrowers then still in office who
either were directors on the Closing Date or whose election or
<PAGE> 61
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nomination for election was previously so approved) shall cease
for any reason to constitute a majority of the members of the
Board of Directors of such Borrower still in office; (iii) any
of the Borrowers conveys, transfers or leases all or
substantially all of its assets to any Person; or (iv) the
approval by stockholders of any of the Borrowers of any plan or
proposal for the liquidation, dissolution or winding up of such
Borrower;
Then, and in any such event, and at any time
thereafter, if any Event of Default shall then be continuing,
the Agent shall, upon the written request of the Required
Banks, by written notice to the Borrowers, take any or all of
the following actions, without prejudice to the rights of the
Agent or any Bank to enforce its claims against the Borrowers,
except as otherwise specifically provided for in this Agreement
(provided that, if an Event of Default specified in Section
8.05 shall occur, with respect to any Borrower or its
respective Subsidiaries, the result which would occur upon the
giving of written notice by the Agent as specified in
clauses (i) and (ii) below shall occur automatically without
the giving of any such notice): (i) declare the principal of
and accrued interest in respect of all Revolving Loans and all
Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind, all
of which are hereby waived by each Borrower; and/or
(ii) enforce, as Collateral Agent (or direct the Collateral
Agent to enforce), any or all of the remedies created pursuant
to the Security Documents. If an Event of Default is cured or
waived in accordance with the terms of this Agreement, such
Event of Default ceases (and, if waived, pursuant to the terms,
and to the extent, of such waiver).
SECTION 9. Definitions. As used herein, the
following terms shall have the meanings herein specified unless
the context otherwise requires. Defined terms in this
Agreement shall include in the singular number the plural and
in the plural the singular.
"A Revolving Loan" has the meaning provided in
Section 1.01(a).
"A Revolving Loan Commitment" means, with respect to
each Bank, the amount set forth below such Bank's name on the
signature pages hereto directly below the column entitled "A
Revolving Loan Commitment," as the same may be reduced from
time to time pursuant to Sections 2.01, 2.02, 3.02 and/or 8.
<PAGE> 62
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"A Revolving Loan Commitment Termination Date" means
the Business Day immediately preceding the A Revolving Maturity
Date.
"A Revolving Maturity Date" means August 31, 1996 or
such earlier date on which the Total A Revolving Loan
Commitment has been terminated.
"A Revolving Note" has the meaning provided in
Section 1.05(a).
"A Revolving Portion" means, at any time, the portion
of the Loan Facility evidenced by the Total A Revolving Loan
Commitment.
"Additional Collateral" has the meaning provided in
Section 6.12.
"Affiliate" means with respect to any Person, any
other Person directly or indirectly controlling (including but
not limited to all directors and executive officers of such
Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control
a corporation for the purposes of this definition if such
Person possesses, directly or indirectly, the power (i) to vote
10% or more of the securities having ordinary voting power for
the election of directors of such corporation or (ii) to direct
or cause the direction of the management and policies of such
corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" means Indosuez, or any successor thereto
appointed in accordance herewith, in its capacity as agent and
collateral agent for the Banks.
"Agent's Office" means the office of the Agent
located at 1211 Avenue of the Americas, Seventh Floor, New
York, New York 10036, or such other office in New York as the
Agent may hereafter designate in writing as such to the other
parties hereto.
"Agreement" means this Credit Agreement, as the same
may after its execution be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Apartment Cable" has the meaning provided in the
preamble to this Agreement.
"Asset Sale" means the sale, transfer or other
disposition, to the extent consummated after the Closing Date,
<PAGE> 63
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by any Borrower of any asset of such Person to any other Person
(other than (i) transactions included in the definition of Net
Financing Proceeds and (ii) sales, transfers or other
dispositions of inventory in the ordinary course of business
and/or of obsolete equipment effected in compliance with
Section 7.12(a)(iv)).
"Authorized Officer" means any senior officer of the
Borrowers, designated as such in writing to the Agent by the
Borrowers on Annex XIV hereto.
"B Revolving Loan Commitment" means, with respect to
each Bank, the amount set forth below such Bank's name on the
signature pages hereto directly below the column entitled
"B Revolving Loan Commitment," as such amount may be reduced
from time to time pursuant to Sections 2.01, 2.02, 3.02 and/or
8.
"B Revolving Loan Commitment Termination Date" means
the Business Day immediately preceding the B Revolving Maturity
Date.
"B Revolving Loans" has the meaning provided in
Section 1.01(b).
"B Revolving Maturity Date" means August 31, 1996 or
such earlier date on which the Total B Revolving Loan
Commitment has been terminated.
"B Revolving Note" has the meaning provided in
Section 1.05(b).
"Bank" has the meaning provided in the first
paragraph of this Agreement and in Section 11.04.
"Bankruptcy Code" has the meaning provided in
Section 8.05.
"Borrowers" has the meaning provided in the preamble
to this Agreement.
"Borrowers General Security Agreement" means the
Borrowers General Security Agreement substantially in the form
of Exhibit H-1 hereto, except for such changes therein as shall
have been approved by the Agent and the Required Banks, as the
same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the
terms thereof and hereof.
<PAGE> 64
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"Borrowers Pledge Agreement" means the Borrowers
Securities Pledge Agreement substantially in the form of
Exhibit F-1 hereto, except for such changes therein as shall
have been approved by the Agent and the Required Banks, as the
same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Business Day" means any day excluding Saturday,
Sunday and any day which shall be in the City of New York a
legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close.
"Capital Lease" of any Person means any lease of any
property (whether real, personal or mixed) by that Person as
lessee which, in conformity with GAAP, is, or is required to
be, accounted for as a capital lease on the balance sheet of
that Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
"Capitalized Lease Obligations" of any Person means
all obligations under Capital Leases of such Person or any of
its Subsidiaries in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means (i) securities issued or
directly and fully guaranteed or insured by the United States
of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America
is pledged in support thereof) having maturities of not more
than three years from the date of acquisition, (ii) marketable
direct obligations issued by any State of the United States of
America or any local government or other political subdivision
thereof rated (at the time of acquisition of such security) at
least AA by Standard & Poor's Corporation ("S&P") or the
equivalent thereof by Moody's Investors Service, Inc.
("Moody's") having maturities of not more than one year from
the date of acquisition, (iii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of
(x) any Bank, (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000
or (z) any bank whose short-term commercial paper rating (at
the time of acquisition of such security) by S&P is at least
A-1 or the equivalent thereof or by Moody's is at least P-1 or
the equivalent thereof (any such bank, an "Approved Bank"), in
each case with maturities of not more than six months from the
date of acquisition, (iv) commercial paper and variable or
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fixed rate notes issued by any Bank or Approved Bank or by the
parent company of any Bank or Approved Bank and commercial
paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a short-term commercial
paper rating (at the time of acquisition of such security) of
at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's, or guaranteed by any
industrial company with a long-term unsecured debt rating (at
the time of acquisition of such security) of at least AA or the
equivalent thereof by S&P or at least the equivalent thereof by
Moody's and in each case maturing within one year after the
date of acquisition and (v) repurchase agreements with any Bank
or any primary dealer maturing within one year from the date of
acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalents; provided
that the terms of such repurchase agreements comply with the
guidelines set forth in the Federal Financial Institutions
Examination Council Supervisory Policy -- Repurchase Agreements
of Depository Institutions With Securities Dealers and Others,
as adopted by the Comptroller of the Currency on October 31,
1985.
"Closing Date" means the date on or before August 31,
1995 on which the Initial Revolving Loans were made.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" means all of the Intellectual Property
Collateral, Pledged Collateral, Pledged Securities and
Mortgaged Property.
"Collateral Agent" means Indosuez in its capacity as
collateral agent for the Banks.
"Commitment" means, with respect to each Bank, such
Bank's A Revolving Loan Commitment and B Revolving Loan
Commitment.
"Commitment Commission" has the meaning provided in
Section 2.03
"Common Stock" means the common stock, par value $.01
per share, of the Company.
"Communications Act" means the Communications Act of
1934, as amended, or any successor statute or law.
"Company" has the meaning provided in the preamble to
this Agreement.
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"Compliance Certificate" means a certificate issued
pursuant to Section 6.01(f) signed by a chief financial
officer, controller, chief accounting officer or other
Authorized Officer of a Borrower.
"Consolidated Amortization Expense" for any Person
means, for any period, the consolidated amortization expense of
such Person for such period, determined on a consolidated basis
for such Person and its Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" of any Person
means, for any period, the aggregate gross increase during that
period in the property, plant or equipment reflected in the
consolidated balance sheet of such Person and its consolidated
Subsidiaries, in conformity with GAAP, but excluding
expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent
financed from insurance proceeds paid on account of the loss of
or damage to the assets being replaced or restored, (ii) with
awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced or
(iii) with regard to equipment that is purchased simultaneously
with the trade-in of existing equipment, fixed assets or
improvements, the credit granted by the seller of such
equipment for the trade-in of such equipment, fixed assets or
improvements; provided that Consolidated Capital Expenditures
shall in any event include the purchase price paid in
connection with the acquisition of any other Person (including
through the purchase of all of the capital stock or other
ownership interests of such Person or through merger or
consolidation) to the extent allocable to property, plant and
equipment.
"Consolidated Depreciation Expense" for any Person
means, for any period, the consolidated depreciation expense of
such Person for such period, determined on a consolidated basis
for such Person and its consolidated Subsidiaries in conformity
with GAAP.
"Consolidated EBITDA" for any Person means, for any
period, the difference between (A) the sum of the amounts for
such period of (i) Consolidated Net Income, (ii) Consolidated
Tax Expense, (iii) Consolidated Interest Expense, (iv) Consoli-
dated Amortization Expense, (v) Consolidated Depreciation
Expense and (vi) the amount of all non-cash items decreasing
Consolidated Net Income for such period (other than reserves or
expenses established in anticipation of future cash
requirements such as reserves for taxes and uncollectible
accounts receivable), less the amount of all non-cash items
increasing Consolidated Net Income, less (B) the sum of the
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amounts for such period of (i) interest income and (ii) net
gains on sales of assets to the extent included in Consolidated
Net Income, whether or not extraordinary (excluding sales in
the ordinary course of business), and other extraordinary
gains, all as determined on a consolidated basis for such
Person and its consolidated Subsidiaries in accordance with
GAAP.
"Consolidated Interest Expense" for any Person means,
for any period, the sum of (x) total interest expense
(including that attributable to Capital Leases in accordance
with GAAP) and (y) total cash dividends paid on any preferred
stock, in each case of such Person and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness
and preferred stock of such Person and its Subsidiaries,
including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit
and bankers' acceptance financing, but excluding, however, any
amortization of deferred financing costs, all as determined on
a consolidated basis for such Person and its consolidated
Subsidiaries in accordance with GAAP. For purposes of clause
(y) above, dividend requirements shall be increased to an
amount representing the pretax earnings that would be required
to cover such dividend requirements; accordingly, the increased
amount shall be equal to such dividend requirements multiplied
by a fraction, the numerator of which is such dividend
requirement and the denominator of which is 1 minus the
applicable actual combined Federal, state, local and foreign
income tax rate of such Person and its Subsidiaries (expressed
as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise
to the need to calculate Consolidated Interest Expense.
