SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 15, 1998
(September 30, 1998)
CAI WIRELESS SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Connecticut 0-22888 06-1324691
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
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18 CORPORATE WOODS BLVD., THIRD FLOOR, ALBANY, NY 12211
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 462-2632
(Former name or former address, if changed since last report)
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Item 3. Bankruptcy or Receivership.
IN RE CAI WIRELESS SYSTEMS, INC. (98-01765 (JJF)). On July 30, 1998 (the
"Petition Date"), CAI Wireless Systems, Inc. ("CAI" or the "registrant") and
its wholly-owned subsidiary, Philadelphia Choice Television, Inc. ("PCT") each
filed a petition for reorganization relief under Chapter 11 of the United
States Bankruptcy Code, 11 U.S.C. <section><section> 101-1330, as amended (the
"Bankruptcy Code"), with the United States Bankruptcy Court for the District
of Delaware (the "Bankruptcy Court"). Prior to the Petition Date, CAI
disseminated, in accordance with section 1126(b) of the Bankruptcy Code, a
proposed plan of reorganization (the "Plan") and an accompanying disclosure
statement, as supplemented on July 15, 1998 (the "Prepetition Disclosure
Statement," and together with the Disclosure Statement and Summary of Plan
Distributions for Equity Security Holders and Holders of Securities Claims with
respect to the Joint Reorganization Plan of CAI Wireless Systems, Inc. and
Philadelphia Choice Television, Inc. dated August 10, 1998, the "Disclosure
Statements") to those Impaired creditors entitled to receive distributions
under the Plan, and solicited their votes to accept the Plan. See registrant's
Current Report on Form 8-K dated July 1, 1998 (filed July 2, 1998) and
registrant's Current Report on Form 8-K dated July 16, 1998. The Plan was
accepted by CAI's impaired creditors in sufficient number and amount to permit
confirmation of the Plan by the Bankruptcy Court. Simultaneously with the
filing of its Chapter 11 petition, CAI filed the Plan and Prepetition
Disclosure Statement, and moved the Bankruptcy Court to, among other things,
schedule hearings to consider approval of the Disclosure Statements and
confirmation of the Plan.
The Plan provides for various recoveries to certain classes of claims.
Recoveries for classes of prepetition claims are summarized in the following
chart:
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DESCRIPTION OF CLAIMS OR INTEREST TREATMENT UNDER THE PLAN
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DIP Facility Claims -- UNCLASSIFIED . (i) cash equal to the unpaid portion of such Allowed DIP
ESTIMATED AMOUNT $60,000,000 plus interest Facility or (ii) such other treatment as to which the Debtors
and fees and such holder shall have agreed upon in writing.
. ESTIMATED RECOVERY - 100%
Administrative Claims -- UNCLASSIFIED . (i) Cash equal to the unpaid portion of such Allowed
ESTIMATED AMOUNT: $5,000,000 Administrative Claim or (ii) such other treatment as to which
the Debtors and such holder will have agreed upon in writing;
PROVIDED, HOWEVER, that Allowed Administrative Claims with
respect to liabilities incurred in the ordinary course of
business during the Chapter 11 Case will be paid in the
ordinary course of business in accordance with the terms and
conditions of any agreements relating thereto.
. ESTIMATED RECOVERY -- 100%
Priority Tax claims - UNCLASSIFIED . (i) Cash equal to the unpaid portion of such Allowed Priority Tax
ESTIMATED AMOUNT: $160,000 Claim, (ii) such other treatment as to which the Debtors and such
holder will have agreed upon in writing, or (iii) at the Reorganized
Debtors' sole discretion, deferred Cash payments having a value, as
of the Consummation Date, equal to such Allowed Priority Tax Claim,
over a period not exceeding six years after the date of assessment
of such Allowed Priority Tax Claim.
. ESTIMATED RECOVERY -- 100%
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Class CAI-1-Other Priority Claims - . (i) Cash equal to the amount of such Allowed Other Priority Claim or
UNIMPAIRED (ii) such other treatment as to which CAI or PCT, as the case may
ESTIMATED AMOUNT: DE MINIMIS be, and such holder will have agreed upon in writing.
-and-
Class PCT-1-Other Priority Claims -- ESTIMATED RECOVERY -- 100%
UNIMPAIRED
ESTIMATED AMOUNT: DE MINIMIS
Class CAI-2 - Secured Claims -- . at the sole discretion of CAI or PCT, as the case may be, (a) Cash
UNIMPAIRED in an amount equal to such Allowed Secured Claim, (b) Reinstatement,
ESTIMATED AMOUNT: $4,250,000 or (c) such other treatment as to which CAI or PCT, as the case may
-and- be, and such holder shall have agreed upon in writing.
Class PCT-2 - Secured Claims --
UNIMPAIRED . ESTIMATED RECOVERY -- 100%
ESTIMATED AMOUNT: DE MINIMIS
Class CAI-3 - General Unsecured Claims -- . (i) treatment that leaves unaltered the legal, equitable, and
UNIMPAIRED contractual rights to which such Allowed General Unsecured Claim
ESTIMATED AMOUNT: $5,000,000 entitles the holder of such Claim, (ii) treatment that (a) cures any
-and- such default that occurred before or after the Petition Date, other
Class PCT-3 - General Unsecured Claims - than a default of a kind specified in Section 365(b)(2) of the
UNIMPAIRED Bankruptcy Code, (b) reinstates the maturity of such Allowed General
ESTIMATED AMOUNT: Included in estimate Unsecured Claim as such maturity existed before such default, (c)
of Class CAI-3 General Unsecured compensates the holder of such Allowed General Unsecured Claim for
Claims any damages incurred as a result of any reasonable reliance by such
holder on such contractual provision or such applicable law, and (d)
does not otherwise alter the legal, equitable, or contractual rights
to which such Allowed General Unsecured Claim entitles the holder of
such Claim, or (iii) such other treatment as to which CAI or PCT, as
the case may be, and such holder shall have agreed upon in writing.
. ESTIMATED RECOVERY -- 100%
Class CAI-4 - Intercompany Claims -- . (i) treatment that leaves unaltered the legal, equitable, and
UNIMPAIRED contractual rights to which such Allowed Intercompany Claim entitles
ESTIMATED AMOUNT: DE MINIMIS the holder of such Claim, (ii) Reinstatement, or (iii) such other
-and- treatment as to which CAI or PCT, as the case may be, and such
Class PCT-4 - Intercompany Claims - holder shall have agreed upon in writing.
UNIMPAIRED
ESTIMATED AMOUNT: $17,411,000 ESTIMATED RECOVERY -- 100%
Class CAI-5 - Senior Note Claims -- . Pro Rata share of (a) the New Senior Discount Notes and (b) ninety-
IMPAIRED four percent (94%) of the New Common Stock to be issued under the
ESTIMATED AMOUNT: $275,000,000 plus Plan. In addition, on the Distribution Date, the holder of an
accrued interest through the Petition Allowed Senior Note Claim against CAI will receive the Pro Rata
Date share of the balance of the Senior Note Escrow that otherwise would
have been payable to such holder on September 1, 1998 in accordance
with the terms of the Senior Notes Indenture.
. Estimated Recovery -- 84.4%
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Class CAI-6 - Subordinated Note . Pro Rata share of six percent (6%) of the New Common Stock to be
Claims - IMPAIRED issued under the Plan. In consideration of the treatment afforded
ESTIMATED AMOUNT: $32,793,000 plus its Class CAI-6 Subordinated Note Claim, the holder of the 12%
accrued interest through the Petition Subordinated Note will provide a release of all obligations under
Date the 12% Subordinated Note to each Obligor Subsidiary.
-and-
Class PCT-5 - Subordinated Note fully and finally satisfied by the satisfaction of the applicable
Claims -- IMPAIRED Class CAI-6 Subordinated Note Claim..
ESTIMATED AMOUNT: $32,793,000 plus
accrued interest through the Petition
Date . ESTIMATED RECOVERY -- 39.9%
Class CAI-7 - Securities Claims -- . will not receive or retain any property under the Plan on account of
IMPAIRED such Claims.
ESTIMATED AMOUNT: Contingent and
unliquidated . ESTIMATED RECOVERY -- 0%
Class CAI-8 - Equity Securities . will not receive or retain any property under the Plan on account of
Interests - IMPAIRED such Equity Securities Interests.
. ESTIMATED RECOVERY -- 0%
Class PCT-6 - Equity Securities . Each Allowed Equity Securities Interests in PCT will be Reinstated.
Interests -- UNIMPAIRED
. ESTIMATED RECOVERY -- 100%
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The Plan was confirmed by the Bankruptcy Court on September 30, 1998
and consummated October 14, 1998 (the "Consummation Date"). In connection
with the consummation of the Plan, CAI has issued and outstanding
15,000,000 shares of common stock, par value $.01 per share (the "Common
Stock"), and has reserved 1,575,000 shares of Common Stock for issuance
upon the exercise of certain options granted to management and warrants
issued to BT Alex. Brown Incorporated, CAI's financial advisor, pursuant to
the Plan.
Item 5. Other Events.
Simultaneously with the consummation of the Plan, the registrant also
consummated an $80,000,000 senior secured credit facility (the "Exit
Facility") provided by Merrill Lynch Global Allocation Fund, Inc. ("MLGAF").
Approximately $64,047,000 of the proceeds from the Exit Facility
were used to repay principal, interest and fees on registrant's $60,000,000
short-term debtor-in-possession credit facility and fees associated with the
Exit Facility. The Exit Facility is a two-tier credit facility maturing on
October 14, 2000. Tier A of the Exit Facility is evidenced by a $30,000,000
senior secured promissory note (the "Senior Secured A Note"). The registrant
granted a first lien and security interest in and to all of its assets to
secure repayment of the Senior Secured A Note. Tier B is evidenced by a
$50,000,000 senior secured promissory note (the "Senior Secured B Note"). The
registrant granted a second lien on and security interest in and to all of its
assets to secure repayment of the Senior Secured B Note. All of the
registrant's obligations under the Senior Secured A Note and Senior Secured B
Note are guaranteed by certain of registrant's wholly-owned subsidiaries.
In connection with the Exit Facility, the Company issued 2,241,379 shares
of Common Stock to MLGAF. The Note Purchase Agreement, the Senior Secured A
Note and the Senior Secured B Note are filed as exhibits with this Current
Report.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 Joint Reorganization Plan of CAI Wireless Systems, Inc.
and Philadelphia Choice Television, Inc. dated June 30,
1998
4.1 Indenture dated as of October 14, 1998 governing the terms
of registrant's 13% Senior Notes due 2004
4.2 Note Purchase Agreement dated as of October 14, 1998 by and
between registrant and Merrill Lynch Global Allocation
Fund, Inc.
4.3 Senior Secured A Note in the principal amount of
$30,000,000 due October 14, 2000
4.4 Senior Secured B Note in the principal amount of
$50,000,000 due October 14, 2000
SIGNATURE
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.
CAI WIRELESS SYSTEMS, INC.
By: /S/ JARED E. ABBRUZZESE
Jared E. Abbruzzese
Chairman and CEO
Date: October 15, 1998
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - - - - - - - X
IN RE :
: CHAPTER 11
CAI WIRELESS SYSTEMS, INC. AND : CASE NOS. 98-1765 (JJF)
PHILADELPHIA CHOICE TELEVISION, INC., : AND 98-1766 (JJF)
: (JOINTLY ADMINISTERED)
DEBTORS. :
:
18 CORPORATE WOODS BOULEVARD : TAX ID NOS. 06-1324691
ALBANY, NEW YORK 12211 : AND 23-2068653
- - - - - - - - - - - - - - - - - - - - - -X
JOINT REORGANIZATION PLAN OF CAI WIRELESS
SYSTEMS, INC. AND PHILADELPHIA CHOICE TELEVISION, INC.
SKADDEN, ARPS, SLATE, MEAGHER
& FLOM LLP
J. Gregory Milmoe
Carlene J. Gatting
Lawrence V. Gelber
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
-and-
Gregg M. Galardi (I.D.#2991)
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
Attorneys for CAI Wireless
Systems, Inc. and Philadelphia
Choice Television, Inc.
Dated: Albany, New York
June 30, 1998
(as modified on September 9, 1998)
TABLE OF CONTENTS
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TABLE OF EXHIBITS .................................................. ....v
INTRODUCTION .. ...................................................... .1
ARTICLE I. DEFINITIONS, RULES OF INTERPRETATION,AND COMPUTATION OF TIME 1
A. Scope Of Definitions; Rules Of Construction .................. 1
B. Definitions ................................................. .1
C. Rules of Interpretation ................................ .....10
D. Computation of Time .................................... ......11
ARTICLE II. CLASSIFICATION OF CLAIMS AND INTERESTS .............. ......11
A. Introduction .............................................. ...11
B. Unclassified Claims ...................................... ....11
1. DIP FACILITY CLAIMS .............................. ......11
2. ADMINISTRATIVE CLAIMS ............................ ......11
3. PRIORITY TAX CLAIMS ................................ ....11
C. Unimpaired Classes Of Claims Against CAI .................. ..11
1. CLASS CAI-1: OTHER PRIORITY CLAIMS .................... 11
2. CLASS CAI-2: SECURED CLAIMS .......................... .11
3. CLASS CAI-3: GENERAL UNSECURED CLAIMS .............. ...12
4. CLASS CAI-4: INTERCOMPANY CLAIMS ..................... .12
D. Impaired Classes Of Claims Against And Interests In CAI .. ...12
1. CLASS CAI-5: SENIOR NOTE CLAIMS ...................... .12
2. CLASS CAI-6: SUBORDINATED NOTE CLAIMS ................ .12
3. CLASS CAI-7: SECURITIES CLAIMS ....................... .12
4. CLASS CAI-8: EQUITY SECURITIES INTERESTS ............. .12
E. Unimpaired Classes Of Claims Against PCT .................... .12
1. CLASS PCT-1: OTHER PRIORITY CLAIMS ................... .12
2. CLASS PCT-2: SECURED CLAIMS ......................... ..13
3. CLASS PCT-3: GENERAL UNSECURED CLAIMS ............. ....13
4. CLASS PCT-4: INTERCOMPANY CLAIMS .................... ..13
F. Impaired Class Of Claims Against PCT ........................ 13
CLASS PCT-5: SUBORDINATED NOTE CLAIMS ................... ..13
G. Unimpaired Class Of Interests In PCT ....................... 13
CLASS PCT-6: EQUITY SECURITIES INTERESTS ................. .13
ARTICLE III. TREATMENT OF CLAIMS AND INTERESTS ........................ 13
A. Unclassified Claims ........................................ ..13
1. DIP FACILITY CLAIMS .................................... 13
2. ADMINISTRATIVE CLAIMS ................................ ..13
3. PRIORITY TAX CLAIMS .................................... 14
B. Unimpaired Classes Of Claims Against CAI ..................... 14
1. CLASS CAI-1: OTHER PRIORITY CLAIMS ................... .14
2. CLASS CAI-2: SECURED CLAIMS .......................... .14
3. CLASS CAI-3: GENERAL UNSECURED CLAIMS ................. 15
4. CLASS CAI-4: INTERCOMPANY CLAIMS ..................... .15
C. Impaired Classes Of Claims Against CAI ..................... ..15
1. CLASS CAI-5: SENIOR NOTE CLAIMS ....................... 15
2. CLASS CAI-6: SUBORDINATED NOTE CLAIMS ................. 16
3. CLASS CAI-7: SECURITIES CLAIMS ........................ 16
D. Impaired Class Of Interests In CAI ........................... 16
CLASS CAI-8: EQUITY SECURITIES INTERESTS .................. 16
E. Unimpaired Classes Of Claims Against PCT .................... .16
1. CLASS PCT-1: OTHER PRIORITY CLAIMS .................... 16
2. CLASS PCT-2: SECURED CLAIMS ........................... 16
3. CLASS PCT-3: GENERAL UNSECURED CLAIMS ................ .17
4. CLASS PCT-4: INTERCOMPANY CLAIMS ...................... 17
F. Impaired Class Of Claims Against PCT ........................ 17
CLASS PCT-5: SUBORDINATED NOTE CLAIMS ..................... 17
G. Unimpaired Class Of Interests In PCT ......................... 17
CLASS PCT-6: EQUITY SECURITIES INTERESTS .................. 17
H. Special Provision Regarding Unimpaired Claims ................ 17
I. Accrual Of Post-Petition Interest ........................... 18
ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN ...................... 18
A. Continued Corporate Existence ................................ 18
B. Corporate Action ............................................. 18
1. CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS ..... 18
2. CERTIFICATE OF INCORPORATION AND BY-LAWS ............... 19
C. CAI's Restructuring Transactions ............................ 19
1. NEW SECURITIES ......................................... 19
2. REGISTRATION RIGHTS .................................... 19
3. NEW SENIOR SECURED FACILITY ............................ 19
D. Sale Of MDU Assets By PCT ................................... 20
1. SALE OF THE MDU ASSETS ................................. 20
2. USE OF PROCEEDS OF SALE ................................ 20
E. Directors And Officers ....................................... 20
F. Revesting Of Assets .......................................... 20
G. Preservation Of Rights Of Action; Settlement of Litigation
Claims 20
H. Exclusivity Period ........................................... 21
I. Effectuating Documents; Further Transactions ................ .21
J. Termination Of DIP Facility .................................. 21
K. Exemption From Certain Transfer Taxes ......................... 21
ARTICLE V. ACCEPTANCE OR REJECTION OF THE PLAN ........................ 21
A. Classes Entitled To Vote ..................................... 21
B. Acceptance By Impaired Classes ............................... 21
C. Cramdown ..................................................... 22
ARTICLE VI. SECURITIES TO BE ISSUEDIN CONNECTION WITH THE PLAN ....... .22
ARTICLE VII. PROVISIONS GOVERNING DISTRIBUTIONS ...................... .22
A. Distributions For Claims Allowed As Of The Consummation Date . 22
B. Interest On Claims ........................................... 22
C. Disbursing Agent ............................................. 22
D. Surrender Of Securities Or Instruments ...................... .23
E. Instructions To Disbursing Agent ............................. 23
F. Services Of Indenture Trustees, Agents, And Servicers ........ 23
G. Record Date For Distributions To Holders Of Debt Securities . .23
H. Means Of Cash Payment ........................................ 23
I. Calculation Of Distribution Amounts Of New Common Stock ...... 23
J. Delivery Of Distributions .................................... 24
K. Fractional Dollars; De Minimis Distributions ................. 24
L. Withholding And Reporting Requirements ....................... 24
M. Setoffs ...................................................... 24
ARTICLE VIII. TREATMENT OF EXECUTORY CONTRACTSAND UNEXPIRED LEASES .... 25
A. Assumed Contracts And Leases ................................. 25
B. Payments Related To Assumption Of Contracts And Leases ....... 25
C. Rejected Contracts And Leases ................................ 25
D. Bar To Rejection Damages ..................................... 25
E. Compensation And Benefit Programs................................... 25
ARTICLE IX. PROCEDURES FOR RESOLVING DISPUTED,CONTINGENT, AND UNLIQUIDATED
CLAIMS .................................................... 26
A. Objection Deadline; Prosecution Of Objections ................26
B. No Distributions Pending Allowance ........................... 26
C. Distribution Reserve ......................................... 26
D. Distributions After Allowance ................................ 27
ARTICLE X. CONDITIONS PRECEDENT TO CONFIRMATION ANDCONSUMMATION OF THE
PLAN 27
A. Conditions To Confirmation ................................... 27
B. Conditions To Consummation ................................... 27
C. Waiver Of Conditions .......................................... 29
ARTICLE XI. MODIFICATIONS AND AMENDMENTS............................... 29
ARTICLE XII. RETENTION OF JURISDICTION ................................ 29
ARTICLE XIII. COMPROMISES AND SETTLEMENTS ............................. 30
ARTICLE XIV. MISCELLANEOUS PROVISIONS ................................. 31
A. Bar Dates For Certain Claims ................................. 31
1. ADMINISTRATIVE CLAIMS; SUBSTANTIAL CONTRIBUTION CLAIMS . 31
2. PROFESSIONAL FEE CLAIMS ................................ 31
B. Payment Of Statutory Fees .................................... 31
C. Severability Of Plan Provisions .............................. 31
D. Successors And Assigns ....................................... 32
E. Releases And Satisfaction Of Subordination Rights ............ 32
F. Discharge Of The Debtors 32
G. Employment Agreements ........................................ 32
H. Committees .................................................. . 32
I. Exculpation And Limitation Of Liability ...................... 32
J. Binding Effect ............................................... 33
K. Revocation, Withdrawal, Or Non-Consummation .................. 33
L. Plan Supplement .............................................. 33
M. Notices ...................................................... 33
N. Indemnification Obligations .................................. 34
O. Prepayment ................................................... 34
P. Term Of Injunctions Or Stays ................................. 34
Q. Governing Law .................................... 35
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TABLE OF EXHIBITS
EXHIBIT NAME
A Amended CAI Certificate of Incorporation and By-laws
B Amended PCT Certificate of Incorporation and By-laws
C Subsidiaries of CAI Wireless Systems, Inc.
D New Senior Notes Indenture
E Description of New Common Stock
F Description of Management Options
G Key Employees of CAI
H Management Option Plan Participants
O.INTRODUCTION
CAI Wireless Systems, Inc. ("CAI") and Philadelphia Choice Television,
Inc. ("PCT" and, together with CAI, the "Debtors") hereby propose the following
joint reorganization plan (the "Plan") for the resolution of their outstanding
creditor Claims and equity Interests. Reference is made to the Disclosure
Statement (as that term is defined herein), distributed contemporaneously
herewith, for a discussion of the Debtors' history, businesses, properties,
results of operations, projections for future operations, risk factors, a
summary and analysis of the Plan, and certain related matters, including the
New Securities to be issued under the Plan and the distribution of the proceeds
of the sale to Mid-Atlantic Telcom Plus, d/b/a OnePoint Communications, of
certain of PCT's MDU Assets, each of which is a central feature of the Plan.
The Debtors are the proponents of this Plan within the meaning of Section 1129
of the Bankruptcy Code (as that term is defined herein).
All holders of Claims and all holders of Interests are encouraged to read
this Plan and the Disclosure Statement in their entirety before voting to
accept or reject this Plan. Subject to certain restrictions and requirements
set forth in Section 1127 of the Bankruptcy Code and Fed. R. Bankr. P. 3019 and
those restrictions on modifications set forth in the DIP Facility Agreement and
Article XI of this Plan, the Debtors reserve the right to alter, amend, modify,
revoke or withdraw this Plan prior to its substantial consummation.
ARTICLE DEFINITIONS, RULES OF INTERPRETATION,AND COMPUTATION OF TIME
A. SCOPE OF DEFINITIONS; RULES OF CONSTRUCTION
For purposes of this Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined shall
have the meanings ascribed to them in Article I of this Plan. Any term used in
this Plan that is not defined herein, but is defined in the Bankruptcy Code or
the Bankruptcy Rules, shall have the meaning ascribed to that term in the
Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, such
terms shall include the plural as well as the singular number, the masculine
gender shall include the feminine, and the feminine gender shall include the
masculine.
B. DEFINITIONS
1.1 "Administrative Claim" means a Claim for payment of an
administrative expense of a kind specified in Section 503(b) or 1114(e)(2) of
the Bankruptcy Code and entitled to priority pursuant to Section 507(a)(1) of
the Bankruptcy Code, including, but not limited to, (a) the actual, necessary
costs and expenses, incurred after the Petition Date, of preserving the Estates
and operating the businesses of the Debtors, including wages, salaries, or
commissions for services rendered after the commencement of the Chapter 11
Case, (b) Professional Fees, (c) the reasonable fees and expenses incurred on
or after the Petition Date by the Indenture Trustee that are required to be
paid by the Debtors pursuant to the Senior Notes Indenture, (d) all fees and
charges assessed against the Estates under chapter 123 of title 28, United
States Code, and (e) all Allowed Claims that are entitled to be treated as
Administrative Claims pursuant to a Final Order of the Bankruptcy Court under
Section 546(c)(2)(A)of the Bankruptcy Code.
1.2 "Affiliate" means CAI or any corporation, limited liability
company, joint venture, or partnership in which CAI directly or indirectly owns
20% or more of the equity interest of such entity.
1.3 "Allowed Claim" means a Claim or any portion thereof (a) as to
which no objection to allowance or request for estimation has been interposed
on or before the Consummation Date or the expiration of such other applicable
period of limitation fixed by the Bankruptcy Code, Bankruptcy Rules, or the
Bankruptcy Court, (b) as to which any objection to its allowance has been
settled, waived through payment, or withdrawn, or has been denied by a Final
Order, (c) that has been allowed by a Final Order, (d) as to which the
liability of the Debtors, or either of them, and the amount thereof are
determined by final order of a court of competent jurisdiction other than the
Bankruptcy Court, or (e) that is expressly allowed in a liquidated amount in
the Plan; PROVIDED, HOWEVER, that with respect to an Administrative Claim,
"Allowed Claim" means an Administrative Claim as to which a timely request for
payment has been made in accordance with Article XIV.A.1 of this Plan (if such
written request is required) or other Administrative Claim, in each case as to
which the Debtors (1) have not interposed a timely objection or (2) have
interposed a timely objection and such objection has been settled, waived
through payment, or withdrawn, or has been denied by a Final Order; PROVIDED
FURTHER, HOWEVER, that all Class CAI-1, CAI-2, CAI-3, CAI-4, PCT-1, PCT-2, PCT-
3, and PCT-4 Claims, if any, shall be treated for all purposes as if the
Chapter 11 Case was not filed, and the determination of whether any such Claims
shall be allowed and/or the amount of any such Claims (as to which no proof of
Claim need be filed) shall be determined, resolved, or adjudicated, as the case
may be, in the manner in which such Claim would have been determined, resolved,
or adjudicated if the Chapter 11 Case had not been commenced.
1.4 "Allowed" means, when used in reference to a Claim or Interest
within a particular Class, an Allowed Claim or Allowed Interest of the type
described in such Class.
1.5 "Allowed Class . . . Claim" means an Allowed Claim in the
particular Class described.
1.6 "Allowed Class . . . Interest" means an Interest in the particular
Class described (a) that has been allowed by a Final Order, (b) for which
(i) no objection to its allowance has been filed within the periods of
limitation fixed by the Bankruptcy Code or by any Final Order of the Bankruptcy
Court or (ii) any objection to its allowance has been settled or withdrawn, or
(c) that is expressly allowed in the Plan.
1.7 "Amended CAI Certificate of Incorporation and By-laws" means
Reorganized CAI's certificate of incorporation and by-laws in effect under the
laws of the State of Connecticut, as amended by the Plan.