"Consolidated Net Income" for any Person means, for
any period, the net income (or loss) of such Person and its
Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined on a consolidated basis for
such Person and its consolidated Subsidiaries in conformity
with GAAP; provided that there shall be excluded (i) the income
(or loss) of any other Person (other than consolidated
Subsidiaries of such Person) in which any third Person (other
than such Person or any of its consolidated Subsidiaries) has a
joint interest, except to the extent of the amount of dividends
or other distributions actually paid to such Person or any of
its Subsidiaries by such other Person during such period,
(ii) the income (or loss) of any other Person accrued prior to
the date it becomes a consolidated Subsidiary of such Person or
is merged into or consolidated with such Person or any of its
consolidated Subsidiaries or such other Person's assets are
acquired by such Person or any of its consolidated
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Subsidiaries, and (iii) the income of any consolidated
Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by that
consolidated Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that consolidated
Subsidiary.
"Consolidated Tax Expense" for any Person means, for
any period, the consolidated tax expense of such Person for
such period, determined on a consolidated basis for such Person
and its consolidated Subsidiaries in conformity with GAAP.
"Contingent Obligations" means, as to any Person,
without duplication, any obligation of such Person guaranteeing
or intended to guarantee any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of
such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds
(i) for the purchase or payment of any such primary obligation
or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or
(d) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business and amounts that are included in
Section 7.17. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the maximum amount that such
Person may be obligated to expend pursuant to the terms of such
Contingent Obligation or, if such Contingent Obligation is not
so limited, the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is
made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person
is required to perform thereunder) as determined by such Person
in good faith.
"Copyright Office" means the Library of Congress, the
Copyright Office of the Library of Congress, the Register of
Copyrights, and any other agency or entity now or hereafter
established or authorized to administer, enforce, or establish
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rules, regulations or policies for the administration or
enforcement of, Section 111 of Title 17 of the United States
Code as now enacted or amended.
"Credit Documents" means (i) this Agreement,
(ii) each Revolving Note, (iii) each Guarantee and (iv) each
Security Document.
"Currency Protection Agreement" shall mean any
foreign exchange contract, currency swap agreement, or other
financial agreements or arrangements designed to protect any
Borrower against fluctuations in currency values.
"Default" means any event, act or condition which
with notice or lapse of time, or both, would constitute an
Event of Default.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
"Destruction" has the meaning assigned to that term
in the Mortgages.
"Dividends" has the meaning provided in Section 7.08.
"Documents" means each Credit Document.
"Dollars" means United States Dollars.
"Effective Date" has the meaning provided in
Section 11.10.
"Environmental Laws" means the common law and all
federal, state, local and foreign laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder, now or hereafter in effect,
relating to pollution or protection of public or employee
health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of Hazardous Materials, into
the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling
of Hazardous Materials, (iii) underground storage tanks, and
related piping, and emissions, discharges, releases or
threatened releases therefrom, and (iv) potential exposure to
radio frequency ("RF") radiation.
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"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time. Section references
to ERISA are to ERISA as in effect at the date of this
Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any entity, whether or not
incorporated, which is under common control or would be
considered a single employer with any Borrower within the
meaning of Section 414(b), (c) or (m) of the Code and
regulations promulgated under those sections or within the
meaning of Section 4001(b) of ERISA and regulations promulgated
under that section.
"Evaluation Materials" means this Agreement and all
documents delivered to the Banks on or prior to the Closing
Date pursuant to this Agreement.
"Event of Default" has the meaning provided in
Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Credit Agreement" has the meaning provided
in the recitals to this Agreement.
"Existing Debt" means the Indebtedness of the
Borrowers set forth on Annex V.
"Existing Loans" has the meaning provided in the
recitals to this Agreement.
"FAA" means the Federal Aviation Administration or
any governmental body or agency succeeding to the functions
thereof.
"FCC" means the Federal Communications Commission or
any governmental body or agency succeeding to the functions
thereof.
"Final Maturity Date" means August 31, 1996.
"Financing Proceeds" means the cash (other than Net
Cash Proceeds) received by the Borrowers, directly or
indirectly, from any financing transaction of whatever kind or
nature, including without limitation from any incurrence of
Indebtedness, any mortgage or pledge of an asset or interest
therein (including a transaction which is the substantial
equivalent of a mortgage or pledge), from the sale of tax
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benefits, from a lease to a third party and a pledge of the
lease payments due thereunder to secure Indebtedness, from a
joint venture arrangement, from an exchange of assets and a
sale of the assets received in such exchange, or any other
similar arrangement or technique whereby the Borrowers obtain
Cash in respect of an asset, net of direct costs associated
therewith.
"FIRREA" means the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from time to
time, and any successor statute.
"GAAP" means generally accepted accounting principles
in the United States of America as in effect from time to time,
it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 7, including
defined terms as used therein, are subject (to the extent
provided therein) to Section 11.07(a).
"General Security Agreements" means and includes the
Borrowers General Security Agreement, the Subsidiary General
Security Agreements and any other general security agreements
delivered pursuant to Section 6.12 or 6.13.
"Governmental Authority" shall mean any federal,
state, local or other governmental or administrative body,
instrumentality, department or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.
"Guarantee" means and includes, once executed and
delivered, the Subsidiary Guarantees.
"Guarantor" for purposes of this Agreement means any
of the Subsidiary Guarantors.
"Hazardous Materials" means pollutants, contaminants,
chemicals, or industrial, toxic or hazardous constituents,
substances or wastes including, without limitation, petroleum,
including crude oil or any fraction thereof, or any petroleum
product.
"Home Systems" has the meaning provided in the
preamble to this Agreement.
"Indebtedness" of any Person means, without
duplication, (i) all indebtedness of such Person for borrowed
money, (ii) the deferred purchase price of assets or services
which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person, (iii) the face amount
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of all letters of credit issued for the account of such Person
and, without duplication, all drafts drawn thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such
Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price
for goods or services whether or not delivered or accepted,
i.e., take-or-pay and similar obligations, (vii) all
obligations of such Person under Interest Rate Agreements or
Currency Protection Agreements and (viii) all Contingent
Obligations of such Person; provided that Indebtedness shall
not include trade payables, accrued expenses, deferred taxes
and accrued income taxes, in each case arising in the ordinary
course of business. For purposes of clause (iv) above (where
the relevant Indebtedness has not been assumed by such first
Person), the amount of Indebtedness is equal to the lesser of
the amount of Indebtedness secured or the fair market value of
the property subject to the Lien.
"Indosuez" means Banque Indosuez, New York Branch.
"Initial Bank" means a Bank that was an original
signatory to this Agreement.
"Initial Exercise Price" means the amount that equals
seventy-five percent (75%) of the Fair Market Value (as defined
in Exhibit M hereto) of the Common Stock determined as of the
applicable Trigger Date.
"Initial Revolving Loans" means the Initial Revolving
Loans made under this Agreement on the Closing Date.
"Intellectual Property Collateral" shall mean all the
Intellectual Property Collateral as defined in the Intellectual
Property Security Agreement.
"Intellectual Property Security Agreement" shall mean
the Intellectual Property Security Agreement substantially in
the form of Exhibit G hereto, except for such changes therein
as shall have been approved by the Agents and the Required
Banks, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Intellectual Property Security Agreements" shall
mean and include, once executed and delivered, the Intellectual
Property Security Agreement and any other intellectual property
security agreements delivered pursuant to Section 6.12 or 6.13.
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"Intercompany Indebtedness" means any Indebtedness of
one Borrower to another Borrower.
"Interest Rate Agreement" means any interest rate
swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate futures contract, interest rate
option contract or other similar agreement or arrangement to
which the Borrowers are a party, designed to protect the
Borrowers against fluctuations in interest rates.
"ITFS" means Instructional Television Fixed Service,
a class of television service licensed by the FCC for the
transmission of instructional and cultural material to
receiving locations and for which excess transmission capacity
may be leased for commercial wireless cable operations.
"Leases" means any now existing or hereafter acquired
leases or subleases, easements, grants or similar instruments
under which the Borrowers have the rights to use real property
or rights-of-way in connection with the operation of the
System, including, without limitation, those listed on Annex X
hereto.
"License" means any license, permit, or other
authorization issued by the FCC or any other Governmental
Authority, including any compulsory license under Section 111
of Title 17 of the United States Code as now enacted or
amended, required for or pertaining to the System.
"License Agreements" means, collectively, the
instruments and agreements pursuant to which the Borrowers have
been granted the rights and privileges (excluding FCC licenses
but including any other governmental Licenses) to construct and
operate the System indicated on Annex X.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for
security or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"Loan Facility" means the credit facility evidenced
by the Total A Revolving Loan Commitment and the Total B
Revolving Loan Commitment.
"Materially Adverse Effect" means (i) any materially
adverse effect (both before and after giving effect to the
transactions contemplated hereby and by the other Documents)
with respect to the operations, business, properties, assets,
nature of assets, liabilities (contingent or otherwise),
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financial condition or prospects of any of the Borrowers and
its Subsidiaries, (ii) any fact or circumstance (whether or not
the result thereof would be covered by insurance) as to which
singly or in the aggregate there is a reasonable likelihood of
(w) a materially adverse change described in clause (i) with
respect to any of the Borrowers and its Subsidiaries, (x) the
inability of any Borrower to perform in any material respect
its Obligations hereunder or under any of the other Documents
or the inability of the Lenders to enforce in any material
respect their rights purported to be granted hereunder or under
any of the other Documents or the Obligations (including
realizing on the Collateral), or (y) a materially adverse
effect on the ability to effect (including hindering or unduly
delaying) the other transactions contemplated hereby and by the
Documents on the terms contemplated hereby and thereby or (iii)
any fact or circumstance relating to any Borrower as to which
singly or in the aggregate there is a reasonable likelihood of
any significant liability on the part of the Banks or the
Agent.
"MDS" means Multipoint Distribution Service, an
omnidirectional, one way domestic transmission service
(including boosters and signal benders) licensed by the FCC
rendered on microwave frequencies from a fixed transmitter
location simultaneously to multiple receiving facilities which
may be used for the distribution of television programming.
"Merger Agreement" means the Agreement and Plan of
Merger, dated March 28, 1995 by and between CAI Wireless
Systems, Inc., CAI Transactions P., Inc. and the Company.
"MMDS" means Multichannel Multipoint Distribution
Service, an omnidirectional, one way domestic transmission
service (including boosters and signal benders) licensed by the
FCC rendered on microwave frequencies from a fixed transmitter
location simultaneously to multiple receiving facilities which
may be used for the distribution of television programming.
"Mortgage" means a leasehold mortgage and security
agreement creating and evidencing a Lien on a Mortgaged
Property, which shall be substantially in the form of Exhibit D
hereto, containing such schedules and including such additional
provisions and other deviations from such Exhibit as shall be
necessary to conform such documents to applicable or local law
or as shall be customary under local law and made and which
shall be dated the date of delivery thereof and made by the
owner of the Mortgaged Property described therein for the
benefit of the Collateral Agent, as mortgagee, assignee and
secured party, as the same may at any time be amended or
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supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Mortgaged Property" means each Real Property
designated on Annex VII which shall be subject to a Mortgage.
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA with respect to which
any Borrower or its respective ERISA Affiliates is or has been
required to contribute.
"Net Award" has the meaning assigned to that term in
each Mortgage.