1.8 "Amended PCT Certificate of Incorporation and By-laws" means
Reorganized PCT's certificate of incorporation and by-laws in effect under the
laws of the State of Delaware, as amended by the Plan.
1.9 "Ballots" means each of the ballot forms distributed with the
Disclosure Statement to holders of Impaired Claims entitled to vote under
Article II hereof in connection with the solicitation of acceptances of the
Plan.
1.10 "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
codified in title 11 of the United States Code, 11 U.S.C.
<section><section> 101-1330, as now in effect or hereafter amended.
1.11 "Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware or such other court as may have jurisdiction over the
Chapter 11 Case.
1.12 "Bankruptcy Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the Federal
Rules of Civil Procedure, as amended, as applicable to the Chapter 11 Case or
proceedings therein, and the Local Rules of the Bankruptcy Court, as applicable
to the Chapter 11 Case or proceedings therein, as the case may be.
1.13 "Bar Date(s)" means the date(s), if any, designated by the
Bankruptcy Court as the last dates for filing proofs of Claim against the
Debtors or either of them.
1.14 "Bott" means George W. Bott.
1.15 "Bott Affiliates" means, collectively, Bott and the Bott Trust.
1.16 "Bott Collateral" means, collectively (a) the stock of Housatonic
Wireless, Inc. and Onteo Associates, Inc., each a Subsidiary, which CAI pledged
to Bott, and the channel leases described in the Guarantee and Security
Agreement, dated as of March 30, 1994, between Housatonic Wireless, Inc., Onteo
Associates, Inc. and Bott, in which CAI granted Bott security interests or
liens, all to secure CAI's obligations under the Bott Note; (b) the stock of
Niskayuna Associates, Inc., a Subsidiary, which CAI pledged to the Bott Trust,
and the channel leases described in the Guarantee and Security Agreement, dated
as of March 30, 1994, between Niskayuna Associates, Inc. and the Bott Trust, in
which CAI granted the Bott Trust security interests or liens, all to secure
CAI's obligations under the 1994 Bott Trust Note; and (c) the stock of Chenango
Associates, Inc., a Subsidiary, which CAI pledged to the Bott Affiliates, and
the channel leases described in the Guarantee and Security Agreement, dated as
of March 30, 1994, between Niskayuna Associates, Inc. and the Bott Trust, in
which CAI granted the Bott Trust security interests or liens, all to secure
CAI's obligations under the 1996 Bott Trust Note, to the extent that, as of the
Consummation Date, such stock remains pledged to the respective Bott Affiliate
and such channel leases remain encumbered by valid, enforceable and perfected
security interests or liens of the respective Bott Affiliate in CAI's Estate's
interest in such channel leases that are not avoidable under the Bankruptcy
Code or applicable nonbankruptcy law.
1.17 "Bott Notes" means, collectively the (a) promissory note, dated
March 30, 1994 (the "Bott Note"), between CAI, as maker, and Bott, as holder,
(b) promissory note, dated March 30, 1994 (the "1994 Bott Trust Note"), between
CAI, as maker, and the Bott Trust, as holder, and (c) promissory note, dated
January 12, 1996 (the "1996 Bott Trust Note"), between CAI, as maker, and the
Bott Trust, as holder, and all agreements and other documents relating to the
foregoing.
1.18 "Bott Trust" means The Bott Family Trust, a charitable remainder
trust.
1.19 "BT Alex. Brown Option(s)" means the option(s) to be issued by
Reorganized CAI to BT Alex. Brown Incorporated to purchase up to 1/2% of the
New Common Stock, on a fully diluted basis, pursuant to the provisions of
Article IV.C.1.a of the Plan.
1.20 "Business Day" means any day, excluding Saturdays, Sundays or
"legal holidays" (as defined in Fed. R. Bankr. P. 9006(a)), on which commercial
banks are open for business in New York, New York.
1.21 "CAI" means CAI Wireless Systems, Inc., a Connecticut corporation.
1.22 "Cash" means legal tender of the United States or equivalents
thereof.
1.23 "Chapter 11 Case" means the jointly administered Chapter 11 cases
of CAI and PCT.
1.24 "Claim" means a claim against the Debtors, or either of them,
whether or not asserted, as defined in Section 101(5) of the Bankruptcy Code.
1.25 "Class" means a category of holders of Claims or Interests, as
described in Article II below.
1.26 "Collateral" means any property or interest in property of a
Debtor's Estate subject to a Lien to secure the payment or performance of a
Claim, which Lien is not subject to avoidance under the Bankruptcy Code or
otherwise invalid under the Bankruptcy Code or applicable state law.
1.27 "Collateral Agent" means Price Waterhouse LLP in its capacity as
administrative agent and collateral agent for the holders of the Secured Notes.
1.28 "Confirmation" means entry by the Bankruptcy Court of the
Confirmation Order.
1.29 "Confirmation Date" means the date of entry by the clerk of the
Bankruptcy Court of the Confirmation Order.
1.30 "Confirmation Hearing" means the hearing to consider confirmation
of the Plan under Section 1128 of the Bankruptcy Code.
1.31 "Confirmation Order" means the order entered by the Bankruptcy
Court confirming the Plan.
1.32 "Consummation Date" means the Business Day on which all conditions
to the consummation of the Plan as set forth in Article X.B hereof have been
satisfied or waived as provided in Article X.C hereof and is the effective date
of the Plan.
1.33 "Creditor" means any Person who holds a Claim against the Debtors
or either of them.
1.34 "Creditors' Committee" means the committee of unsecured creditors,
if any, appointed pursuant to Section 1102(a) of the Bankruptcy Code in the
Chapter 11 Case.
1.35 "CS Wireless" means CS Wireless Systems, Inc., a Delaware
corporation.
1.36 "CS Wireless Stockholders' Agreement" means the stockholders'
agreement, dated as of February 23, 1996, as may have been amended from time to
time, between and among CAI, Heartland, and CS Wireless.
1.37 "CS Wireless Participation Agreement" means the participation
agreement, dated as of December 12, 1995, as may have been amended from time to
time, between and among CAI, Heartland, and CS Wireless.
1.38 "Cure" means the distribution of Cash, or such other property as
may be agreed upon by the parties or ordered by the Bankruptcy Court, with
respect to the assumption of an executory contract or unexpired lease, pursuant
to Section 365(b) of the Bankruptcy Code, in an amount equal to all unpaid
monetary obligations, without interest, or such other amount as may be agreed
upon by the parties, under such executory contract or unexpired lease, to the
extent such obligations are enforceable under the Bankruptcy Code and
applicable bankruptcy law.
1.39 "Debtor(s)" means, individually, CAI or PCT, and collectively, CAI
and PCT, including in their capacity as debtors-in-possession pursuant to
Sections 1107 and 1108 of the Bankruptcy Code, and as reorganized hereunder.
1.40 "Debt Securities" means, collectively, the Secured Notes, Senior
Notes and Subordinated Notes.
1.41 "Debt Securities Claim" means a Securities Claim arising from a
Debt Security.
1.42 "DIP Facility" means the debtor-in-possession credit facility to be
provided to the Debtors during the Chapter 11 Case in the principal amount of
$60,000,000, pursuant to the DIP Facility Agreement.
1.43 "DIP Facility Agreement" means the amended and restated note
purchase agreement, to be dated as of, or prior to, the Petition Date, between
the Debtors and MLGAF, and the other signatories thereto.
1.44 "DIP Facility Claim" means a Claim arising under or as a result of
the DIP Facility.
1.45 "Disbursing Agent" means Reorganized CAI or any party designated by
Reorganized CAI, in its sole discretion, to serve as a disbursing agent under
the Plan.
1.46 "Disclosure Statement" means the written disclosure statement that
relates to the Plan, dated June 30, 1998, as amended, supplemented, or modified
from time to time, and that is prepared and distributed in accordance with
Sections 1125 and 1126(b) of the Bankruptcy Code and Fed. R. Bankr. P. 3018.
1.47 "Disputed Claim" means any Claim not otherwise Allowed or paid
pursuant to the Plan or an order of the Bankruptcy Court (a) which has been or
hereafter is listed on the Schedules as unliquidated, contingent, or disputed,
and which has not been resolved by written agreement of the parties or an order
of the Bankruptcy Court, (b) proof of which was required to be filed by order
of the Bankruptcy Court but as to which a proof of Claim was not timely or
properly filed, (c) proof of which was timely and properly filed and which has
been or hereafter is listed on the Schedules as unliquidated, disputed or
contingent, (d) that is disputed in accordance with the provisions of this
Plan, or (e) as to which a Debtor has interposed a timely objection or request
for estimation in accordance with the Bankruptcy Code, the Bankruptcy Rules,
and any orders of the Bankruptcy Court, or is otherwise disputed by a Debtor in
accordance with applicable law, which objection, request for estimation, or
dispute has not been withdrawn or determined by a Final Order; PROVIDED,
HOWEVER, that for purposes of determining whether a particular Claim is a
Disputed Claim prior to the expiration of any period of limitation fixed for
the interposition by the Debtors of objections to the allowance of Claims, any
Claim that is not identified by the applicable Debtor as an Allowed Claim shall
be deemed a Disputed Claim.
1.48 "Distribution Date" means the date, occurring as soon as
practicable after the Consummation Date, upon which distributions are made by
Reorganized CAI or Reorganized PCT, as the case may be, to holders of Allowed
DIP Facility, Administrative, Priority Tax, and Class CAI-1, CAI-5, CAI-6, PCT-
1, and PCT-5 Claims; PROVIDED, HOWEVER, that in no event shall the Distribution
Date occur later than twenty (20) Business Days after the Consummation Date.
1.49 "Distribution Record Date" means the record date for purposes of
making distributions under the Plan on account of Allowed Claims, which date
shall be September 10, 1998.
1.50 "Distribution Reserve" means the reserve, if any, established and
maintained by the Reorganized Debtors, into which the Reorganized Debtors shall
deposit the amount of Cash, New Senior Notes, New Common Stock, or other
property that would have been distributed by the Reorganized Debtors on the
Distribution Date to holders of (a) Disputed Claims, (b) contingent liquidated
Claims, if such Claims had been undisputed or noncontingent Claims on the
Distribution Date, pending (i) the allowance of such Claims, (ii) the
estimation of such Claims for purposes of allowance or (iii) the realization of
the contingencies, and (c) unliquidated Claims, if such Claims had been
liquidated on the Distribution Date, such amount to be estimated by the
Bankruptcy Court or agreed upon by CAI and the holders thereof as sufficient to
satisfy such unliquidated Claim upon such Claim's (x) allowance, (y) estimation
for purposes of allowance, or (z) liquidation, pending the occurrence of such
estimation or liquidation.
1.51 "ECN Notes" means, collectively, the thirteen (13) subordinated
promissory notes due September 29, 2000, in the aggregate principal amount of
$2,793,000 given by CAI to the ECN Participants.
1.52 "ECN Participants" means, collectively, Gerard Klauer Mattison &
Co., LLC; Quota Corporation; NOSROB, L.L.C.; Mellon Bank, N.A., Trustee for
Dextor Corporation, Grantor Trust; Montgomery Small Cap Partners II,
L.P.;Roanoke Partners, L.P.; John Flavin; Flavin, Blake Investors, L.P.;
Montgomery Growth Partners I, L.P.; Richard McKenzie; Haussman, L.L.C.; Les
Alexander; and Eastern Cable Networks Corp.
1.53 "Employment Agreements" means the employment agreements to be
entered into between Reorganized CAI and the Key Employees, which agreements
shall be in substantially the form of the agreements to be included in the Plan
Supplement.
1.54 "Equity Securities" means, collectively, the Old Common Stock, Old
Stock Options, and Old Warrants, together with any options, warrants, or
rights, contractual or otherwise, to acquire or receive any such stock or
ownership interests, including, but not limited to, the Old Options, the Old
Warrants and any contracts or agreements pursuant to which the non-debtor party
was or could have been entitled to receive shares of stock or other ownership
interests in CAI.
1.55 "Equity Securities Claim" means a Securities Claim arising from any
Equity Security.
1.56 "Estate(s)" means, individually, the estate of CAI or PCT in the
Chapter 11 Case, and, collectively, the estates of CAI and PCT in the Chapter
11 Case, created pursuant to Section 541 of the Bankruptcy Code.
1.57 "Existing Securities" means, collectively the Equity Securities and
the Debt Securities.
1.58 "Exit Lender(s)" means the lender(s) under the New Senior Secured
Facility.
1.59 "Face Amount" means (a) when used in reference to a Disputed Claim,
the full stated amount claimed by the holder of such Claim in any proof of
Claim timely filed with the Bankruptcy Court or otherwise deemed timely filed
by any Final Order of the Bankruptcy Court or other applicable bankruptcy law,
and (b) when used in reference to an Allowed Claim, the allowed amount of such
Claim.
1.60 "FCC" means the Federal Communications Commission, as constituted
from time to time, or any successor governmental agency performing functions
similar to those performed by the Federal Communications Commission on the date
hereof.
1.61 "Final Order" means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket in the
Chapter 11 Case, the operation or effect of which has not been stayed,
reversed, or amended and as to which order or judgment (or any revision,
modification, or amendment thereof) the time to appeal or seek review or
rehearing has expired and as to which no appeal or petition for review or
rehearing was filed or, if filed, remains pending.
1.62 " General Unsecured Claim" means a Claim against the Debtors, or
either of them, that is not a DIP Facility Claim, Administrative Claim,
Priority Tax Claim, Other Priority Claim, Secured Claim, Senior Note Claim,
Subordinated Note Claim, Intercompany Claim, or Securities Claim.
1.63 "Heartland" means Heartland Wireless Communications, Inc., a
Delaware corporation.
1.64 "Impaired" means, when used with reference to a Claim or Interest,
a Claim or Interest that is impaired within the meaning of Section 1124 of the
Bankruptcy Code.
1.65 "Indenture Trustee" means The Chase Manhattan Bank or its
successor, in either case in its capacity as indenture trustee for the Senior
Notes Indenture.
1.66 "Intercompany Claim" means, as the case may be, any Claim of (a)
any Subsidiary against a Debtor, (b) any Subsidiary against any other
Subsidiary, or (c) CAI against any Subsidiary.
1.67 "Interest" means (a) the legal, equitable, contractual and other
rights of any Person with respect to Old Common Stock, Old Stock Options, Old
Warrants, or any other Equity Securities of CAI or PCT and (b) the legal,
equitable, contractual or other rights of any Person to acquire or receive any
of the foregoing.
1.68 "Key Employees" means, collectively, the employees of CAI listed on
Exhibit G to the Plan.
1.69 "Lien" means a charge against or interest in property to secure
payment of a debt or performance of an obligation.
1.70 "Litigation Claims" means the claims, rights of action, suits, or
proceedings, whether in law or in equity, whether known or unknown, that the
Debtors or their Estates may hold against any Person, which are to be retained
by the Reorganized Debtors pursuant to Article IV.G of this Plan.
1.71 "Management Option Agreement(s)" means the stock option
agreement(s), substantially in the form of the agreements to be included in the
Plan Supplement, to be entered into by Reorganized CAI and the Management
Option Plan Participants, pursuant to which the Management Options will be
granted.
1.72 "Management Option Plan" means the stock option plan pursuant to
which the Management Options will be issued, substantially in the form of the
plan to be included in the Plan Supplement, to be adopted by CAI or Reorganized
CAI pursuant to Article IV.C.1.a of this Plan.
1.73 "Management Option Plan Participants" means the employees of
Reorganized CAI, listed on Exhibit H to this Plan, entitled to participate in
the Management Option Plan.
1.74 "Management Options" means the options to be issued by Reorganized
CAI to the Management Option Plan Participants to purchase up to 10% of the New
Common Stock, on a fully diluted basis, pursuant to the provisions of the
Management Option Agreement to be entered into under the Management Option
Plan.
1.75 "MDU Assets" means the assets currently used by PCT in the
provision of analog subscription video services to 64 multi-dwelling units
located in and around the greater Philadelphia area, which are to be sold to
OnePoint pursuant to Section 363(b) of the Bankruptcy Code.
1.76 "Mester" means John Mester d/b/a Connecticut Home Theater.
1.77 "Mester Collateral" means, collectively, (a) the stock of
Springfield License, Inc., a Subsidiary, (b) the equipment described in
Schedule A to the Pledge and Security Agreement, dated August 21, 1997, between
CAI, Mester, and Brown Neitert & Kaufman, Chartered, as pledge agent for
Mester, and (c) all proceeds, profits and products of any sale or other
disposition of the foregoing, which CAI pledged to Mester or in which CAI
granted Mester security interests or liens to secure CAI's obligations under
the Mester Notes, to the extent that, as of the Consummation Date, such stock
remains pledged to Mester and such equipment and proceeds remain encumbered by
valid, enforceable and perfected security interests or liens of Mester in CAI's
Estate's interest in such equipment and proceeds that are not avoidable under
the Bankruptcy Code or applicable nonbankruptcy law.
1.78 "Mester Notes" means the two (2) promissory notes, each dated
August 21, 1997, between CAI, as maker, and Mester, as holder, and all
agreements and other documents relating thereto.
1.79 "MLGAF" means Merrill Lynch Global Allocation Fund, Inc., a
Maryland corporation.
1.80 "New Common Stock" means the 25 million shares of common stock of
Reorganized CAI, $.01 par value per share, authorized under Article IV.C.1.a of
the Plan and the Amended CAI Certificate of Incorporation and By-laws.
1.81 "New Options" means, collectively, the Management Options and the
BT Alex. Brown Option.
1.82 "New Securities" means, collectively, the New Common Stock, New
Senior Notes, and New Options.
1.83 "New Senior Notes" means the 12% Senior Notes due 2004 of
Reorganized CAI, in the aggregate principal amount of $100 million, to be
issued and distributed pursuant to the Plan on the Distribution Date and
governed by the terms of the New Senior Notes Indenture, as more fully
described in Article VI.A hereof.
1.84 "New Senior Notes Indenture" means the indenture to be entered into
between Reorganized CAI and an entity to be selected prior to the Consummation
Date, as indenture trustee, under which the New Senior Notes shall be issued,
which indenture shall be substantially in the form of the indenture to be
included in the Plan Supplement as Exhibit D to this Plan.
1.85 "New Senior Secured Facility" means the new senior secured credit
facilit(ies) in an aggregate principal amount of not more than $80 million,
which Reorganized CAI anticipates entering into as a condition to the
consummation of the Plan.
1.86 "Note Purchase Agreement" means the note purchase agreement, dated
as of November 24, 1997, as amended from time to time, by and among CAI, the
Subsidiaries named therein, and MLGAF, pursuant to which the Secured Notes were
issued and sold.
1.87 "Obligor Subsidiaries" means, collectively, those Subsidiaries of
CAI that are signatories to, and obligors under, the Note Purchase Agreement.
1.88 "Old Common Stock" means CAI's common stock, no par value, together
with any options, warrants, or rights, contractual or otherwise, to acquire or
receive any such stock, including, but not limited to, the Old Stock Options
and Old Warrants.
1.89 "Old Junior Preferred Stock" means the shares of CAI's non-voting
convertible junior preferred stock, having a liquidation preference of $30
million, and options, warrants, or rights, contractual or otherwise, if any, to
acquire any such non-voting convertible junior preferred stock.
1.90 "Old Stock Options" means the outstanding options to purchase Old
Common Stock, as of the Petition Date.
1.91 "Old Senior Preferred Stock" means the shares of CAI's 14% Senior
Convertible Preferred Stock, par value $10,000 per share, and options,
warrants, or rights, contractual or otherwise, if any, to acquire any such 14%
Senior Convertible Preferred Stock.
1.92 "Old Voting Preferred Stock" means the shares of CAI's Series C
Convertible Preferred Stock, no par value per share, and options, warrants, or
rights, contractual or otherwise, if any, to acquire any such Series C
Convertible Preferred Stock.
1.93 "Old Warrants" means the outstanding warrants to purchase Old
Common Stock, as of the Petition Date.
1.94 "OnePoint" means Mid-Atlantic Telcom Plus, d/b/a OnePoint
Communications.
1.95 "Operating Subsidiaries" means, collectively, Commonwealth Choice
Television, Inc.; Connecticut Choice Television, Inc.; Eastern New England TV,
Inc.; Greater Albany Wireless Systems, Inc.; Hampton Roads Wireless, Inc.; New
York Choice Television, Inc.; Philadelphia Choice Television, Inc.; Rochester
Choice Television, Inc.; and Washington Choice Television, Inc.
1.96 "Ordinary Course Professionals' Order" means an order entered by
the Bankruptcy Court authorizing the Debtors, or either of them, to retain,
employ and pay certain professionals, as specified in the order, which are not
involved in the administration of the Chapter 11 Case, in the ordinary course
of business, without further order of the Bankruptcy Court.
1.97 "Other Priority Claim" means a Claim entitled to priority pursuant
to Section 507(a) of the Bankruptcy Code other than a DIP Facility Claim,
Priority Tax Claim or an Administrative Claim.
1.98 "Other Secured Claims" means, collectively, all Secured Claims
against CAI or PCT, as the case may be, other than the Secured Claims included
in Classes CAI-2.01 through CAI-2.02.
1.99 "Petition Date" means the date on which CAI and PCT file their
petitions for relief commencing the Chapter 11 Case.
1.100 "Plan" means this Chapter 11 reorganization plan for CAI and PCT
and all exhibits annexed hereto or referenced herein, as the same may be
amended, modified or supplemented from time to time.
1.101 "Plan Supplement" means the compilation of documents and forms of
documents specified in the Plan which will be filed with the Bankruptcy Court
not later than five (5) Business Days prior to date of the commencement of the
Confirmation Hearing.
1.102 "Priority Tax Claim" means a Claim that is entitled to priority
pursuant to Section 507(a)(8) of the Bankruptcy Code.
1.103 "Professional" means any professional employed in the Chapter 11
Case pursuant to Sections 327 or 1103 of the Bankruptcy Code or otherwise and
the professionals seeking compensation or reimbursement of expenses in
connection with the Chapter 11 Case pursuant to Section 503(b)(4) of the
Bankruptcy Code.
1.104 "Professional Fee Claim" means a Claim of a Professional for
compensation or reimbursement of costs and expenses relating to services
incurred after the Petition Date and prior to and including the Consummation
Date.
1.105 "Pro Rata" means, at any time, the proportion that the Face Amount
of a Claim in a particular Class bears to the aggregate Face Amount of all
Claims (including Disputed Claims) in such Class, unless the Plan provides
otherwise.
1.106 "Registrable Securities" means securities acquired, by Persons who
may be deemed to be "affiliates" or "underwriters" of Reorganized CAI for
purposes of the Securities Act, pursuant to or in connection with the Plan,
including New Common Stock, New Senior Notes, and securities issuable in
connection with the New Senior Secured Facility, or acquired by their
successors and permitted assigns in accordance with the Registration Rights
Agreement (and any securities issued or issuable with respect thereto).
1.107 "Registration Rights Agreement" means the agreement, between
Reorganized CAI and certain Persons who may be deemed to be "affiliates" or
"underwriters" of Reorganized CAI for purposes of the Securities Act, governing
the registration of (a) New Senior Notes, (b) New Common Stock, including, but
not limited to, the additional shares of New Common Stock issuable upon
exercise of the New Options, and (c) securities issuable in connection with the
New Senior Secured Facility, in substantially the form of the registration
rights agreement to be included in the Plan Supplement.
1.108 "Reinstated" or "Reinstatement" means (i) leaving unaltered the
legal, equitable, and contractual rights to which a Claim entitles the holder
of such Claim so as to leave such Claim unimpaired in accordance with Section
1124 of the Bankruptcy Code or (ii) notwithstanding any contractual provision
or applicable law that entitles the holder of such Claim to demand or receive
accelerated payment of such Claim after the occurrence of a default (a) curing
any such default that occurred before or after the Petition Date, other than a
default of a kind specified in Section 365(b)(2) of the Bankruptcy Code; (b)
reinstating the maturity of such Claim as such maturity existed before such
default; (c) compensating the holder of such Claim for any damages incurred as
a result of any reasonable reliance by such holder on such contractual
provision or such applicable law; and (d) not otherwise altering the legal,
equitable, or contractual rights to which such Claim entitles the holder of
such Claim; PROVIDED, HOWEVER, that any contractual right that does not pertain
to the payment when due of principal and interest on the obligation on which
such Claim is based, including, but not limited to, financial covenant ratios,
negative pledge covenants, covenants or restrictions on merger or
consolidation, and affirmative covenants regarding corporate existence
prohibiting certain transactions or actions contemplated by the Plan, or
conditioning such transactions or actions on certain factors, shall not be
required to be reinstated in order to accomplish Reinstatement.
1.109 "Reorganized CAI" means reorganized CAI, on and after the
Consummation Date.
1.110 "Reorganized Debtor(s)" means, individually, Reorganized CAI or
Reorganized PCT and, collectively, Reorganized CAI and Reorganized PCT.
1.111 "Reorganized PCT" means reorganized PCT, on and after the
Consummation Date.
1.112 "Restructuring" means, collectively, the transactions and transfers
described in Article IV of this Plan.
1.113 "Satellite Subsidiaries" means, collectively, MMDS Satellite
Ventures, Inc., CAI Data Systems, Inc., and CAI Satellite Communications, Inc.
1.114 "Schedules" means the schedules of assets and liabilities and the
statements of financial affairs, if any, filed in the Bankruptcy Court by CAI
or PCT, as the case may be, as such schedules or statements or may be amended
or supplemented from time to time in accordance with Fed. R. Bankr. P. 1009 or
orders of the Bankruptcy Court.
1.115 "Secured Claim" means a Claim, other than a Setoff Claim, that is
secured by a security interest in or lien upon property, or the proceeds of the
sale of such property, in which a Debtor has an interest, to the extent of the
value, as of the Consummation Date or such later date as is established by the
Bankruptcy Court, of such interest or lien as determined by a Final Order of
the Bankruptcy Court pursuant to Section 506 of the Bankruptcy Code or as
otherwise agreed upon in writing by such Debtor or Reorganized Debtor and the
holder of such Claim.
1.116 "Secured Notes" means the 13% Senior Secured Notes of CAI and
certain Subsidiaries, issued and outstanding under the Note Purchase Agreement.
1.117 "Secured Note Collateral" means the Collateral referred to in the
Secured Note Collateral Documents and all other property and assets that are or
are intended under the terms of the Collateral Documents to be subject to any
Lien in favor of the Collateral Agent for the benefit of the holders of the
Secured Notes.