"Net Cash Proceeds" means (a) with respect to any
Asset Sale in excess of $25,000, the aggregate cash payments
received by the Borrowers from such Asset Sale, net of direct
expenses of sale; provided that, with respect to taxes,
expenses shall only include taxes to the extent that taxes are
payable in cash in the current year or in the next succeeding
year with respect to the current year as a result of such Asset
Sale; and (b) with respect to any Taking or Destruction, the
Net Award or Net Proceeds, as applicable, resulting therefrom,
to be applied as Net Cash Proceeds under this Agreement
pursuant to the provisions of Sections 8 and 9 of the
Mortgages; provided, further, that Net Cash Proceeds shall not
include any amounts or items included in the definition of
Financing Proceeds or Net Financing Proceeds.
"Net Financing Proceeds" means Financing Proceeds,
net of direct expenses of the transaction and net of taxes
(including income taxes) currently paid or payable in cash as a
result thereof in the current year or in the next succeeding
year with respect to the current year as a result of the
transaction generating Net Financing Proceeds.
"Net Proceeds" has the meaning assigned to that term
in each Mortgage.
"Obligations" means all amounts, direct or indirect,
contingent or absolute, of every type or description, and at
any time existing, owing to the Agent or any Bank pursuant to
the terms of this Agreement or any other Credit Document or
secured by any of the Security Documents.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such
corporation by its Chairman of the Board (if an officer) or its
President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or any Assistant Treasurer;
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provided that every Officers' Certificate with respect to
compliance with a condition precedent to the making of any Loan
hereunder shall include (i) a statement that the officers
making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in
this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be
made such examination or investigation as they believe to be
necessary to enable them to express an informed opinion as to
whether or not such condition has been complied with, and (iii)
a statement as to whether, in the opinion of the signers, such
condition has been complied with.
"OFS" means Operational Fixed Services, i.e. services
licensed by the FCC from a fixed station, not open to public
correspondence, using portions of the microwave spectrum
operated by and for the use of Persons operating their own
radio communication facilities in primarily the public safety,
industrial, land transportation, marine or aviation services
that may also be used for providing a wireless cable service.
"Operating Lease" of any Person, shall mean any lease
(including, without limitation, leases which may be terminated
by the lessee at any time) of any property (whether real,
personal or mixed) by such Person as lessee which is not a
Capital Lease.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor
thereto.
"Pension Plan" means any pension plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) which
is or has been maintained by or to which contributions are or
have been made by any Borrower or its respective ERISA
Affiliates.
"Permitted Encumbrances" has the meaning provided in
Section 7.03.
"Person" means any individual, partnership, joint
venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
"Pledge Agreements" means and includes the Borrowers
Pledge Agreement, the Subsidiary Pledge Agreements and any
securities pledge agreements delivered pursuant to Section 6.12
or 6.13.
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"Pledged Collateral" means all the Pledged Collateral
as defined in the General Security Agreements.
"Pledged Securities" means all the Pledged Collateral
as defined in each of the Pledge Agreements.
"Portion" means the A Revolving Portion or the B
Revolving Portion.
"Prime Rate" means the rate which the Agent announces
from time to time as its prime lending rate, as in effect from
time to time. The rate the Agent announces as its prime
lending rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any
customer. The Agent may make commercial loans or other loans
at rates of interest at, above or below the rate it announces
as its prime lending rate.
"Prior Liens" means Liens which, pursuant to the
provisions of any Security Document, are or may be superior to
the Lien of such Security Document.
"Real Property" means all right, title and interest
of any Borrower or its respective Subsidiaries (including,
without limitation, any leasehold estate) in and to a parcel of
real property owned or operated by any Borrower together with,
in each case, all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and
rights incidental to the ownership, lease or operation thereof.
"Registration Rights Agreement" means the
Registration Rights Agreement executed by the Company
substantially in the form of Exhibit N hereto, except for such
changes therein as shall have been approved by the Agent and
the Required Banks, as the same may after its execution be
amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof and hereof.
"Regulation G" means Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation T" means Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in
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effect and any successor to all or a portion thereof
establishing margin requirements.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof
establishing margin requirements.
"Required Banks" shall mean at any time Banks holding
at least 66-2/3% of the Loans; provided that for the purposes
of Section 4, the requirement that any document, agreement,
certificate or other writing is to be satisfactory to the
Required Banks shall be satisfied if (x) such document,
agreement, certificate or other writing was delivered in its
final form to the Banks prior to the Effective Date (or if
amended or modified thereafter, the Agent has reasonably
determined such amendment or modification not to be material),
(y) such document, agreement, certificate or other writing is
satisfactory to the Agent and (z) Banks holding more than
33-1/3% of the Loans held by Banks have not objected in writing
to such document, agreement, certificate or other writing to
the Agent prior to the Closing Date.
"Restoration" has the meaning assigned to that term
in each Mortgage.
"Revolving Loan" means each and every A Revolving
Loan or B Revolving Loan.
"Revolving Notes" means any A Revolving Note or B
Revolving Note.
"SEC" means the Securities and Exchange Commission or
any successor thereto.
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or
other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates
of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right
to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security Documents" means each of the Mortgages, the
Pledge Agreements, the General Security Agreements, the
Intellectual Property Security Agreements and any other
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documents utilized to pledge as Collateral for the Obligations
any property or assets of whatever kind or nature.
"State and Local Real Property Disclosure
Requirements" means any state or local laws requiring
notification of the buyer of real property, or notification,
registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control
of an entity, of the actual or threatened presence or release
into the environment, or the use, disposal, or handling of
Hazardous Materials on, at, under, or near the real property to
be sold or the entity for which control is to be transferred.
"Statements of Account" means the statements of
account required to be filed with the Copyright Office under
Section 111 of Title 17 of the United States Code as now
enacted or amended.
"Subscriber" means, with respect to the System, a
Person at any given time contracting with any of the Borrowers
for residential television services and who (A) is monthly
receiving television signals supplied by a Borrower; (B) has
commenced payment for such signals, directly or indirectly,
under subscriptions with a Borrower; and (C) is not sixty-one
or more days delinquent in payments as determined on such
contractual basis. In cases involving multiple dwelling units,
commercial billings and bulk sales, the number of Subscribers
shall be computed by dividing (x) total monthly revenues from
such sources less the portion of monthly revenues attributable
to premium services not included in the basic rate charged by a
Borrower to its single home Subscribers by (y) the basic rate
charged by such Borrower to its single home Subscribers.
"Subscriber Report" means a report of the Borrowers
setting forth the total number of Subscribers on the last day
of any given month and the total payments made by such
Subscribers during such month.
"Subsidiary" of any Person means and includes (i) any
corporation more than 50% of whose stock of any class or
classes having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the
time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or
indirectly through Subsidiaries has more than a 50% equity
interest at the time.
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"Subsidiary Guarantee" means the Subsidiary Guarantee
executed by each Subsidiary Guarantor substantially in the form
of Exhibit E-1 hereto, except for such changes therein as shall
have been approved by the Agent and the Required Banks, as the
same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Subsidiary Guarantor" means each Subsidiary of the
Company other than Apartment Cable and Home Systems.
"Subsidiary Pledge Agreement" means the Subsidiary
Securities Pledge Agreement executed by the holders of the
capital stock of each Subsidiary Guarantor other than the
Borrowers substantially in the form of Exhibit F-2 hereto,
except for such changes therein as shall have been approved by
the Agent and the Required Banks, as the same may after its
execution be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Subsidiary Security Agreement" means the Subsidiary
General Security Agreement substantially in the form of Exhibit
H-2 hereto, except for such changes therein as shall have been
approved by the Agent and the Required Banks, as the same may
after its execution be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof
and hereof.
"Survey" means a survey of any Mortgaged Property
(and all improvements thereon): (i) prepared by a surveyor or
engineer licensed to perform surveys in the jurisdiction where
such Mortgaged Property is located, (ii) dated (or redated) not
earlier than six months prior to the date of delivery thereof
unless there shall have occurred within six months prior to
such date of delivery any exterior construction on the site of
such Mortgaged Property, in which event such survey shall be
dated (or redated) after the completion of such construction or
if such construction shall not have been completed as of such
date of delivery, not earlier than 20 days prior to such date
of delivery, (iii) certified by the surveyor (in a manner
acceptable to the Agent) to the Agent and the Title Company and
(iv) complying in all respects with the minimum detail
requirements of the American Land Title Association as such
requirements are in effect on the date of preparation of such
survey.
"System" means, collectively, the MMDS, MDS, ITFS and
OFS television distribution and reception systems constructed
and operated, or to be constructed and operated, or proposed to
be constructed and operated, by the Borrowers in the
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Philadelphia, Pennsylvania area, Cleveland, Ohio area,
Bakersfield, California area and Stockton/Modesto, California
area, and any other counties or geographic regions in which the
Borrowers may construct or operate such distribution and
reception systems in the future, to provide a wireless cable
service pursuant to the System Agreements.
"System Agreements" means, collectively, all material
instruments, licenses, permits and agreements of the Borrowers,
now existing or hereafter acquired or obtained, relative to the
construction and operation of the System.
"Taking" has the meaning assigned to that term in
each Mortgage.
"Taxes" has the meaning provided in Section 3.04.
"Title Company" means such title insurance or
abstract company as shall be designated by the Agent.
"Total A Revolving Loan Commitment" means the sum of
the A Revolving Loan Commitment of each of the Banks.
"Total Commitment" means the sum of the Total A
Revolving Loan Commitment and the Total B Revolving Loan
Commitment.
"Total B Revolving Loan Commitment" means the sum of
the B Revolving Loan Commitment of each of the Banks.
"Trigger Date" means each of February 29, 1996, May
31, 1996 and August 15, 1996.
"UCC" means the Uniform Commercial Code as in effect
in the State of New York.
"Unutilized Commitment" for any Bank at any time
means, on and after the Closing Date, the aggregate of the
unutilized A Revolving Loan Commitment of such Bank and the
unutilized B Revolving Loan Commitment of such Bank.
"Voting Stock" means all classes of capital stock of
a corporation then outstanding and normally entitled to vote in
the election of directors.
"Wholly-Owned Subsidiary" of any Person means any
Subsidiary of such Person to the extent all of the capital
stock or other ownership interests in such Subsidiary, other
than directors' or nominees' qualifying shares, are owned
directly or indirectly by such Person.
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"Written" or "in writing" means any form of written
communication or a communication by means of telex, telecopier
device, telegraph or cable.
SECTION 10. The Agent.
10.01 Appointment. Each Bank hereby irrevocably
designates and appoints Indosuez as Agent (such term to include
the Agent acting as Collateral Agent or in any other
representative capacity under any other Credit Document) of
such Bank to act as specified herein and in the other Credit
Documents and each such Bank hereby irrevocably authorizes the
Agent to take such action on its behalf under the provisions of
this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and the other
Credit Documents, together with such other powers as are
reasonably incidental thereto. The Agent agrees to act as such
upon the express conditions contained in this Section 10.
Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in
the other Credit Documents, or any fiduciary relationship with
any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into this Agreement or otherwise exist against the Agent.
The provisions of this Section 10 are solely for the benefit of
the Agent and the Banks, and no Borrower shall have any rights
as a third party beneficiary of any of the provisions hereof.
In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation
or relationship of agency or trust with or for any Borrower.