1.118 "Secured Note Collateral Documents" means, collectively, (a) the
Security Agreement and Pledge Agreement (as those terms are defined in the Note
Purchase Agreement), (b) each other security agreement or pledge agreement
entered into pursuant to Section 8.11 of the Note Purchase Agreement, and (c)
each other agreement that creates or purports to create or perfect a Lien in
favor of the Collateral Agent for the benefit of the holders of the Secured
Notes.
1.119 "Securities Act" means the Securities Act of 1933, 15 U.S.C.
<section><section> 77a-77aa, as now in effect or hereafter amended.
1.120 "Securities Action" means the consolidated class action captioned
IN RE CAI WIRELESS SYSTEMS, INC. SECURITIES LITIGATION, Master File No. 96-CV-
1857 (LEK/DRH), pending in the United States District Court for the Northern
District of New York.
1.121 "Securities Claim" means a Claim arising from the rescission of a
purchase or sale of a security of CAI, including, but not limited to, Old
Senior Preferred Stock, Old Junior Preferred Stock, Old Voting Preferred Stock,
Old Common Stock, Old Stock Options, Old Warrants, Senior Notes, Secured Notes,
Subordinated Notes, all other debt instruments and any and all other rights to
acquire Equity Securities of CAI, for damages arising from the purchase or sale
of such a security, or for reimbursement, contribution or indemnification
allowed under Section 502 of the Bankruptcy Code on account of such Claim,
including, without limitation, a Claim with respect to any action pending
against CAI and/or its current or former officers and directors in which
Securities Claims are asserted, including the Securities Action.
1.122 "Senior Note Claim" means a Claim of a Senior Note Holder arising
under or as a result of the Senior Notes.
1.123 "Senior Note Escrow" means the escrow account established pursuant
to the terms of Section 2 of the Senior Note Escrow Agreement.
1.124 "Senior Note Escrow Agreement" means the escrow agreement, dated as
of September 15, 1995, by and among CAI, The Chase Manahattan Bank, as escrow
agent, and the Indenture Trustee, pursuant to which the Senior Note Escrow was
established.
1.125 "Senior Note Holder" means a holder of Senior Notes.
1.126 "Senior Notes Indenture" means the indenture, dated September 15,
1995, as modified by the First Supplemental Indenture, dated as of January 31,
1996, between CAI and The Chase Manhattan Bank, as trustee, pursuant to which
the Senior Notes were issued.
1.127 "Senior Notes" means the 12 1/4% Senior Notes Due September 15,
2002 of CAI, issued and outstanding under the Senior Notes Indenture.
1.128 "Setoff Claim" means a Claim, against a Debtor, of a holder that
has a valid right of setoff with respect to such Claim, which right is
enforceable under Section 553 of the Bankruptcy Code as determined by a Final
Order or as otherwise agreed in writing by a Debtor, to the extent of the
amount subject to such right of setoff.
1.129 "Severance Plan" means the Executive Severance Pay Plan currently
maintained by CAI, pursuant to which executive employees of CAI identified and
designated by the compensation committee of the board of directors of CAI as
eligible participants are entitled to certain severance benefits upon certain
types of terminations of employment in the event of a change in control of
CAI.
1.130 "Solicitation" means the solicitation by CAI from holders of Senior
Notes and Subordinated Notes of acceptances of the Plan pursuant to Section
1126(b) of the Bankruptcy Code.
1.131 "Subordinated Notes" means, collectively, the ECN Notes and the 12%
Subordinated Note.
1.132 "Subsidiaries" means, collectively, the direct and indirect
subsidiaries of CAI listed on the annexed Exhibit C.
1.133 "Subsidiary Interests" means, collectively, the issued and
outstanding shares of stock of the Subsidiaries directly or indirectly owned by
CAI, as of the Petition Date.
1.134 "Substantial Contribution Claim" means a claim for compensation or
reimbursement of expenses incurred in making a substantial contribution in the
Chapter 11 Case pursuant to Section 503(b)(3),(4), or (5) of the Bankruptcy
Code.
1.135 "Trade Claim" means any Unsecured Claim against a Debtor, arising
from or with respect to the sale of goods or services to such Debtor, prior to
the Petition Date, in the ordinary course of such Debtor's business, including
any Claim of an employee that is not an Other Priority Claim, but only to the
extent that the holder of such Claim continues to provide goods and/or services
to the Debtor pursuant to customary or ordinary trade terms.
1.136 "Trigger Event" means, with respect to the Management Option Plan,
a material third party acquisition or merger, material equity investment in
CAI, or material joint venture, and/or a material take-or-pay arrangement or
other third party transaction with respect to the use of CAI's spectrum, and/or
any other material third party transaction having a substantially similar
economic effect as the foregoing.
1.137 "12% Subordinated Note" means the 12% subordinated note due October
1, 2005, in the principal amount of $30,000,000, given by CAI and the Obligor
Subsidiaries to MLGAF.
1.138 "Unimpaired Claim" means a Claim that is not an Impaired Claim.
1.139 "Unsecured Claim" means any Claim against a Debtor, other than a
DIP Facility Claim, Administrative Claim, or a Secured Claim.
1.140 "Voting Deadline" means 12:00 midnight on July 28, 1998, unless
extended by the Debtors.
1.141 "Voting Record Date" means, with respect to identification of the
holders of Impaired Claims entitled to vote on the Plan, June 23, 1998.
C. RULES OF INTERPRETATION
For purposes of the Plan (a) any reference in the Plan to a contract,
instrument, release, indenture, or other agreement or document's being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions, (b) any reference in the Plan to an existing document or exhibit
filed or to be filed means such document or exhibit as it may have been or may
be amended, modified, or supplemented, (c) unless otherwise specified, all
references in the Plan to Sections, Articles, Schedules, and Exhibits are
references to Sections, Articles, Schedules, and Exhibits of or to the Plan,
(d) the words "herein" and "hereto" refer to the Plan in its entirety rather
than to a particular portion of the Plan, (e) captions and headings to Articles
and Sections are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of the Plan, and (f)
the rules of construction set forth in Section 102 of the Bankruptcy Code and
in the Bankruptcy Rules shall apply.
D. COMPUTATION OF TIME
In computing any period of time prescribed or allowed by the Plan, the
provisions of Fed. R. Bankr. P. 9006(a) shall apply.
ARTICLE II.
CLASSIFICATION OF CLAIMS AND INTERESTS
A. INTRODUCTION
All Claims and Interests, except DIP Facility Claims, Administrative
Claims and Priority Tax Claims, are placed in the Classes set forth below. In
accordance with Section 1123(a)(1) of the Bankruptcy Code, DIP Facility Claims,
Administrative Claims and Priority Tax Claims, as described below, have not
been classified.
A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class, and is
classified in other Classes to the extent that any portion of the Claim or
Interest falls within the description of such other Classes. A Claim is also
placed in a particular Class for the purpose of receiving distributions
pursuant to the Plan only to the extent that such Claim is an Allowed Claim in
that Class and such Claim has not been paid, released, or otherwise settled
prior to the Consummation Date.
B. UNCLASSIFIED CLAIMS
1. DIP FACILITY CLAIMS
2. ADMINISTRATIVE CLAIMS
3. PRIORITY TAX CLAIMS
C. UNIMPAIRED CLASSES OF CLAIMS AGAINST CAI (DEEMED TO HAVE ACCEPTED THE PLAN
AND, THEREFORE, NOT ENTITLED TO VOTE)
1. CLASS CAI-1: OTHER PRIORITY CLAIMS
Class CAI-1 consists of all Other Priority Claims against CAI.
2. CLASS CAI-2: SECURED CLAIMS
Class CAI-2 consists of separate subclasses for each Secured Claim
secured by a security interest in or lien upon property in which CAI's Estate
has an interest. Each subclass is deemed to be a separate Class for all
purposes under the Bankruptcy Code.
a. Class CAI-2.01: Bott Secured Claims
Class CAI-2.01 consists of all Claims against CAI, secured by and
to the extent of the value (as of the Petition Date), if any, of the Bott
Collateral, directly or indirectly arising from or under, or relating in any
way to, the Bott Notes.
b. Class CAI-2.02: Mester Secured Claims
Class CAI-2.02 consists of all Claims against CAI, directly or
indirectly arising from or under, or relating in any way to, the Mester Notes
and secured by the Mester Collateral, but only to the extent of the value (if
any) of Mester's interest in CAI's interest in the Mester Collateral.
c. Class CAI-2.03: Other Secured Claims
Class CAI-2.03 consists of all Other Secured Claims against CAI.
3. CLASS CAI-3: GENERAL UNSECURED CLAIMS
Class CAI-3 consists of all General Unsecured Claims against CAI.
4. CLASS CAI-4: INTERCOMPANY CLAIMS
Class CAI-4 consists of all Intercompany Claims against CAI.
D. IMPAIRED CLASSES OF CLAIMS AGAINST AND INTERESTS IN CAI (CLASSES 5 AND 6
ARE ENTITLED TO VOTE ON THE PLAN; CLASSES 7 AND 8 ARE DEEMED TO HAVE REJECTED
THE PLAN AND, THEREFORE, ARE NOT ENTITLED TO VOTE)
1. CLASS CAI-5: SENIOR NOTE CLAIMS
Class CAI-5 consists of all Senior Note Claims against CAI.
Notwithstanding anything contained in this Plan to the contrary, the Senior
Note Claims shall be deemed Allowed Class CAI-5 Claims in the aggregate amount
of $275,000,000 plus accrued interest through the Petition Date.
2. CLASS CAI-6: SUBORDINATED NOTE CLAIMS
Class CAI-6 consists of all Subordinated Note Claims against CAI.
Notwithstanding anything contained in this Plan to the contrary, the
Subordinated Note Claims shall be deemed Allowed Class CAI-6 Claims in the
aggregate amount of $32,793,000 plus accrued interest through the Petition
Date.
3. CLASS CAI-7: SECURITIES CLAIMS
a. Class CAI-7.01: Debt Securities Claims
Class CAI-7.01 consists of all Debt Securities Claims against
CAI.
b. Class CAI-7.02: Equity Securities Claims
Class CAI-7.02 consists of all Equity Securities Claims against
CAI.
4. CLASS CAI-8: EQUITY SECURITIES INTERESTS
Class CAI-8 consists of all Interests in CAI directly or indirectly
arising from or under, or relating in any to, any of the Equity Securities of
CAI.
E. UNIMPAIRED CLASSES OF CLAIMS AGAINST PCT (DEEMED TO HAVE ACCEPTED THE PLAN
AND, THEREFORE, NOT ENTITLED TO VOTE)
1. CLASS PCT-1: OTHER PRIORITY CLAIMS
Class PCT-1 consists of all Other Priority Claims against PCT.
2. CLASS PCT-2: SECURED CLAIMS
Class PCT-2 consists of all Secured Claims against PCT. Each holder
of a Secured Claim against PCT shall be treated as a separate subclass for all
purposes under Plan and the Bankruptcy Code.
3. CLASS PCT-3: GENERAL UNSECURED CLAIMS
Class PCT-3 consists of all General Unsecured Claims against PCT.
4. CLASS PCT-4: INTERCOMPANY CLAIMS
Class PCT-4 consists of all Intercompany Claims against PCT.
F. IMPAIRED CLASS OF CLAIMS AGAINST PCT (ENTITLED TO VOTE ON THE PLAN)
5. CLASS PCT-5: SUBORDINATED NOTE CLAIMS
Class PCT-5 consists of all Claims against PCT arising under or as a
result of any Subordinated Note. Notwithstanding anything contained in this
Plan to the contrary, the Subordinated Note Claims shall be deemed Allowed
Class PCT-5 Claims in the aggregate amount of $30,000,000 plus accrued interest
through the Petition Date.
G. UNIMPAIRED CLASS OF INTERESTS IN PCT (DEEMED TO HAVE ACCEPTED THE PLAN
AND, THEREFORE, NOT ENTITLED TO VOTE)
1. CLASS PCT-6: EQUITY SECURITIES INTERESTS
Class PCT-6 consists of all Interests in PCT directly or indirectly
arising from or under, or relating in any way to, any of the Equity Securities
of PCT.
ARTICLE III.
TREATMENT OF CLAIMS AND INTERESTS
A. UNCLASSIFIED CLAIMS
1. DIP FACILITY CLAIMS
On, or one Business Day after, the Consummation Date or the date such DIP
Facility Claim becomes payable pursuant to any agreement between CAI and the
holder of such DIP Facility Claim, each holder of an Allowed DIP Facility Claim
shall receive in full satisfaction, settlement, release, and discharge of and
in exchange for such Allowed DIP Facility Claim (a) cash equal to the unpaid
portion of such Allowed DIP Facility Claim or (b) such other treatment as to
which CAI and such holder shall have agreed upon in writing.
2. ADMINISTRATIVE CLAIMS
Except as otherwise provided for herein, and subject to the requirements
of Article XIV.A.2 hereof, on, or as soon as reasonably practicable after, the
latest of (i) the Distribution Date, (ii) the date such Administrative Claim
becomes an Allowed Administrative Claim, or (iii) the date such Administrative
Claim becomes payable pursuant to any agreement between a Debtor and the holder
of such Administrative Claim, each holder of an Allowed Administrative Claim
shall receive in full satisfaction, settlement, release, and discharge of and
in exchange for such Allowed Administrative Claim (a) Cash equal to the unpaid
portion of such Allowed Administrative Claim or (b) such other treatment as to
which the applicable Debtor and such holder shall have agreed upon in writing;
PROVIDED, HOWEVER, that Allowed Administrative Claims with respect to
liabilities incurred by a Debtor in the ordinary course of business during the
Chapter 11 Case shall be paid in the ordinary course of business in accordance
with the terms and conditions of any agreements relating thereto.