10.02 Delegation of Duties. The Agent may execute
any of its duties under this Agreement or any other Credit
Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care except to the extent
otherwise required by Section 10.03.
10.03 Exculpatory Provisions. Neither the Agent nor
any of its officers, directors, employees, agents, attorneys-in-
fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement (except for its or
such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Banks for any
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recitals, statements, representations or warranties by the
Borrowers or any of their respective officers contained in this
Agreement, any other Document or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this
Agreement or any other Document or for any failure of the
Borrowers or any of their respective officers to perform its
obligations hereunder or thereunder. The Agent shall not be
under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement, or to inspect
the properties, books or records of the Borrowers. The Agent
shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any Credit Document or for any
representations, warranties, recitals or statements made herein
or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or
therewith furnished or made by the Agent to the Banks or by or
on behalf of the Borrowers to the Agent or any Bank or be
required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to
the use of the proceeds of the Revolving Loans or of the
existence or possible existence of any Default or Event of
Default.
10.04 Reliance by the Agent. The Agent shall be
entitled to rely, and shall be fully protected in relying, upon
any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or
conversation believed by it to be genuine and to have been
signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without
limitation, counsel to the Borrowers), independent accountants
and other experts selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under
this Agreement or any other Credit Document unless it shall
first receive such advice or concurrence of the Required Banks
as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Banks (or to the
extent specifically provided in Section 11.12, all the Banks),
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and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks.
10.05 Notice of Default. The Agent shall not be
deemed to have knowledge of the occurrence of any Default or
Event of Default, other than a default in the payment of
principal or interest on the Revolving Loans hereunder unless
it has received notice from a Bank or the Borrowers or any
other Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the
Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by
the Required Banks; provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default
as it shall deem advisable in the best interests of the Banks.
10.06 Non-Reliance on Agent and Other Banks. Each
Bank expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact
or affiliates have made any representations or warranties to it
and that no act by the Agent hereinafter taken, including any
review of the affairs of the Borrowers, shall be deemed to
constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, assets, operations, property, financial and
other conditions, prospects and creditworthiness of the
Borrowers and made its own decision to make its Revolving Loans
hereunder and enter into this Agreement and the other
agreements contemplated hereby. Each Bank also represents that
it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not
taking action under this Agreement, and to make such
investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrowers.
Except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide
any Bank with any credit or other information concerning the
business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of Borrowers which
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may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.07 Indemnification. The Banks agree to indemnify
the Agent in its capacity as such or in any other representa-
tive capacity under any other Credit Document ratably according
to their aggregate Revolving Loans, from and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or
disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the
payment of the Obligations) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way
relating to or arising out of this Agreement or any other
Credit Document, or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action
taken or omitted to be taken by the Agent under or in
connection with any of the foregoing, but only to the extent
that any of the foregoing is not paid by the Borrowers;
provided that no Bank shall be liable to the Agent for the
payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's
gross negligence or willful misconduct. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may
call for additional indemnity and cease, or not commence, to do
the acts indemnified against until such additional indemnity is
furnished. The agreements in this Section 10.07 shall survive
the payment of all Obligations.
10.08 The Agent in Its Individual Capacity. The
Agent and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the
Borrowers, and other Affiliates of the Borrowers as though the
Agent were not the Agent hereunder. With respect to the
Revolving Loans made by it and all Obligations owing to it, the
Agent shall have the same rights and powers under this
Agreement as any Bank and may exercise the same as though it
were not the Agent, and the terms "Bank" and "Banks" shall
include the Agent in its individual capacity.
10.09 Successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the term
"Agent" shall include such successor agent effective upon its
appointment, and the resigning Agent's rights, powers and
duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of
the parties to this Agreement. After the retiring Agent's
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resignation hereunder as Agent, the provisions of this
Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this
Agreement.
10.10 Resignation by Agent. A. The Agent may
resign from the performance of all its functions and duties
hereunder at any time by giving 15 Business Days' prior written
notice to the Borrowers and the Banks. Such resignation shall
take effect upon the acceptance by a successor Agent of
appointment pursuant to subsections B and C below or as
otherwise provided below; provided, however, that at the time
of appointment of a successor Agent, if the Agent, through its
possession, control, or ownership of Pledged Collateral or
otherwise, holds, owns, or controls any permit, license or
other authorization issued by the FCC such that the FCC must
consent to the appointment of a successor Agent, until the FCC
has consented to the appointment of a successor Agent, the
Agent shall retain control over such Pledged Collateral or
permit, license or other authorization.
B. Upon any such notice of resignation of the
Agent, the Required Banks shall appoint a successor Agent
acceptable to the Borrowers and which shall be an incorporated
bank or trust company or other qualified financial institution
with operations in the United States and total assets of at
least $1 billion.
C. If a successor Agent shall not have been so
appointed within said 15 Business Day period, the resigning
Agent with the consent of the Borrowers (which consent shall
not be unreasonably withheld) shall then appoint a successor
Agent (which shall be an incorporated bank or trust company or
other qualified financial institution with operations in the
United States and total assets of at least $1 billion) who
shall serve as Agent until such time, if any, as the Required
Banks appoint a successor Agent as provided above.
D. If no successor Agent has been appointed
pursuant to subsection B or C by the 20th Business Day after
the date such notice of resignation was given by the resigning
Agent, such Agent's resignation shall become effective and the
Required Banks shall thereafter perform all the duties of Agent
hereunder until such time, if any, as the Required Banks
appoint a successor Agent as provided above.
E. The Agent may transfer its rights and
obligations to perform all of its functions and duties
hereunder to its parent company or to any Affiliate of it or
its parent company.
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SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrowers
agree, jointly and severally, to: (i) whether or not the
transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent in
connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and
instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the
reasonable fees and disbursements of Cahill Gordon & Reindel
and local and FCC counsel to the Banks) with prior notice to
the Borrowers of the engagement of any counsel and of each of
the Banks in connection with the enforcement of the Credit
Documents (including in connection with any "work-out" or other
restructuring of the Borrowers' Obligations or in connection
with any bankruptcy, reorganization or similar proceeding with
respect to any Borrower) and the documents and instruments
referred to therein (including, without limitation, the
reasonable fees and disbursements of counsel for each of the
Banks) with prior notice to the Borrowers of the engagement of
any counsel and the reasonable fees and expenses of any
appraisers or any consultants or other advisors engaged with
prior notice to the Borrowers of any such engagement with
respect to environmental or other matters; (ii) pay all
reasonable out-of-pocket costs and expenses of the Agent or
Indosuez in connection with the assignment or attempted
assignment to any other Person of all or any portion of
Indosuez's interest under this Agreement pursuant to
Section 11.04 incurred prior to 90 days following the Closing
Date, provided that no payments shall be required pursuant to
this clause (ii) if Indosuez assigns all of its interest in the
Revolving Loans within such period; (iii) pay and hold each of
the Banks harmless from and against any and all present and
future stamp and other similar taxes with respect to the
foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent
attributable to such Bank) to pay such taxes; and (iv) in-
demnify each Bank, its officers, directors, employees,
representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or
expenses (including, without limitation, any and all losses,
liabilities, claims, damages or expenses arising under
Environmental Laws) incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, any
investigation, litigation or other proceeding (whether or not
any Bank is a party thereto) related to the entering into
and/or performance of any Document or the use of the proceeds
of any Revolving Loans hereunder or the consummation of any
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other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding (but excluding
any such losses, liabilities, claims, damages or expenses to
the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
11.02 Right of Set-off. In addition to any rights
now or hereafter granted under applicable law or otherwise, and
not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default,
each Bank is hereby authorized at any time or from time to time
thereafter, without presentment, demand, protest or other
notice of any kind to any Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such
Bank (including, without limitation, by branches and agencies
of such Bank wherever located) to or for the credit or the
account of Borrowers against and on account of the Obligations
and liabilities of any Borrower to such Bank under this
Agreement or under any of the other Credit Documents,
including, without limitation, all interests in Obligations of
any Borrower purchased by such Bank pursuant to Section
11.06(b), and all other claims of any nature or description
arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Bank shall
have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or
unmatured.
11.03 Notices. Except as otherwise expressly
provided herein, all notices and other communications provided
for hereunder shall be in writing (including telegraphic,
telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to
any Borrower, to such Borrower, c/o ACS Enterprises, Inc., 2510
Metropolitan Drive, Trevose, Pennsylvania 19053, Attention:
Alan Sonnenberg, with a copy to: Fox, Rothschild, O'Brien &
Frankel, 2000 Market Street, 10th Floor, Philadelphia,
Pennsylvania 19103, Attention: Jerome E. Bogutz, Esq.; if to
any Bank, at its address specified for such Bank on Annex II
hereto; or, at such other address as shall be designated by any
party in a written notice to the other parties hereto. All
such notices and communications shall, when mailed, be
effective upon receipt, or when telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be
effective when delivered to the telegraph company, cable
company or overnight courier, as the case may be, or when sent
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by telex or telecopier, except that notices and communications
to the Agent shall not be effective until received by the
Agent.
11.04 Benefit of Agreement. (a) This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto, all future holders of the
Revolving Notes, and their respective successors and assigns;
provided that no Borrower may assign or transfer any of its
interests hereunder without the prior written consent of the
Banks; and provided, further, that the rights of each Bank to
transfer, assign or grant participations in its rights and/or
obligations hereunder shall be limited as set forth below in
this Section 11.04; provided that nothing in this Section 11.04
shall prevent or prohibit any Bank from (i) pledging its
Revolving Loans hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank
and (ii) subject to Section 11.04(b)(B), granting
participations in or assignments of such Bank's Revolving Loans
hereunder to its parent company and/or to any Affiliate of such
Bank that is at least 50% owned by such Bank or its parent
company.
(b) Each Bank shall have the right to transfer,
assign or grant participations in all or any part of its
remaining Revolving Loans hereunder on the basis set forth
below in this clause (b); provided that no assignee or
participant of any Bank's rights shall be entitled to receive
any greater payment under Section 1.08 than such Bank would
have been entitled to receive with respect to the rights
transferred. Each Bank may furnish any information concerning
the Borrowers in the possession of such Bank from time to time
to assignees and participants (including prospective assignees
and participants).
(A) Assignments. Each Bank, with the written
consent of the Agent, which shall not be unreasonably
withheld and which shall be evidenced on the notice in the
form of Exhibit I-1 hereto, may assign pursuant to an
Assignment and Assumption Agreement substantially in the
form of Exhibit I-2 hereto all or a portion of its
Revolving Loans hereunder pursuant to this clause (b)(A)
to any Person; provided that any such assignment pursuant
to this clause (b)(A) shall be with respect to Revolving
Loans in the aggregate amount of at least $2,500,000 (or,
if lower, the entire amount of such Bank's Revolving
Loans). Any assignment pursuant to this clause (b)(A)
will become effective five Business Days after the Agent's
receipt of (i) a written notice in the form of Exhibit I-1
hereto from the assigning Bank and the assignee Bank and
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(ii) a processing and recordation fee of $2,000 from the
assigning Bank in connection with the Agent's recording of
such sale, assignment, transfer or negotiation; provided
that such fee shall only be payable if the assignment is
between a Bank and a party that is not a Bank prior to the
assignment. The Borrowers shall issue a new Revolving
Note to the assignee in conformity with Section 1.05 and
the assignor shall return the old Revolving Note to the
Borrowers. Upon the effectiveness of any assignment in
accordance with this clause (b)(A), the assignee will
become a "Bank" for all purposes of this Agreement and the
other Credit Documents and, to the extent of such
assignment, the assigning Bank shall be relieved of its
obligations hereunder with respect to the Revolving Loans
or portion thereof, as the case may be, being assigned.