<PAGE>
3. PRIORITY TAX CLAIMS
On, or as soon as reasonably practicable after, the later of (i) the
Distribution Date or (ii) the date such Priority Tax Claim becomes an Allowed
Priority Tax Claim, each holder of an Allowed Priority Tax Claim shall receive
in full satisfaction, settlement, release, and discharge of and in exchange for
such Allowed Priority Tax Claim (a) Cash equal to the unpaid portion of such
Allowed Priority Tax Claim, (b) Cash payments over time in an aggregate
principal amount equal to the amount of such Allowed Priority Tax Claim plus
interest on the unpaid portion thereof at the rate of seven percent (7%) per
annum from the Consummation Date through the date of payment thereof, or (c)
such other treatment as to which CAI or PCT, as the case may be, and such
holder shall have agreed upon in writing. Cash payments of principal shall be
made in annual installments, each such installment amount being equal to ten
percent (10%) of such Allowed Priority Tax Claim plus accrued and unpaid
interest, with the first payment to be due on or before the first anniversary
of the Consummation Date, or as soon thereafter as is practicable, and
subsequent payments to be due on the anniversary of the first payment date or
as soon thereafter as is practicable; PROVIDED, HOWEVER, that any installments
remaining unpaid on the date that is six years after the date of assessment of
the tax that is the basis for the Allowed Priority Tax Claim shall be paid on
the first Business Day following such date, or as soon thereafter as is
practicable together with any accrued and unpaid interest to the date of
payment; and PROVIDED FURTHER, that the Debtors reserve the right to pay any
Allowed Priority Tax Claim, or any remaining balance of any Allowed Priority
Tax Claim, in full at any time on or after the Distribution Date without
premium or penalty; and PROVIDED FURTHER, that no holder of an Allowed Priority
Tax Claim shall be entitled to any payments on account of any pre-Consummation
Date interest accrued on or penalty arising after the Petition Date with
respect to or in connection with such Allowed Priority Tax Claim.
Notwithstanding anything to the contrary contained in this Article III.A.3 or
elsewhere in the Plan, the Priority Tax Claim, if any, of the Internal Revenue
Service shall be paid in full within six years from the date of assessment of
the tax in equal quarterly installments of principal and interest at the rate
of 8%. The first payment shall be due and payable on the Distribution Date.
B. UNIMPAIRED CLASSES OF CLAIMS AGAINST CAI
1. CLASS CAI-1: OTHER PRIORITY CLAIMS
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class CAI-1 Other Priority Claim becomes
an Allowed Class CAI-1 Other Priority Claim, or (iii) the date such Class CAI-1
Other Priority Claim becomes payable pursuant to any agreement between CAI and
the holder of such Class CAI-1 Other Priority Claim, each holder of an Allowed
Class CAI-1 Other Priority Claim shall receive in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed Class
CAI-1 Other Priority Claim (a) Cash equal to the unpaid portion of such Allowed
Class CAI-1 Other Priority Claim or (b) such other treatment as to which CAI
and such holder shall have agreed upon in writing.
2. CLASS CAI-2: SECURED CLAIMS
Each holder of a Class 2 Secured Claim shall be treated as a separate
class for all purposes under this Plan, and each holder of an Allowed Class 2
Secured Claim shall receive the treatment set forth below. To the extent, if
any, that the value of the collateral securing a Class 2 Secured Claim is less
than the total amount of such Claim, the difference shall be treated as a Class
3 General Unsecured Claim. CAI specifically reserves all rights to challenge
the validity, nature and perfection of, and to avoid pursuant to the provisions
of the Bankruptcy Code and other applicable law, any purported liens and
security interests.
a. Class CAI-2.01: Bott Secured Claims
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class CAI-2.01 Bott Secured Claim becomes
an Allowed Class CAI-2.01 Bott Secured Claim, or (iii) the date such Class CAI-
2.01 Bott Secured Claim becomes payable pursuant to any agreement between CAI
and the holder of such Class CAI-2.01 Bott Secured Claim, each holder of an
Allowed Class CAI-2.01 Bott Secured Claim, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed Class CAI-2.01 Bott
Secured Claim, shall, in the sole discretion of CAI, (a) receive deferred cash
payments totaling at least the allowed amount of such Allowed Class CAI-2.01
Bott Secured Claim, of a value, as of the Consummation Date, of at least the
value of such holder's interest in CAI's Estate's interest in the Bott
Collateral, (b) upon abandonment by CAI receive the Bott Collateral,
(c) receive payments or liens amounting to the indubitable equivalent of the
value of such holder's interest in CAI's Estate's interest in the Bott
Collateral, (d) be Reinstated, or (e) receive such other treatment as CAI and
such holder shall have agreed upon in writing.
b. Class CAI-2.02: Mester Secured Claims
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class CAI-2.02 Mester Secured Claim
becomes an Allowed Class CAI-2.02 Mester Secured Claim, or (iii) the date such
Class CAI-2.02 Mester Secured Claim becomes payable pursuant to any agreement
between CAI and the holder of such Class CAI-2.02 Mester Secured Claim, each
holder of an Allowed Class CAI-2.02 Mester Secured Claim, in full satisfaction,
settlement, release and discharge of and in exchange for such Allowed Class
CAI-2.02 Mester Secured Claim, shall, in the sole discretion of CAI,
(a) receive deferred cash payments totaling at least the allowed amount of such
Allowed Class CAI-2.02 Mester Secured Claim, of a value, as of the Consummation
Date, of at least the value of such holder's interest in CAI's Estate's
interest in the Mester Collateral, (b) upon abandonment by CAI receive the
Mester Collateral, (c) receive payments or liens amounting to the indubitable
equivalent of the value of such holder's interest in CAI's Estate's interest in
the Mester Collateral, (d) be Reinstated, or (e) receive such other treatment
as CAI and such holder shall have agreed upon in writing.
c. Class CAI-2.03: Other Secured Claims
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class CAI-2.03 Other Secured Claim
becomes an Allowed Class CAI-2.03 Other Secured Claim, or (iii) the date such
Class CAI-2.03 Other Secured Claim becomes payable pursuant to any agreement
between CAI and the holder of such Class CAI-2.03 Other Secured Claim, each
holder of an Allowed Class CAI-2.03 Other Secured Claim, in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed
Class CAI-2.03 Other Secured Claim, shall, in the sole discretion of CAI,
(a) receive deferred cash payments totaling at least the allowed amount of such
Allowed Class CAI-2.03 Other Secured Claim, of a value, as of the Consummation
Date, of at least the value of such holder's interest in CAI's Estate's
interest in the Collateral securing the Allowed Class CAI-2.03 Other Secured
Claim, (b) upon abandonment by CAI receive the Collateral securing such
holder's Allowed Class CAI-2.03 Other Secured Claim, (c) receive payments or
liens amounting to the indubitable equivalent of the value of such holder's
interest in CAI's Estate's interest in the Collateral securing the Allowed
Class CAI-2.03 Other Secured Claim, (d) be Reinstated, or (e) receive such
other treatment as CAI and such holder shall have agreed upon in writing.
d. CLASS CAI-3: GENERAL UNSECURED CLAIMS
Each holder of an Allowed Class CAI-3 General Unsecured Claim shall
receive in full satisfaction, settlement, release and discharge of and in
exchange for such Allowed Class CAI-3 General Unsecured Claim, in the sole
discretion of CAI, (a) treatment that leaves unaltered the legal, equitable,
and contractual rights to which such Allowed Class CAI-3 General Unsecured
Claim entitles the holder of such Claim; (b) notwithstanding any contractual
provision or applicable law that entitles the holder of such Allowed Class CAI-
3 General Unsecured Claim to demand or receive accelerated payment of such
Claim after the occurrence of a default, treatment that (i) cures any such
default that occurred before or after the Petition Date, other than a default
of a kind specified in Section 365(b)(2) of the Bankruptcy Code, (ii)
reinstates the maturity of such Allowed Class CAI-3 General Unsecured Claim as
such maturity existed before such default, (iii) compensates the holder of such
Allowed Class CAI-3 General Unsecured Claim for any damages incurred as a
result of any reasonable reliance by such holder on such contractual provision
or such applicable law, and (iv) does not otherwise alter the legal, equitable,
or contractual rights to which such Allowed Class CAI-3 General Unsecured Claim
entitles the holder of such Claim; or (c) such other treatment as to which CAI
and such holder shall have agreed upon in writing.
4. CLASS CAI-4: INTERCOMPANY CLAIMS
Each holder of an Allowed Class CAI-4 Intercompany Claim, in full
satisfaction, settlement, release and discharge of and in exchange for such
Allowed Class CAI-4 Intercompany Claim, shall, in the sole discretion of CAI,
(a) receive treatment that leaves unaltered the legal, equitable, and
contractual rights to which such Allowed Class CAI-4 Intercompany Claim
entitles the holder of such Claim, (b) be Reinstated, or (c) receive such other
treatment as CAI and such holder have agreed upon in writing.
C. IMPAIRED CLASSES OF CLAIMS AGAINST CAI
1. CLASS CAI-5: SENIOR NOTE CLAIMS
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class CAI-5 Senior Note Claim becomes an
Allowed Class CAI-5 Senior Note Claim or (iii) the date such Class CAI-5 Senior
Note Claim becomes payable pursuant to any agreement between CAI and the holder
of such Class CAI-5 Senior Note Claim, each holder of an Allowed Class CAI-5
Senior Note Claim shall receive, in full satisfaction, settlement, release, and
discharge of and in exchange for such Allowed Class CAI-5 Senior Note Claim,
its Pro Rata share of (a) the New Senior Notes and (b) ninety-one percent (91%)
of the New Common Stock, subject to dilution, to be issued pursuant to Article
IV.C of the Plan. In addition, on the Distribution Date or as soon thereafter
as practicable, each holder of an Allowed Class CAI-5 Senior Note Claim shall
receive its Pro Rata share of the balance of the Senior Note Escrow which
otherwise would have been payable to such holder on September 1, 1998 in
accordance with the terms of the Senior Notes Indenture.
2. CLASS CAI-6: SUBORDINATED NOTE CLAIMS
On, or as soon as reasonably practicable after, the later of (i) the
Distribution Date or (ii) the date such Class CAI-6 Subordinated Note Claim
becomes an Allowed Class CAI-6 Subordinated Note Claim, each holder of an
Allowed Class CAI-6 Subordinated Note Claim shall receive, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed Class CAI-6 Subordinated Note Claim, its Pro Rata share of nine percent
(9%) of the New Common Stock to be issued pursuant to Article IV.C of the Plan.
In consideration of the treatment afforded its Class CAI-6 Subordinated Note
Claim, the holder of the 12% Subordinated Note shall be deemed to release each
Obligor Subsidiary of all obligations under the 12% Subordinated Note.
3. CLASS CAI-7: SECURITIES CLAIMS
a. Class CAI-7.01: Debt Securities Claims
The holders of Class CAI-7.01 Debt Securities Claims shall not be
entitled to, and shall not, receive or retain any property or interest in
property on account of such Claims.
b. Class CAI-7.02: Equity Securities Claims
The holders of Class CAI-7.02 Equity Securities Claims shall not be
entitled to, and shall not, receive or retain any property or interest in
property on account of such Claims.
D. IMPAIRED CLASS OF INTERESTS IN CAI
1. CLASS CAI-8: EQUITY SECURITIES INTERESTS
The holders of Class CAI-8 Equity Securities Interests shall not be
entitled to, and shall not, receive or retain any property or interest in
property on account of such Interests.
E. UNIMPAIRED CLASSES OF CLAIMS AGAINST PCT
1. CLASS PCT-1: OTHER PRIORITY CLAIMS
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class PCT-1 Other Priority Claim becomes
an Allowed Class PCT-1 Other Priority Claim, or (iii) the date such Class PCT-1
Other Priority Claim becomes payable pursuant to any agreement between PCT and
the holder of such Class PCT-1 Other Priority Claim, each holder of an Allowed
Class PCT-1 Other Priority Claim shall receive in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed Class
PCT-1 Other Priority Claim (a) Cash equal to the unpaid portion of such Allowed
Class PCT-1 Other Priority Claim or (b) such other treatment as to which PCT
and such holder shall have agreed upon in writing.
2. CLASS PCT-2: SECURED CLAIMS
Class PCT-2 consists of separate subclasses for each holder of a Secured
Claim secured by a security interest in or lien upon property in which PCT's
Estate has an interest. Each subclass is deemed to be a separate Class for all
purposes under the Plan and the Bankruptcy Code.
On, or as soon as reasonably practicable after, the latest of (i) the
Distribution Date, (ii) the date such Class PCT-2 Secured Claim becomes an
Allowed Class PCT-2 Secured Claim, or (iii) the date such Class PCT-2 Secured
Claim becomes payable pursuant to any agreement between PCT and the holder of
such Class PCT-2 Secured Claim, each holder of an Allowed Class PCT-2 Secured
Claim will, in the sole discretion of PCT, (a) receive Cash in an amount equal
to such Allowed Class PCT-2 Secured Claim, (b) receive deferred cash payments
totaling at least the allowed amount of such Allowed Class PCT-2 Secured Claim,
of a value, as of the Consummation Date, of at least the value of such holder's
interest in PCT's Estate's interest in the collateral securing the Allowed
Class PCT-2 Secured Claim, (c) upon abandonment by PCT, receive the collateral
securing such holder's Allowed Class PCT-2 Secured Claim, (d) receive payments
or liens amounting to the indubitable equivalent of the value of such holder's
interest in PCT's Estate's interest in the collateral securing the Allowed
Class PCT-2 Secured Claim, (e) have its Allowed Class PCT-2 Secured Claim
Reinstated, or (f) receive such other treatment as PCT and such holder have
agreed upon in writing.
3. CLASS PCT-3: GENERAL UNSECURED CLAIMS
Each holder of an Allowed Class PCT-3 General Unsecured Claim shall
receive in full satisfaction, settlement, release and discharge of and in
exchange for such Allowed Class PCT-3 General Unsecured Claim, in the sole
discretion of PCT, (a) treatment that leaves unaltered the legal, equitable,
and contractual rights to which such Allowed Class PCT-3 General Unsecured
Claim entitles the holder of such Claim; (b) notwithstanding any contractual
provision or applicable law that entitles the holder of such Allowed Class PCT-
3 General Unsecured Claim to demand or receive accelerated payment of such
Claim after the occurrence of a default, treatment that (i) cures any such
default that occurred before or after the Petition Date, other than a default
of a kind specified in Section 365(b)(2) of the Bankruptcy Code, (ii)
reinstates the maturity of such Allowed Class PCT-3 General Unsecured Claim as
such maturity existed before such default, (iii) compensates the holder of such
Allowed Class PCT-3 General Unsecured Claim for any damages incurred as a
result of any reasonable reliance by such holder on such contractual provision
or such applicable law, and (iv) does not otherwise alter the legal, equitable,
or contractual rights to which such Allowed Class PCT-3 General Unsecured Claim
entitles the holder of such Claim; or (c) such other treatment as to which PCT
and such holder shall have agreed upon in writing.
4. CLASS PCT-4: INTERCOMPANY CLAIMS
Each holder of an Allowed Class PCT-4 Intercompany Claim, in full
satisfaction, settlement, release and discharge of and in exchange for such
Allowed Class PCT-4 Intercompany Claim, shall, in the sole discretion of PCT,
(a) receive treatment that leaves unaltered the legal, equitable, and
contractual rights to which such Allowed Class PCT-4 Intercompany Claim
entitles the holder of such Claim, (b) be Reinstated, or (c) receive such other
treatment as PCT and such holder have agreed upon in writing.
F. IMPAIRED CLASS OF CLAIMS AGAINST PCT (ENTITLED TO VOTE ON THE PLAN)
CLASS PCT-5: SUBORDINATED NOTE CLAIMS
On the Distribution Date, or as soon thereafter as practicable, each
Allowed Class PCT-5 Subordinated Note Claim shall be fully and finally
satisfied by the satisfaction of the applicable Class CAI-6 Subordinated Note
Claim in accordance with Article III.C.2 of the Plan.
G. UNIMPAIRED CLASS OF INTERESTS IN PCT (DEEMED TO HAVE ACCEPTED THE PLAN AND,
THEREFORE, NOT ENTITLED TO VOTE)
CLASS PCT-6: EQUITY SECURITIES INTERESTS
On the Distribution Date, each Allowed Class PCT-6 Equity Securities
Interest shall be Reinstated.
H. SPECIAL PROVISION REGARDING UNIMPAIRED CLAIMS
Except as otherwise provided in the Plan, nothing shall affect the
Debtors' or Reorganized Debtors' rights and defenses, both legal and equitable,
with respect to any Unimpaired Claims, including, but not limited to, all
rights with respect to legal and equitable defenses to Setoffs or recoupments
against Unimpaired Claims.
<PAGE>
I. ACCRUAL OF POST-PETITION INTEREST
Interest on and fees and expenses, if any, with respect to Allowed Class
CAI-2 and Class PCT-2 Secured Claims, including, but limited to, unpaid
professional fees due the holders of such Claims, shall be paid when due under
the contract, agreement, or other instrument governing the terms and conditions
of the obligation comprising such Allowed Claim, together with any additional
amounts required to be paid with respect to Unimpaired Claims pursuant to
Section 1124 of the Bankruptcy Code. Except as otherwise provided above,
elsewhere in this Plan, or in an order of the Bankruptcy Court, no holder of an
Allowed Unsecured Claim shall be entitled to the accrual of post-petition
interest or the payment by the Debtors or Reorganized Debtors of post-petition
interest on account of such Claim for any purpose.
ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. CONTINUED CORPORATE EXISTENCE
CAI, PCT, and the Subsidiaries shall continue to exist after the
Consummation Date as separate corporate entities, in accordance with the
applicable law in the respective jurisdictions in which they are incorporated
and pursuant to their respective certificates of incorporation and by-laws in
effect prior to the Consummation Date, except to the extent such certificates
of incorporation and by-laws are amended by this Plan.
B. CORPORATE ACTION
1. CANCELLATION OF EXISTING SECURITIES AND AGREEMENTS
On the Consummation Date, except as otherwise provided for herein, (i)
the Existing Securities and any other note, bond, indenture, or other
instrument or document evidencing or creating any indebtedness or obligation of
a Debtor, except such notes or other instruments evidencing indebtedness or
obligations of a Debtor that are Reinstated under the Plan, shall be canceled,
and (ii) the obligations of the Debtors under any agreements, indentures or
certificates of designations governing the Existing Securities and any other
note, bond, indenture or other instrument or document evidencing or creating
any indebtedness or obligation of a Debtor, except such notes or other
instruments evidencing indebtedness or obligations of a Debtor that are
Reinstated under the Plan, as the case may be, shall be discharged; PROVIDED,
HOWEVER, that each indenture or other agreement that governs the rights of the
holder of a Claim and that is administered by an indenture trustee, an agent,
or a servicer shall continue in effect solely for the purposes of (i) allowing
such indenture trustee, agent, or servicer to make the distributions to be made
on account of such Claims under the Plan as provided in Article III hereof and
(ii) permitting such indenture trustee, agent, or servicer to maintain any
rights or liens it may have for fees, costs and expenses under such indenture
or other agreement; PROVIDED, FURTHER, that the provisions of clause (ii) of
this paragraph shall not affect the discharge of the Debtors' liabilities under
the Bankruptcy Code and the Confirmation Order or result in any expense or
liability to any Reorganized Debtor. No Reorganized Debtor shall have any
obligations to any indenture trustee, agent or servicer (or to any Disbursing
Agent replacing such indenture trustee, agent or servicer) for any fees, costs
or expenses, except as expressly provided in this Article IV.B.1; PROVIDED,
HOWEVER, that nothing herein shall preclude such indenture trustee, agent or
servicer (or any Disbursing Agent replacing such indenture trustee, agent or
servicer) from being paid or reimbursed for pre-petition and post-petition
fees, costs and expenses from the distributions until payment in full of such
fees, costs or expenses that are governed by the respective indenture or other
agreement in accordance with the provisions set forth therein.
Any actions taken by an indenture trustee, an agent, or a servicer that
are not for the purposes authorized in this Article IV.B.1 of the Plan shall
not be binding upon the Debtors. Notwithstanding the foregoing, any Debtor may
terminate any indenture or other governing agreement and the authority of any
indenture trustee, agent, or servicer to act thereunder at any time, with or
without cause, by giving five (5) days written notice of termination to the
indenture trustee, agent, or servicer. If distributions under the Plan have not
been completed at the time of termination of the indenture or other governing
agreement, the applicable Debtor shall designate a Disbursing Agent to act in
place of the indenture trustee, agent, or servicer, and the provisions of this
Article IV.B.1 shall be deemed to apply to the new distribution agent.
2. CERTIFICATE OF INCORPORATION AND BY-LAWS
The certificate of incorporation and by-laws of each Debtor shall be
amended as necessary to satisfy the provisions of the Plan and the Bankruptcy
Code and shall include, among other things, pursuant to Section 1123(a)(6) of
the Bankruptcy Code, (x) a provision prohibiting the issuance of non-voting
equity securities, and if applicable (y) a provision as to the classes of
securities issued pursuant to the Plan or thereafter possessing voting power,
for an appropriate distribution of such power among such classes, including, in
the case of any class of equity securities having a preference over another
class of equity securities with respect to dividends, adequate provisions for
the election of directors representing such preferred class in the event of
default in the payment of such dividends. The Amended CAI Certificate of
Incorporation shall also include, among other things, a provision authorizing a
capital stock of 25 million shares of New Common Stock, $.01 par value per
share.
C. CAI'S RESTRUCTURING TRANSACTIONS
1. NEW SECURITIES
a. Authorization
As of the Consummation Date, the issuance by Reorganized CAI of (i) $100
million in principal amount of New Senior Notes, (ii) up to 25 million shares
of New Common Stock, and (iii) New Options to purchase up to 10.5% of the New
Common Stock, on a fully diluted basis, is hereby authorized without further
act or action under applicable law, regulation, order or rule.
b. Issuance
The New Securities authorized pursuant to Article IV.C.1 hereof shall be
issued by Reorganized CAI pursuant to the Plan without further act or action
under applicable law, regulation, order or rule, as follows: (i) $100 million
in principal amount of New Senior Notes shall be issued to the holders of the
Senior Notes; (ii) ninety-one percent (91%) of the New Common Stock shall be
issued to the holders of the Senior Notes; (iii) nine percent (9%) of the New
Common Stock shall be issued to the holders of the Subordinated Notes; (iv) the
Management Options shall be issued to the Management Option Plan Participants,
and (v) the BT Alex. Brown Option shall be issued to BT Alex. Brown.
c. Reserve
Reorganized CAI shall reserve 1.5 million shares of the New Common Stock
for issuance pursuant to the Management Option Plan and 75,000 shares of the
New Common Stock for issuance pursuant to the BT Alex. Brown Option, in each
case without further act or action under applicable law, regulation, order or
rule.
2. REGISTRATION RIGHTS
Reorganized CAI and certain holders of shares of New Common Stock who may
be deemed to be "underwriters" or "affiliates" for purposes of the Securities
Act shall enter into the Registration Rights Agreement on or prior to the
Consummation Date. Pursuant to the Registration Rights Agreement, Reorganized
CAI shall agree to file with the SEC, as soon as practicable after receiving a
request from the holders of not less than 10% of the shares of New Common Stock
(subject to adjustments for stock splits), a registration statement on Form S-1
or Form S-3, if use of such a form is then available, to cover resales of
Registrable Securities by the holders thereof who satisfy certain conditions
relating to the provision of information in connection with such registration
statement.
3. NEW SENIOR SECURED FACILITY
The Debtors, together with the non-Debtor Subsidiaries, expect to enter
into one or more post-confirmation loan facilities, which may be the New Senior
Secured Facility, in order to (a) refinance amounts outstanding on the
Consummation Date under the DIP Facility, (b) make other payments required to
be made on the Consummation Date or the Distribution Date, and (c) provide the
additional borrowing capacity required by the Reorganized Debtors and the
Subsidiaries following the Consummation Date to maintain their operations. The
Debtors further expect that (x) the New Senior Secured Facility or other post-
confirmation loan facilit(ies), may consist of two tranches of secured debt,
the first tranche secured by a first priority lien on and security interest in
substantially all of Reorganized CAI's assets and the second tranche secured by
a second priority lien on and security interest in the same assets and (y) the
lender(s) under the New Senior Secured Facility may require a market interest
rate and an equity stake in Reorganized CAI.
D. SALE OF MDU ASSETS BY PCT
1. SALE OF THE MDU ASSETS
The Debtors have entered into a binding letter of intent (the "LOI") with
OnePoint providing for the sale by the Debtors to OnePoint of PCT's and CAI's
MDU Assets. The proposed purchase price for the MDU Assets is $6 million, 92%
of which will be delivered to the Debtors at closing and 8% of which will be
held in escrow for a period up to 6 months, pending the technical conversion
required to convert the multi-dwelling units to OnePoint's distribution system.
Consummation of the transactions contemplated by the LOI is subject to the
satisfaction of a variety of conditions, including Bankruptcy Court approval.
2. USE OF PROCEEDS OF SALE
The Reorganized Debtors shall use a portion of the proceeds of the sale
of the MDU Assets to establish and fund a Distribution Reserve for and on
account of certain Disputed Claims against PCT. All sale proceeds remaining
after the establishment and funding of the Distribution Reserve shall be used
by the Reorganized Debtors, first to fund distributions required to be made
under the Plan, and second, for general working capital purposes.
E. DIRECTORS AND OFFICERS
The existing officers of the Debtors shall serve initially in their
current capacities after the Consummation Date. On the Consummation Date, the
term of the current board of directors of each Debtor shall expire. The
Debtors anticipate that the boards of directors of the Reorganized Debtors will
include two (2) members of current management of CAI. The composition of the
remainder of the boards of the Reorganized Debtors will consist of nominees
designated by holders of the Senior Notes, subject to the requirements of
Section 1129(a)(5) of the Bankruptcy Code. The Debtors intend to announce
prior to the Confirmation Date the identities of any individuals proposed to
serve as directors or officers of the Reorganized Debtors. If and to the
extent possible, the identities of such individuals will be announced by
inclusion of a list of proposed directors and/or officers in the Plan
Supplement, which will be filed with the Bankruptcy Court at least five (5)
Business Days prior to the commencement of the Confirmation Hearing. The
boards of directors of the Reorganized Debtors shall have the responsibility
for the management, control, and operation of the Reorganized Debtors on and
after the Consummation Date.