The Agent shall maintain at the Agent's Office a copy of
each Assignment and Assumption Agreement delivered to and
accepted by it and a register in which it shall record the
names and addresses of the Banks and the Revolving Loan
Commitments of, and principal amount of the Revolving
Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent
demonstrable error, and the Borrowers, the Agent and the
Banks may treat each Person whose name is recorded in the
Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection
by the Borrowers, the Agent or any Bank at any reasonable
time and from to time upon reasonable prior notice.
(B) Participations. Each Bank may transfer, grant
or assign participations in all or any part of such Bank's
Revolving Loans hereunder pursuant to this clause (b)(B)
to any Person; provided that (i) such Bank shall remain a
"Bank" for all purposes of this Agreement and the
transferee of such participation shall not constitute a
Bank hereunder and (ii) no participant under any such
participation shall have rights to approve any amendment
to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver
would (x) extend the scheduled final maturity date of any
of the Revolving Loans in which such participant is
participating or (y) reduce the principal amount, interest
rate or fees applicable to any of the Revolving Loans in
which such participant is participating or postpone the
payment of any interest or fees or (z) release all or
substantially all of the Collateral (except as expressly
permitted by the Credit Documents). In the case of any
such participation, the participant shall not have any
rights under this Agreement or any of the other Credit
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Documents (the participant's rights against the granting
Bank in respect of such participation to be those set
forth in the agreement with such Bank creating such
participation) and all amounts payable by the Borrowers
hereunder shall be determined as if such Bank had not sold
such participation; provided that such participant shall
be considered to be a "Bank" for purposes of Sections
11.02 and 11.06(b).
11.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Agent or any Bank in exercising any
right, power or privilege hereunder or under any other Credit
Document and no course of dealing between any Borrower and the
Agent or any Bank shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power, or
privilege hereunder or under any other Credit Document preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The
rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which the Agent or
any Bank would otherwise have. No notice to or demand on any
Borrower in any case shall entitle a Borrower to any other or
further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Banks to
any other or further action in any circumstances without notice
or demand.
11.06 Payments Pro Rata. (a) The Agent agrees that
promptly after its receipt of each payment from or on behalf of
any Borrower in respect of any Obligations of any Borrower, it
shall distribute such payment to the Banks pro rata based upon
their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of
setoff or banker's lien, by counterclaim or cross action, by
the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal
of, or interest on, the Revolving Loans, of a sum which with
respect to the related sum or sums received by other Banks is
in a greater proportion than the total of such Obligations then
owed and due to such Bank bears to the total of such
Obligations then owed and due to all of the Banks immediately
prior to such receipt, then such Bank receiving such excess
payment shall purchase for cash without recourse or warranty
from the other Banks an interest in the Obligations of the
respective Borrower to such Banks in such amount as shall
result in a proportional participation by all of the Banks in
<PAGE> 92
-86-
such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase
shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
11.07 Calculations; Computations. (a) The
financial statements to be furnished to the Banks pursuant
hereto shall be made and prepared in accordance with GAAP
consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in
writing by the Borrowers to the Banks); provided that, except
as otherwise specifically provided herein, all computations
determining compliance with Section 7 and all definitions used
herein for any purpose shall utilize accounting principles and
policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the historical financial
statements delivered to the Banks pursuant to Section 4.01(h).
(b) All computations of interest and fees hereunder
shall be made on the actual number of days elapsed over a year
of 365 days.
11.08 Governing Law; Submission to Jurisdiction;
Venue. (a) This Agreement and the rights and obligations of
the parties hereunder shall be construed and enforced in
accordance with and be governed by the laws of the State of New
York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the
courts of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery
of this Agreement, each Borrower and each of the Banks hereby
irrevocably accepts for themselves and in respect of their
property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts. Each Borrower and each
of the Banks further irrevocably consents to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Corporation
Service Company and the Agent, respectively, as its agent for
service of process, such service to become effective 30 days
after such mailing. Each Borrower and each of the Banks hereby
irrevocably appoints Corporation Service Company and the Agent,
respectively, to serve as its agent for service of process in
respect of any such action or proceeding. Nothing herein shall
affect the right of the Agent or any Bank to serve process in
any other manner permitted by law or to commence legal
proceedings or otherwise proceed against either Borrower or any
Bank in any other jurisdiction.
<PAGE> 93
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(b) Each Borrower and each of the Banks hereby
irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement
or any other Credit Document brought in the courts referred to
in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought
in an inconvenient forum.
11.09 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed
and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged
with the Borrowers and the Agent.
11.10 Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which the
Borrowers and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered
the same to the Agent at the Agent's Office or, in the case of
the Banks, shall have given to the Agent telephonic (confirmed
in writing), written, telex or telecopy notice (actually
received) at such office that the same has been signed and
mailed to it. The Agent will give the Borrowers and each Bank
prompt written notice of the occurrence of the Effective Date.
11.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.
11.12 Amendment or Waiver. Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof
may be changed, waived, discharged or terminated unless such
change, waiver, discharge or termination is in writing signed
by the Required Banks; provided that no such change, waiver,
discharge or termination shall, without the consent of each
affected Bank and the Agent, (i) extend the scheduled final
maturity date of any Revolving Loan, or any portion thereof, or
reduce the rate or extend the time of payment of interest
thereon or fees or reduce the principal amount thereof, (ii)
release all or substantially all of the Collateral or
Guarantees (except as expressly permitted by the Credit
Documents), (iii) amend, modify or waive any provision of Sec-
tion 3.02, 3.04, Section 8, 10.07, 11.01, 11.02, 11.04, 11.06,
11.07(b) or 11.12, (iv) reduce any percentage specified in, or
otherwise modify, the definition of Required Banks, or
<PAGE> 94
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(v) consent to the assignment or transfer by any Borrower of
any of its rights and obligations under this Agreement. No
provision of Section 10 may be amended without the consent of
the Agent.
11.13 Survival. All indemnities set forth herein
including, without limitation, in Section 3.04, 10.07 or 11.01
shall survive the execution and delivery of this Agreement and
the making of the Revolving Loans, the repayment of the
Obligations and the termination of the Total Revolving Loan
Commitment.
11.14 Domicile of Revolving Loans. Each Bank may
transfer and carry its Revolving Loans at, to or for the
account of any branch office, Subsidiary or Affiliate of such
Bank.
11.15 Waiver of Jury Trial. Each of the parties to
this Agreement hereby irrevocably waives all right to a trial
by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the Credit Documents or the
transactions contemplated hereby or thereby.
11.16 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
<PAGE> 95
caused a counterpart of this Agreement to be duly executed and
delivered as of the date first above written.
ACS ENTERPRISES, INC.
By: /s/ ALAN SONNENBERG
--------------------------
Name: Alan Sonnenberg
Title: Chairman of the Board
ACS HOME SYSTEMS, INC.
By: /s/ ALAN SONNENBERG
--------------------------
Name: Alan Sonnenberg
Title: Chairman of the Board
APARTMENT CABLE SYSTEMS, INC.
By: /s/ ALAN SONNENBERG
--------------------------
Name: Alan Sonnenberg
Title: Chairman of the Board
<PAGE> 96
Credit Agreement among ACS Enterprises, Inc., ACS Home
Systems, Inc., Apartment Cable Systems, Inc., Banque Indosuez and
the Banks listed herein.
BANQUE INDOSUEZ, NEW YORK BRANCH
as Agent and Collateral
Agent
By: /s/ JOHN G. POPP
--------------------------
Name: John G. Popp
Title: First Vice President
By: /s/ R. HAYNES CHIDSEY
--------------------------
Name: R. Haynes Chidsey
Title: Vice President
A Revolving Loan Commitment: $22,000,000
B Revolving Loan Commitment: $14,000,000
<PAGE> 1
Exhibit M to
Credit Agreement
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID
ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL (WHO MAY BE AN EMPLOYEE OF SUCH
HOLDER) REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER SAID ACT. THE OFFERING OF THIS SECURITY HAS NOT
BEEN REVIEWED OR APPROVED BY ANY STATE'S SECURITIES
ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER ARE ALSO BENEFITED BY AND SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF AUGUST , 1995, BY
AND AMONG THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, A
COPY OF WHICH IS ON FILE WITH THE COMPANY AND WILL BE FURNISHED
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: , 1996
FORM OF WARRANT
To Purchase 100,000 Shares of Common Stock
ACS ENTERPRISES, INC.
EXPIRING , 2003.*
THIS IS TO CERTIFY THAT, for value received,
, or registered
assigns (the "Holder") is entitled to purchase from ACS
ENTERPRISES, INC., a Pennsylvania corporation (the "Company"),
at any time or from time to time prior to 5:00 p.m., New York
City time, on , 2003* at the place where a Warrant
Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined), the number of shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the
Company shown above, all subject to adjustment and upon the
terms and conditions as hereinafter provided, and is entitled
also to exercise the other appurtenant rights, powers and
privileges hereinafter described. This Warrant is one of one
- --------------------------
* The seventh anniversary of the applicable Trigger Date (as
defined in the Credit Agreement).
<PAGE> 2
-2-
or more warrants (the "Warrants") of the same form and having
the same terms as this Warrant. The Holder shall designate at
the time of exercise whether the Common Stock to be received
shall be voting Common Stock or non-voting Common Stock.
Certain terms used in this Warrant are defined in
Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in
whole or in part, the Holder shall deliver to the Company, at
the Warrant Agency, (a) this Warrant, (b) a written notice, in
substantially the form of the Subscription Notice attached
hereto, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock
to be purchased, the denominations of the share certificate or
certificates desired, whether the Common Stock to be acquired
shall be voting Common Stock or non-voting Common Stock and the
name or names in which such certificates are to be the
registered, and (c) payment of the Exercise Price with respect
to such shares. Such payment may be made, at the option of the
Holder: (x) by cash, money order, certified or bank cashier's
check or wire transfer, (y) the surrender to the Company of
securities of the Company having a value equal to the aggregate
Exercise Price, as determined in good faith by the Company's
board of directors, or (z) the delivery of a notice to the
Company that the Holder is exercising this Warrant by
authorizing the Company to reduce the number of shares of
Common Stock subject to this Warrant by the number of shares
having an aggregate value equal to the aggregate Exercise
Price, as determined in good faith by the Company's board of
directors.
The Company shall, as promptly as practicable and in
any event within three Business Days thereafter, execute and
deliver or cause to be executed and delivered, in accordance
with such notice, a certificate or certificates representing
the aggregate number and type of shares of Common Stock
specified in said notice. The share certificate or
certificates so delivered shall be in such denominations as may
be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of
shares of Common Stock for which the Warrant is being
exercised, and shall be issued in the name of the Holder or
such other name or names as shall be designated in such notice.
Such certificate or certificates shall be deemed to have been
issued, and such Holder or any other Person so designated to be
<PAGE> 3
-3-
named therein shall be deemed for all purposes to have become a
holder of record of such shares, as of the date the
aforementioned notice is received by the Company. If this
Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing
the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant, or, at the
request of the Holder, appropriate notation may be made on this
Warrant which shall then be returned to the Holder. The
Company shall pay all expenses, taxes (if any) and other
charges payable in connection with the preparation, issuance
and delivery of share certificates and new Warrants, except
that, if share certificates or new Warrants shall be registered
in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of
such transfer shall be paid by the Holder at the time of
delivering the aforementioned notice of exercise or promptly
upon receipt of a written request of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All
shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable and free
from all preemptive rights of any stockholder, and from all
taxes, liens and charges with respect to the issue thereof
(other than transfer taxes) and, if voting Common Stock is to
be issued upon exercise hereof and such Common Stock is then
listed on any national securities exchanges (as defined in the
Exchange Act) or quoted on NASDAQ, shall be duly listed or
quoted thereon, as the case may be.
1.3 No Fractional Shares To Be Issued. The Company
shall not be required to issue fractions of shares of Common
Stock upon exercise of this Warrant. If any fraction of a
share would, but for this Section, be issuable upon any
exercise of this Warrant, in lieu of such fractional share the
Company shall pay to the Holder, in cash, an amount equal to
such fraction of the Fair Market Value per share of outstanding
Common Stock of the Company on the Business Day immediately
prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of
Common Stock issued upon exercise of this Warrant, unless at
the time of exercise such shares are registered under the
Securities Act, shall bear the following legend:
"This security has not been registered under the
Securities Act of 1933, as amended, or under the
securities laws of any state or other jurisdiction
<PAGE> 4
-4-
and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under
said Act and applicable state securities laws or
unless the Company receives an opinion of counsel
(who may be an employee of such holder) reasonably
satisfactory to the Company that registration,
qualification or other such actions are not
required under said Act. The offering of this
security has not been reviewed or approved by any
state securities administrator. This security is
also benefited by and subject to a Registration
Rights Agreement, dated as of August , 1995,
between the Company and the other parties listed
therein, a copy of which is on file with the
Company and will be furnished upon written request
and without charge."
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend (except a
new certificate issued upon completion of a public distribution
pursuant to a registration statement under the Securities Act)
shall also bear such legend unless, in the opinion of counsel
selected by the holder of such certificate (who may be an
employee of such holder), the securities represented thereby
are no longer subject to restrictions on resale under the
Securities Act.
1.5 Reservation; Authorization. The Company has
reserved and will keep available for issuance upon exercise of
the Warrants the total number of shares of Common Stock
deliverable upon exercise of all Warrants from time to time
outstanding. The issuance of the such shares has been duly and
validly authorized and, when issued and sold in accordance with
the Warrants, such shares will be duly and validly issued,
fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. If the holders of Warrants to
purchase a majority of the shares of Common Stock issuable upon
exercise of the Warrants shall request appointment of an
independent warrant agency with respect to the Warrants, the
Company shall promptly appoint and thereafter maintain, at its
own expense, an agency in New York, New York, which agency may
be the Company's then existing transfer agent (the "Warrant
Agency"), for certain purposes specified herein, and shall give
prompt notice of such appointment (and appointment of any
<PAGE> 5
-5-
successor Warrant Agency) to all holders of Warrants. Until an
independent Warrant Agency is so appointed, the Company shall
perform the obligations of the Warrant Agency provided herein
at its address at 2510 Metropolitan Drive, Trevose,
Pennsylvania 19053 or such other address as the Company shall
specify by notice to all Warrantholders.
2.2 Ownership of Warrant. The Company may deem and
treat the Person in whose name this Warrant is registered as
the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by any Person other than the
Warrant Agency) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant
for registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to
maintain at the Warrant Agency books for the registration of
transfers of the Warrants, and transfer of this Warrant and all
rights hereunder shall be registered, in whole or in part, on
such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly
executed by the Holder or his duly authorized agent or
attorney, with (unless the Holder is the original Warrantholder
or an institutional investor) signatures guaranteed by a bank
or trust company or a broker or dealer registered with the
NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender the Company shall execute
and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be
cancelled. Notwithstanding the foregoing, a Warrant may be
exercised by a new holder without having a new Warrant issued.
The Warrant Agency shall not be required to register any
transfers if the Holder fails to furnish to the Company, after
a request therefor, an opinion of counsel (who may be an
employee of such Holder) reasonably satisfactory to the Company
that such transfer is exempt from the registration requirements
of the Securities Act.
2.4 Division or Combination of Warrants. This
Warrant may be divided or combined with other Warrants upon
surrender hereof and of any Warrant or Warrants with which this
Warrant is to be combined at the Warrant Agency, together with
a written notice specifying the names and denominations in
which the new Warrant or Warrants are to be issued, signed by
the holders hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with
Section 2.3 as to any transfer which may be involved in the
division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or
<PAGE> 6
-6-
Warrants to be divided or combined in accordance with such
notice.
2.5 Loss, Theft, Destruction or Mutilation of
Warrants. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of any Warrant
and, in the case of any such loss, theft or destruction, upon
receipt of indemnity or security reasonably satisfactory to the
Company (the original Warrantholder's indemnity being
satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such holder), or, in the
case of any such mutilation, upon surrender and cancellation of
such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase
the same aggregate number of shares of Common Stock as provided
for in such lost, stolen, destroyed or mutilated Warrant.
2.6 Expenses of Delivery of Warrants. The Company
shall pay all expenses, taxes (other than transfer taxes) and
other charges payable in connection with the preparation,
issuance and delivery of Warrants and Warrant Shares hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Registration Rights. The Common Stock issuable
upon exercise of this Warrant is entitled to the benefits of
the Registration Rights Agreement dated as of August , 1995,
by and among the Company and the other parties listed therein
(the "Registration Rights Agreement"). The Company shall keep
a copy of the Registration Rights Agreement, and any amendments
thereto, at the Warrant Agency and shall furnish copies thereof
to the Holder upon request.
3.2 Contest and Appraisal Rights. Upon each
determination of Fair Market Value hereunder (other than a
determination relating solely to setting the value of
fractional shares), the Company shall promptly give notice
thereof to all Warrantholders, setting forth in reasonable
detail the calculation of such Fair Market Value and the method
and basis of determination thereof, as the case may be. If a
majority in interest of Warrantholders shall disagree with such
determination and shall, by notice to the Company given within
15 days after the Company's notice of such determination, elect
to dispute such determination, such dispute shall be resolved
in accordance with this Section 3.2. In the event that a
determination of Market Price, or a determination of Fair
Market Value solely involving Market Price, is disputed, such
<PAGE> 7
-7-
dispute shall be submitted, at the Company's expense, to a New
York Stock Exchange member firm selected by the Company and
acceptable to the Warrantholders, whose determination of Fair
Market Value and/or Market Price, as the case may be, shall be
binding on the Company and the Warrantholders. In the event
that a determination of Fair Market Value, other than a
determination solely involving Market Price, is disputed, such
dispute shall be resolved through the Appraisal Procedure.
3.3 Certain Covenants. The Company covenants and
agrees that, until exercise or cancellation of this Warrant,
the Company will deliver to each Holder:
(a) As soon as available but not later than one
hundred twenty (120) days after the close of the fiscal year of
the Company, a consolidated balance sheet of the Company as at
the end of such year and the related consolidated and
consolidating statements of income, of stockholders' equity and
of cash flows for such year, such consolidated statements to be
audited by a firm of independent certified public accountants;
(b) As soon as available but not later than sixty
(60) days after the end of each quarter, a consolidated balance
sheet of the Company as at the end of, and the related
consolidated statement of income for, the portion of the
Company's fiscal year then elapsed, all prepared in accordance
with generally accepted accounting principles;
(c) As soon as available, any and all management
letters provided to the Company's board of directors or audit
committee by the Company's auditors;
(d) As soon as available, any and all reports filed
by the Company under the Securities Act and the Exchange Act;
and
(e) As soon as available, any and all press releases
of the Company which appear in the financial media.
3.4 Non-Voting Common Stock. Upon the request of a
Holder whose ownership of voting Common Stock, upon the
exercise of this Warrant, would be prohibited by the provisions
of Regulation Y of the Board of Governors of the Federal
Reserve System or any successor to such regulation to issue
non-voting Common Stock upon the exercise of this Warrant, the
Company shall issue to such Holder upon the exercise of this
Warrant non-voting Common Stock.
<PAGE> 8
-8-
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and
the number of shares of Common Stock (or other securities or
property) issuable upon exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of
certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company
shall after the date of issuance of this Warrant subdivide its
outstanding shares of Common Stock into a greater number of
shares or consolidate its outstanding shares of Common Stock
into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price
shall be adjusted, effective immediately after the record date
at which the holders of shares of Common Stock are determined
for purposes of such Common Stock Reorganization, to a price
determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding on such record date before giving effect to
such Common Stock Reorganization and the denominator of which
shall be the number of shares of Common Stock outstanding after
giving effect to such Common Stock Reorganization, and (b) the
number of shares of Common Stock subject to purchase upon
exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before
such Common Stock Reorganization by a fraction, the numerator
of which shall be the number of shares outstanding after giving
effect to such Common Stock Reorganization and the denominator
of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock
Reorganization.
4.3 Common Stock Distribution. (a) Subject to the
last sentence of this paragraph, if the Company shall after the
date of issuance of this Warrant issue or otherwise sell or
distribute any shares of Common Stock (other than upon the
exercise of options or warrants that were outstanding on August
31, 1995), otherwise than pursuant to a Common Stock
Reorganization (any such event, including any event described
in paragraphs (b) and (c) below, being herein called a "Common
Stock Distribution"), if such Common Stock Distribution shall
be for a consideration per share less than the Fair Market
Value per share of outstanding Common Stock of the Company on
the date of such Common Stock Distribution, or on the first
date of the announcement of such Common Stock Distribution
<PAGE> 9
-9-
(whichever is less), then, effective upon such Common Stock
Distribution, the number of shares of Common Stock purchasable
upon exercise of this Warrant shall be adjusted by multiplying
the number of shares of Common Stock subject to purchase upon
exercise of this Warrant by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding
(and issuable upon exercise or conversion of outstanding
options, warrants and convertible securities) immediately prior
to such Common Stock Distribution plus the number of shares of
Common Stock issued (or deemed to be issued pursuant to
paragraphs (b) and (c) below) in such Common Stock Distribution
and the denominator of which shall be an amount equal to the
sum of (A) the number of shares of Common Stock outstanding
(and issuable upon exercise or conversion of outstanding
options, warrants and convertible securities) immediately prior
to such Common Stock Distribution, plus (B) the number of
shares of Common Stock which the aggregate consideration, if
any, received by the Company (determined as provided below) for
such Common Stock Distribution would buy at the Fair Market
Value thereof, as of the date immediately prior to such Common
Stock Distribution or as of the date immediately prior to the
date of announcement of such Common Stock Distribution
(whichever is less). In the event of any such adjustment, the
Exercise Price for each Warrant shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to
such Common Stock Distribution by the fraction used for
purposes of the aforementioned adjustment.
The provisions of this paragraph (a), including by
operation of paragraph (b) or (c) below, shall not operate to
increase the Exercise Price or to reduce the number of shares
of Common Stock subject to purchase upon exercise of this
Warrant.
(b) If the Company shall after the date of issuance
of this Warrant issue, sell, distribute or otherwise grant in
any manner (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common
Stock (such rights, warrants or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"),
whether or not such Options or the rights to convert or
exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the granting of
<PAGE> 10
-10-
such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all
such Options, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Fair Market Value per share of outstanding Common Stock of
the Company on the date of granting such Options or on the date
of announcement thereof (whichever is less), then for purposes
of paragraph (a) above, the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued as of the date of
granting of such Options and thereafter shall be deemed to be
outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d)
below, no additional adjustment of the number of shares of
Common Stock purchasable upon the exercise of this Warrant or
of the Exercise Price shall be made upon the actual exercise of
such Options or upon conversion or exchange of such Convertible
Securities.
(c) If the Company shall after the date of issuance
of this Warrant issue, sell or otherwise distribute or grant
(whether directly or by assumption in a merger or otherwise)
any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the
aggregate amount received or receivable by the Company as
consideration for the issue, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon
the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less
than the Fair Market Value per share of outstanding Common
Stock of the Company on the date of such issue, sale or
distribution or on the date of announcement thereof (whichever
is less), then, for purposes of paragraph (a) above, the total
maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall
be deemed to have been issued as of the date of the issue, sale
or distribution of such Convertible Securities and thereafter
<PAGE> 11
-11-
shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise
provided in paragraph (d) below, no additional adjustment of
the number of shares of Common Stock purchasable upon exercise
of this Warrant or of the Exercise Price shall be made upon the
actual conversion or exchange of such Convertible Securities.
(d) If the purchase price provided for in any Option
referred to in paragraph (b) above, the additional
consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (b) or
(c) above, or the rate at which any Convertible Securities
referred to in paragraph (b) or (c) above are convertible into
or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to
protect against, and having the effect of protecting against,
dilution upon an event which results in a related adjustment
pursuant to this Article IV), the number of shares of Common
Stock purchasable upon exercise of this Warrant and the
Exercise Price then in effect shall forthwith be readjusted
(effective only with respect to any exercise of this Warrant
after such readjustment) to the number of shares of Common
Stock purchasable upon exercise of this Warrant and the
Exercise Price which would then be in effect had the adjustment
made upon the issue, sale, distribution or grant of such
Options or Convertible Securities been made based upon such
changed purchase price, additional consideration or conversion
rate, as the case may be; provided, however, that such
readjustment shall give effect to such change only with respect
to such Options and Convertible Securities as then remain
outstanding. If, at any time after any adjustment of the
number of shares of Common Stock purchasable upon exercise of
each Warrant or the Exercise Price shall have been made
pursuant to this Article IV on the basis of the issuance of any
Option or Convertible Securities or after any new adjustments
of the number of shares of Common Stock purchasable upon
exercise of each Warrant or the Exercise Price shall have been
made pursuant to this paragraph, the right of conversion,
exercise or exchange in such Option or Convertible Securities
shall expire or terminate, and the right of conversion,
exercise or exchange in respect of a portion of such Option or
Convertible Securities shall not have been exercised, such
previous adjustment shall be rescinded and annulled.
Thereupon, a recomputation shall be made of the effect of such
Option or Convertible Securities on the basis of treating the
number of shares of Common Stock, if any, theretofore actually
issued or issuable pursuant to the previous exercise of such
right of conversion, exercise or exchange as having been issued
on the date or dates of such conversion, exercise or exchange
<PAGE> 12
-12-
and for the consideration actually received and receivable
therefor, and treating any such Option or Convertible
Securities which then remain outstanding as having been granted
or issued immediately after the time of any such issuance for
the consideration per share for which shares of Common Stock
are issuable under such Option or Convertible Securities; and,
if and to the extent called for by the foregoing provisions of
this Section on the basis aforesaid, a new adjustment of the
number of shares of Common Stock purchasable upon exercise of
each Warrant and the Exercise Price shall be made, which new
adjustment shall supersede (effective only with respect to any
exercise of this Warrant after such readjustment) the previous
adjustment so rescinded and annulled.
(e) If the Company shall after the date of issuance
of this Warrant pay a dividend or make any other distribution
upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of
paragraph (a) above, such Common Stock, Options or Convertible
Securities, as the case may be, shall be deemed to have been
issued or sold without consideration.
(f) If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for
cash, the consideration received therefor shall be deemed to be
the amount received by the Company therefor, after deduction
therefrom of any expenses incurred and any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed
for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be
deemed to be the Fair Market Value of such consideration, after
deduction of any expenses incurred and any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. If any shares of Common Stock, Options
or Convertible Securities shall be issued in connection with
any merger in which the Company is the surviving corporation,
the amount of consideration therefor shall be deemed to be the
Fair Market Value of such portion of the assets and business of
the nonsurviving corporation as shall be attributable to such
Common Stock, Options or Convertible Securities, as the case
may be. If any Options shall be issued in connection with the
issue and sale of other securities of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for
consideration to be determined pursuant to the Appraisal
Procedure.
<PAGE> 13
-13-
(g) If the Company shall take a record of the
holders of the Common Stock for the purpose of entitling them
to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or to subscribe for or
purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue,
sale, distribution or grant of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date
of the granting of such right of subscription or purchase, as
the case may be.
(h) For purposes of determining whether any
adjustment is required pursuant to this Article IV, any
security of the Company having rights substantially equivalent
to the Common Stock as to dividends or upon liquidation,
dissolution or winding up of the Company shall be treated as if
such security were Common Stock.
4.4 Dividends. (a) If the Company shall after the
date of issuance of this Warrant issue or distribute to all or
substantially all holders of shares of Common Stock evidences
of indebtedness, any other securities of the Company or any
property, assets or cash, and if such issuance or distribution
does not constitute a Common Stock Reorganization or a Common
Stock Distribution (any such nonexcluded event being herein
called a "Dividend"), (i) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be
increased (but not decreased), effective immediately after the
record date at which the holders of shares of Common Stock are
determined for purposes of such Dividend, to a number
determined by multiplying the number of shares of Common Stock
subject to purchase immediately before such Dividend by a
fraction, the numerator of which shall be the Fair Market Value
per share of outstanding Common Stock on such record date and
the denominator of which shall be the Fair Market Value per
share of outstanding Common Stock of the Company on such record
date less the then Fair Market Value of the evidences of
indebtedness, securities, cash, or property or other assets
issued or distributed in such Dividend with respect to one
share of Common Stock, and (ii) the Exercise Price shall be
decreased (but not increased) to a price determined by
multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the number of shares of Common
Stock subject to purchase upon exercise of this Warrant
immediately before such Dividend and the denominator of which
shall be the number of shares of Common Stock subject to
purchase upon exercise of this Warrant immediately after such
Dividend; provided, that in the case of any such distribution,
the Holder hereof may elect by giving the Company two days
<PAGE> 14
-14-
prior written or telephonic notice promptly confirmed in
writing, either (x) to have the adjustment provided for in this
clause (a) applied to its Warrant or (y) to receive such
distribution as set forth in clause (b) below). If after the
date of issuance of this Warrant the Company repurchases shares
of Common Stock for a per share consideration which exceeds the
Fair Market Value (as calculated immediately prior to such
repurchase), then the number of shares of Common Stock
purchasable upon exercise of this Warrant and the Exercise
Price shall be adjusted in accordance with the foregoing
provisions, as if, in lieu of such repurchases, the Company had
(I) distributed a Dividend having a Fair Market Value equal to
the Fair Market Value of all property and cash expended in the
repurchases, and (II) effected a reverse split of the Common
Stock in the proportion required to reduce the number of shares
of Common Stock outstanding from (A) the number of such shares
outstanding immediately before such first repurchase to (B) the
number of such shares outstanding immediately following all the
repurchases.
(b) If the Company shall, after the issuance of this
Warrant, declare a dividend or distribution on its Common
Stock, the Company shall, at least 30 days prior to the record
date for the declaration of any such dividend or other
distribution, give the registered Holder of this Warrant notice
of such record date and the dividend or distribution to be paid
or made. The registered Holder of this Warrant on the record
date for the declaration of any such dividend or other
distribution shall be entitled to share in any such dividend or
distribution by receiving such dividend or distribution as if
this Warrant had been exercised and the shares of Common Stock
underlying this Warrant were issued and outstanding on such
record date.
4.5 Capital Reorganization. If after the date of
issuance of this Warrant there shall be any consolidation or
merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing
corporation and which does not result in any reclassification
of, or change (other than a Common Stock Reorganization or a
change in par value), in, outstanding shares of Common Stock,
or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (any such event being
called a "Capital Reorganization"), then, effective upon the
effective date of such Capital Reorganization, the Holder shall
have the right to purchase, upon exercise of this Warrant, the
kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or
have been entitled to receive after such Capital Reorganization
if this Warrant had been exercised immediately prior to such
<PAGE> 15
-15-
Capital Reorganization, assuming such holder (i) is not a
person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which
such sale or conveyance was made, as the case may be
("constituent person"), or an Affiliate of a constituent person
and (ii) failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization (provided that if
the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization is not the same for
each share of Common Stock held immediately prior to such
consolidation, merger, sale or conveyance by other than a
constituent person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section
the kind and amount of shares of stock and other securities or
other property (including cash) receivable upon such Capital
Reorganization shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing
shares). As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to
each Warrantholder and to the Warrant Agency an agreement as to
the Warrantholder's rights in accordance with this Section 4.5,
providing for subsequent adjustments as nearly equivalent as
may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.5 shall similarly
apply to successive Capital Reorganizations.
4.6 Certain Other Events. If any event occurs after
the date of issuance of this Warrant as to which the foregoing
provisions of this Article IV are not strictly applicable or,
if strictly applicable, would not, in the good faith judgment
of the Board of Directors of the Company, fairly protect the
purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then such
Board shall make such adjustments in the application of such
provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith
opinion of such Board, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the
effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock subject to purchase upon
exercise of this Warrant, or otherwise adversely affect the
Warrantholders.
4.7 Adjustment Rules. (a) Any adjustments pursuant
to this Article IV shall be made successively whenever an event
referred to herein shall occur.
<PAGE> 16
-16-
(b) If the Company shall set a record date to
determine the holders of shares of Common Stock for purposes of
a Common Stock Reorganization, Common Stock Distribution,
Dividend or Capital Reorganization, and shall legally abandon
such action prior to effecting such Action, then no adjustment
shall be made pursuant to this Article IV in respect of such
action.
(c) No adjustment in the amount of shares
purchasable upon exercise of this Warrant or in the Exercise
Price shall be made hereunder unless such adjustment increases
or decreases such amount or price by one percent or more, but
any such lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried
forward shall serve to adjust such amount or price by one
percent or more.
(d) No adjustment in the Exercise Price shall be
made hereunder if such adjustment would reduce the exercise
price to an amount below par value of the Common Stock, which
par value shall initially be $.01 per share of Common Stock.
(e) No adjustment shall be made pursuant to the
Article IV in respect of the issuance of shares of Common Stock
upon exercise of the Warrants.
4.8 Proceedings Prior to Any Action Requiring
Adjustment. As a condition precedent to the taking of any
action which would require an adjustment pursuant to this
Article IV, the Company shall take any action which may be
necessary, including obtaining regulatory approvals or
exemptions, in order that the Company may thereafter validly
and legally issue as fully paid and nonassessable all shares of
Common Stock which the holders of Warrants are entitled to
receive upon exercise thereof.
4.9 Notice of Adjustment. Not less than 20 nor more
than 90 days prior to the record date or effective date, as the
case may be, of any action which requires or might require an
adjustment or readjustment pursuant to this Article IV, the
Company shall give notice to each Warrantholder of such event,
describing such event in reasonable detail and specifying the
record date or effective date, as the case may be, and, if
determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the
time of such notice, the Company shall give notice to each
Warrantholder of such adjustment and computation promptly after
such adjustment becomes determinable.
<PAGE> 17
-17-
ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have
the following respective meanings:
"Appraisal Procedure" means a procedure whereby two
independent appraisers, one chosen by the Company and one by a
majority in interest of the Warrantholders, shall mutually
agree upon the determinations then the subject of appraisal.
Each party shall deliver a notice to the other appointing its
appraiser within 15 days after the Appraisal Procedure is
invoked. If within 30 days after appointment of the two
appraisers they are unable to agree upon the amount in
question, a third independent appraiser shall be chosen within
10 days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon
the appointment of a third appraiser, such appointment shall be
made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators
having experience in the appraisal of the subject matter to be
appraised. The decision of the third appraiser so appointed
and chosen shall be given within 30 days after the selection of
such third appraiser. If three appraisers shall be appointed
and the determination of one appraiser is disparate from the
middle determination by more than twice the amount by which the
other determination is disparate from the middle determination,
then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average
shall be binding and conclusive on the Company and the Warrant-
holders; otherwise the average of all three determinations
shall be binding and conclusive on the Company and the Warrant-
holders. The costs of conducting any Appraisal Procedure shall
be borne by the Warrantholders requesting such Appraisal
Procedure, except (a) the fees and expenses of the appraiser
appointed by the Company and any costs incurred by the Company
shall be borne by the Company and (b) if such Appraisal
Procedure shall result in a determination that is disparate by
5% or more to the benefit of the holder from the Company's
initial determination, all costs of conducting such Appraisal
Procedure shall be borne by the Company.
"Business Day" shall mean (a) if any class of Common
Stock is listed or admitted to trading on a national securities
exchange, a day on which the principal national securities
exchange on which such class of Common Stock is listed or
admitted to trading is open for business or (b) if no class of
Common Stock is so listed or admitted to trading, a day on
<PAGE> 18
-18-
which any New York Stock Exchange member firm is open for
business.
"Capital Reorganization" shall have the meaning set
forth in Section 4.5.
"Closing Price" with respect to any security on any
day means (a) if such security is listed or admitted for
trading on a national securities exchange, the reported last
sales price regular way or, if no such reported sale occurs on
such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which such class of security is listed
or admitted to trading, or (b) if such security is not listed
or admitted to trading on any national securities exchange, the
last quoted sales price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter
market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any
New York Stock Exchange member firm reasonably selected by the
Company for such purpose.
"Common Stock" shall have the meaning set forth in
the first paragraph of this Warrant subject to adjustment
pursuant to Article IV.
"Common Stock Distribution" shall have the meaning
set forth in Section 4.3(a).
"Common Stock Reorganization" shall have the meaning
set forth in Section 4.2.
"Company" shall have the meaning set forth in the
first paragraph of this Warrant.
"Convertible Securities" shall have the meaning set
forth in Section 4.3(b).
"Credit Agreement" means the Replacement Revolving
Credit Agreement dated as of August , 1995 among the Company,
Banque Indosuez, as agent, and the other parties thereto, as
amended from time to time, together with refinancings thereof.
"Dividend" shall have the meaning set forth in
Section 4.4.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and any similar or successor federal statute,
<PAGE> 19
-19-
and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall
be in effect at the time.
"Exercise Price" means the lower of (i) [ ]*
or (ii) the Initial Exercise Price (as defined in the Credit
Agreement) of any warrants issued by the Company after the date
of this Warrant pursuant to the Credit Agreement.
"Fair Market Value" means the fair market value of
the business or property in question, as determined in good
faith by the Board of Directors of the Company, provided,
however, that the Fair Market Value of any security for which a
Closing Price is available shall be the Market Price of such
security. The Fair Market Value of the Company shall be the
Fair Market Value of the Company and its subsidiaries as a
going concern. Notwithstanding the foregoing, if, at any date
of determination of the Fair Market Value of the Company, the
Common Stock of any class shall then be publicly traded, the
Fair Market Value of the Company on such date shall be the
Market Price on such date multiplied by the number of shares of
Common Stock then outstanding on a fully diluted basis.
"Holder" shall have the meaning set forth in the
first paragraph of this Warrant.
"Market Price" with respect to any security on any
day means the average of the daily Closing Prices of a share or
unit of such security for the 20 consecutive Business Days
ending on the most recent Business Day for which a Closing
Price is available; provided, however, that in the event that,
in the case of Common Stock, the Market Price is determined
during a period following the announcement by the Company of
(A) a dividend or distribution of Common Stock, or (B) any
subdivision, combination or reclassification of Common Stock
and prior to the expiration of 20 Business Days after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current market
price per share equivalent of Common Stock.
"NASD" means The National Association of Securities
Dealers, Inc.
- -------------------------
* Insert the Initial Exercise Price (as defined in the Credit
Agreement).
<PAGE> 20
-20-
"NASDAQ" means The National Association of Securities
Dealers, Inc. Automated Quotation System.
"Options" shall have the meaning set forth in Section
4.3(b).
"Registration Rights Agreement" shall have the
meaning set forth in Section 3.1.
"Securities Act" shall mean the Securities Act of
1933, as amended, and any similar or successor federal statute,
and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall
be in effect at the time.
"Warrant Agency" shall have the meaning set forth in
Section 2.1.
"Warrantholder" means a holder of a Warrant.
"Warrants" shall have the meaning set forth in the
first paragraph of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and
other communications provided for herein shall be in writing
and shall be effective upon delivery in person, faxed or
telecopied, or mailed by certified or registered mail, return
receipt requested, postage pre-paid, addressed as follows:
if to the Company, to ACS Enterprises, Inc., 2510
Metropolitan Drive, Trevose, Pennsylvania 19053,
Attention: Alan Sonnenberg; with a copy to Fox,
Rothschild, O'Brien & Frankel, 2000 Market Street,
10th Floor, Philadelphia, Pennsylvania 19103,
Attention: Jerome E. Bogulz, Esq.;
if to an initial Holder of Warrants, to such
Holder at 1211 Avenue of the Americas, 7th Floor,
New York, New York 10036, with a copy to Cahill
Gordon & Reindel, 80 Pine Street, New York, New
York 10005, Attention: John Schuster, Esq., and
if to any subsequent Holder of Warrants, to it at
such address as may have been furnished to the
Company in writing by such Holder;
<PAGE> 21
-21-
or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of a
holder of Warrants) or to the Holders of Warrants (in the case
of the Company) in accordance with the provisions of this
paragraph.
6.2 Waivers; Amendments. No failure or delay of the
Holder in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the
Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this
Warrant may be amended, modified or waived with (and only with)
the written consent of the Company and the Warrantholders,
voting as a single class, entitling such holders to purchase a
majority of the Common Stock subject to purchase upon exercise
of such Warrants at the time outstanding (exclusive of Warrants
then owned by the Company or any subsidiary thereof); provided,
however, that no such amendment, modification or waiver shall,
without the written consent of each Warrantholder whose
interest might be adversely affected by such amendment,
modification or waiver, (a) change the number of shares of
Common Stock subject to purchase upon exercise of this Warrant,
the Exercise Price or provisions for payment thereof or (b)
amend, modify or waive the provisions of this Section or
Article III or IV. The provisions of the Registration Rights
Agreement may be amended, modified or waived only in accordance
with the respective provisions thereof.
Any such amendment, modification or waiver effected
pursuant to this Section or the applicable provisions of the
Registration Rights Agreement shall be binding upon the holders
of all Warrants and Warrant Shares, upon each future holder
thereof and upon the Company. In the event of any such
amendment, modification or waiver the Company shall give prompt
notice thereof to all Warrantholders and, if appropriate,
notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in
similar or other circumstances.
6.3 Governing Law. This Warrant shall be construed
in accordance with and governed by the laws of the State of New
York without regard to principles of conflicts of law.
<PAGE> 22
-22-
6.4 Survival of Agreements; Representations and
Warranties etc. All warranties, representations and covenants
made by the Company herein or in any certificate or other
instrument delivered by or on behalf of it in connection with
the Warrants shall be considered to have been relied upon by
the Holder and shall survive the issuance and delivery of the
Warrants, regardless of any investigation made by the Holder,
and shall continue in full force and effect so long as any
Warrant is outstanding. All statements in any such certificate
or other instrument shall constitute representations and
warranties hereunder.
6.5 Covenants to Bind Successor and Assigns. All
covenants, stipulations, promises and agreements in this
Warrant contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
6.6 Severability. In case any one or more of the
provisions contained in the Registration Rights Agreement or
this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the
remaining provisions contained herein and therein shall not in
any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
6.7 Section Headings. The sections headings used
herein are for convenience of reference only, are not part of
this Warrant and are not to affect the construction of or be
taken into consideration in interpreting this Warrant.
6.8 No Rights as Stockholder. This Warrant shall
not entitle the Holder to any rights as a stockholder of the
Company.
6.9 No Impairment. The Company shall not by any
action including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not, directly
or indirectly, increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the
<PAGE> 23
-23-
amount payable therefor upon such exercise immediately prior to
such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its
commercially reasonable best efforts to obtain all such
authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.
<PAGE> 24
IN WITNESS WHEREOF, ACS ENTERPRISES, INC. has caused
this Warrant to be executed in its corporate name by one of its
officers thereunto duly authorized, and attested by its
Secretary or an Assistant Secretary, all as of the day and year
first above written.
ACS ENTERPRISES, INC.
By:
----------------------------
Name:
Title:
Attest:
- -----------------------------
Name:
Title:
<PAGE> 25
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO ACS ENTERPRISES, INC.:
The undersigned hereby irrevocably elects to exercise
the right to purchase represented by the attached Warrant for,
and to purchase thereunder, _________________ shares of
[voting] [non-voting] Common Stock, as provided for therein,
and tenders herewith payment of the Exercise Price in full in
accordance with the terms of the attached Warrant.
Please issue a certificate or certificates for such
shares of Common Stock in the following name or names and
denominations:
If said number of shares shall not be all the shares
issuable upon exercise of the attached Warrant, a new Warrant
is to be issued in the name of the undersigned for the balance
remaining of such shares less any fraction of a share paid in
cash.
Dated: , 19
------------- --
---------------------------------
Note: The above signature should
correspond exactly with
the name on the face of
the attached Warrant or
with the name of the
assignee appearing in the
assignment form below.
<PAGE> 26
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ______________________________
hereby sells, assigns and transfers unto __________________ the
attached Warrant, together with all rights, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________ attorney to transfer said Warrant on the
books of ACS Enterprises, Inc., with full power of substitution
in the premises.
-----------------------------------
Note: The above signature should
correspond exactly with
the name on the face of
the attached Warrant.