F. REVESTING OF ASSETS
The property of each Debtor's Estate, together with any property of each
Debtor that is not property of its Estate and that is not specifically disposed
of pursuant to the Plan, shall revest in the applicable Debtor on the
Confirmation Date. Thereafter, each Debtor may operate its business and may
use, acquire, and dispose of property free of any restrictions of the
Bankruptcy Code, the Bankruptcy Rules, and the Bankruptcy Court. As of the
Confirmation Date, all property of each Debtor shall be free and clear of all
Claims and Interests, except as specifically provided in the Plan or the
Confirmation Order. Without limiting the generality of the foregoing, each
Debtor may, without application to or approval by the Bankruptcy Court, pay
fees that it incurs after the Confirmation Date for professional fees and
expenses.
G. PRESERVATION OF RIGHTS OF ACTION; SETTLEMENT OF LITIGATION CLAIMS
Except as otherwise provided in this Plan or the Confirmation Order, or
in any contract, instrument, release, indenture or other agreement entered into
in connection with the Plan, in accordance with Section 1123(b) of the
Bankruptcy Code, the Reorganized Debtors shall retain and may enforce, sue on,
settle, or compromise (or decline to do any of the foregoing) all claims,
rights or causes of action, suits, and proceedings, whether in law or in
equity, whether known or unknown, that the Debtors or the Estates may hold
against any Person or entity. Each Debtor or its successor(s) may pursue such
retained claims, rights or causes of action, suits, or proceedings as
appropriate, in accordance with the best interests of the Reorganized Debtor or
its successor(s) who hold such rights.
<PAGE>
H. EXCLUSIVITY PERIOD
The Debtors shall retain the exclusive right to amend or modify the Plan,
and to solicit acceptances of any amendments to or modifications of the Plan,
through and until the Consummation Date.
I. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS
The chairman of the board of directors, president, chief financial
officer, or any other appropriate officer of CAI or PCT, as the case may be,
shall be authorized to execute, deliver, file, or record such contracts,
instruments, releases, indentures, and other agreements or documents, and take
such actions as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan. The secretary or assistant
secretary of CAI or PCT, as the case may be, shall be authorized to certify or
attest to any of the foregoing actions.
J. TERMINATION OF DIP FACILITY
To the extent not amended and restated with the express consent of MLGAF
as a part of any post-confirmation financing procured by CAI, the DIP Facility
shall be terminated and of no further force and effect upon payment in full on
or one Business Day after the Consummation Date, except as necessary to
evidence and maintain the liens and security interests granted pursuant to (i)
any Final Order authorizing CAI's entry into the DIP Facility and (ii) the
various agreements approved thereby; PROVIDED, HOWEVER, that the liens and
security interests securing the DIP Facility shall remain in full force and
effect until the DIP Facility is repaid in full in cash.
K. EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to Section 1146(c) of the Bankruptcy Code, any transfers from a
Debtor to a Reorganized Debtor or any other Person or entity pursuant to the
Plan shall not be subject to any document recording tax, stamp tax, conveyance
fee, intangibles or similar tax, mortgage tax, stamp act, real estate transfer
tax, mortgage recording tax or other similar tax or governmental assessment,
and the Confirmation Order shall direct the appropriate state or local
governmental officials or agents to forego the collection of any such tax or
governmental assessment and to accept for filing and recordation any of the
foregoing instruments or other documents without the payment of any such tax or
governmental assessment.
ARTICLE V.
ACCEPTANCE OR REJECTION OF THE PLAN
A. CLASSES ENTITLED TO VOTE
Each Impaired Class of Claims that will (or may) receive or retain
property or any interest in property under the Plan, I.E., Classes CAI-5, CAI-
6, and PCT-5, shall be entitled to vote to accept or reject the Plan. By
operation of law, each Unimpaired Class of Claims is deemed to have accepted
the Plan and, therefore, is not entitled to vote to accept or reject the Plan.
Because holders of Class CAI-7 Securities Claims and Class CAI-8 Equity
Securities Interests are not entitled to receive or retain any property under
the Plan, Classes CAI-7 and CAI-8 are presumed to have rejected the Plan and,
therefore, shall not be entitled to vote on the Plan.
B. ACCEPTANCE BY IMPAIRED CLASSES
An Impaired Class of Claims shall have accepted the Plan if (i) the
holders (other than any holder designated under Section 1126(e) of the
Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims
actually voting in such Class have voted to accept the Plan and (ii) the
holders (other than any holder designated under Section 1126(e) of the
Bankruptcy Code) of more than one-half in number of the Allowed Claims actually
voting in such Class have voted to accept the Plan.
C. CRAMDOWN
CAI shall request Confirmation of the Plan, as it may be modified from
time to time, under Section 1129(b) of the Bankruptcy Code. CAI reserves the
right to modify the Plan to the extent, if any, that Confirmation pursuant to
Section 1129(b) of the Bankruptcy Code requires modification.
ARTICLE VI.
SECURITIES TO BE ISSUED
IN CONNECTION WITH THE PLAN
On or before the Distribution Date, Reorganized CAI shall issue for
distribution in accordance with the provisions of the Plan all of the New
Senior Notes, the New Common Stock, and New Options required for distribution
or sale pursuant to the provisions of the Plan. All securities to be issued
will be deemed issued as of the Distribution Date regardless of the date on
which they are actually distributed. The form of indenture governing the New
Senior Notes shall be included in the Plan Supplement as Exhibit D to this
Plan. A description of the terms of the New Common Stock and Management
Options are included in Exhibits E and F, annexed to and incorporated in the
Plan, respectively.
ARTICLE VII.
PROVISIONS GOVERNING DISTRIBUTIONS
A. DISTRIBUTIONS FOR CLAIMS ALLOWED AS OF THE CONSUMMATION DATE
Except as otherwise provided herein or as ordered by the Bankruptcy
Court, distributions to be made on account of Claims that are Allowed Claims as
of the Consummation Date shall be made on the Distribution Date, or as soon
thereafter as practicable. The New Securities to be issued under this Plan
shall be deemed issued as of the Distribution Date regardless of the date on
which they are actually distributed. Distributions on account of Claims that
first become Allowed Claims after the Consummation Date shall be made pursuant
to Articles III, VII, and IX of this Plan.
B. INTEREST ON CLAIMS
Unless otherwise specifically provided for in this Plan or the
Confirmation Order, or required by applicable bankruptcy law, post-petition
interest shall not accrue or be paid on Claims, and no holder of a Claim shall
be entitled to interest accruing on or after the Petition Date on any Claim.
Interest shall not accrue or be paid upon any Disputed Claim in respect of the
period from the Petition Date to the date a final distribution is made thereon
if and after such Disputed Claim becomes an Allowed Claim.
C. DISBURSING AGENT
The Disbursing Agent shall make all distributions required under this
Plan (subject to the provisions of Articles III, VII, and IX hereof) except
with respect to a holder of a Claim whose distribution is governed by an
indenture or other agreement and is administered by an indenture trustee,
agent, or servicer, which distributions shall be deposited with the appropriate
indenture trustee, agent, or servicer, who shall deliver such distributions to
the holders of Claims in accordance with the provisions of this Plan and the
terms of the relevant indenture or other governing agreement.
If the Disbursing Agent is an independent third party designated by the
Reorganized Debtors to serve in such capacity, such Disbursing Agent shall
receive, without further Bankruptcy Court approval, reasonable compensation for
distribution services rendered pursuant to the Plan and reimbursement of
reasonable out-of-pocket expenses incurred in connection with such services
from the Reorganized Debtors on terms acceptable to the Reorganized Debtors.
No Disbursing Agent shall be required to give any bond or surety or other
security for the performance of its duties unless otherwise ordered by the
Bankruptcy Court. If otherwise so ordered, all costs and expenses of procuring
any such bond shall be paid by the Reorganized Debtors.
<PAGE>
D. SURRENDER OF SECURITIES OR INSTRUMENTS
On or before the Distribution Date, or as soon as practicable thereafter,
each holder of an instrument evidencing a Claim on account of Debt Securities
which are not being Reinstated (a "Certificate") shall surrender such
Certificate to the Disbursing Agent, or, with respect to indebtedness that is
governed by an indenture or other agreement, the respective indenture trustee,
agent, or servicer, as the case may be, and such Certificate shall be
cancelled. No distribution of property hereunder shall be made to or on behalf
of any such holder unless and until such Certificate is received by the
Disbursing Agent or the respective indenture trustee, agent, or servicer, as
the case may be, or the unavailability of such Certificate is reasonably
established to the satisfaction of the Disbursing Agent or the respective
indenture trustee, agent, or servicer, as the case may be. Any such holder who
fails to surrender or cause to be surrendered such Certificate or fails to
execute and deliver an affidavit of loss and indemnity reasonably satisfactory
to the Disbursing Agent or the respective indenture trustee, agent, or
servicer, as the case may be, prior to the second (2{nd}) anniversary of the
Consummation Date, shall be deemed to have forfeited all rights and Claims in
respect of such Certificate and shall not participate in any distribution
hereunder, and all property in respect of such forfeited distribution,
including interest accrued thereon, shall revert to Reorganized CAI
notwithstanding any federal or state escheat laws to the contrary.
E/ INSTRUCTIONS TO DISBURSING AGENT
Prior to any distribution on account of a Class CAI-5 Senior Note Claim,
the Indenture Trustee, agent, or servicer of the Senior Notes shall (i) inform
the Disbursing Agent as to the amount of properly surrendered Senior Notes and
(ii) instruct the Disbursing Agent, in a form and manner that the Disbursing
Agent reasonably determines to be acceptable, of the names of the holders of
Allowed Class CAI-5 Senior Note Claims, and the face amount of New Senior Notes
and/or number of shares of New Common Stock, , as the case may be, to be issued
and distributed to or on behalf of such holders of Allowed Class CAI-5 Senior
Note Claims in exchange for properly surrendered Senior Notes.
F. SERVICES OF INDENTURE TRUSTEES, AGENTS, AND SERVICERS
The services, with respect to consummation of the Plan, of indenture
trustees, agents, and servicers under indentures and other agreements that
govern the rights of holders of Claims, shall be as set forth in Article IV.B.1
and elsewhere in the Plan.
G. RECORD DATE FOR DISTRIBUTIONS TO HOLDERS OF DEBT SECURITIES
At the close of business on the Distribution Record Date, the transfer
ledgers for the Debt Securities shall be closed, and there shall be no further
changes in the record holders of the Debt Securities. Reorganized CAI and the
Disbursing Agent, if any, shall have no obligation to recognize any transfer of
such Debt Securities occurring after the Distribution Record Date and shall be
entitled instead to recognize and deal for all purposes hereunder with only
those record holders stated on the transfer ledgers as of the close of business
on the Distribution Record Date.
H. MEANS OF CASH PAYMENT
Cash payments made pursuant to this Plan shall be in U.S. funds, by the
means agreed to by the payor and the payee, including by check or wire
transfer, or, in the absence of an agreement, such commercially reasonable
manner as the payor shall determine in its sole discretion; PROVIDED, HOWEVER,
that any cash payment in excess of $1,000,000 shall, notwithstanding the
foregoing, be effected by wire transfer.
I. CALCULATION OF DISTRIBUTION AMOUNTS OF NEW COMMON STOCK
No fractional shares of New Common Stock shall be issued or distributed
under the Plan or by Reorganized CAI or any Disbursing Agent, indenture
trustee, agent, or servicer. Each Person entitled to receive New Common Stock
will receive the total number of whole shares of New Common Stock to which such
Person is entitled. Whenever any distribution to a particular Person would
otherwise call for distribution of a fraction of a share of New Common Stock,
the Disbursing Agent shall allocate separately one whole share to such Persons
in order of the fractional portion of their entitlements, starting with the
largest such fractional portion, until all remaining whole shares have been
allocated. Upon the allocation of a whole share to a Person in respect of the
fractional portion of its entitlement, such fractional portion shall be
cancelled. If two or more Persons are entitled to equal fractional
entitlements and the number of Persons so entitled exceeds the number of whole
shares which remain to be allocated, the Disbursing Agent shall allocate the
remaining whole shares to such holders by random lot or such other impartial
method as the Disbursing Agent deems fair. Upon the allocation of all of the
whole shares authorized under the Plan, all remaining fractional portions of
the entitlements shall be cancelled and shall be of no further force and
effect.
J. DELIVERY OF DISTRIBUTIONS
Distributions to holders of Allowed Claims shall be made by the
Disbursing Agent or the appropriate indenture trustee, agent, or servicer, as
the case may be, (a) at the addresses set forth on the proofs of Claim filed by
such holders (or at the last known addresses of such holders if no proof of
Claim is filed or if the Debtors have been notified of a change of address),
(b) at the addresses set forth in any written notices of address changes
delivered to the Disbursing Agent after the date of any related proof of Claim,
(c) at the addresses reflected in the Schedules if no proof of Claim has been
filed and the Disbursing Agent has not received a written notice of a change of
address, or (d) in the case of the holder of a Claim that is governed by an
indenture or other agreement and is administered by an indenture trustee,
agent, or servicer, at the addresses contained in the official records of such
indenture trustee, agent, or servicer, or (e) at the addresses set forth in a
properly completed letter of transmittal accompanying securities properly
remitted to the Debtors. If any holder's distribution is returned as
undeliverable, no further distributions to such holder shall be made unless and
until the Disbursing Agent or the appropriate indenture trustee, agent, or
servicer is notified of such holder's then current address, at which time all
missed distributions shall be made to such holder without interest. Amounts in
respect of undeliverable distributions made through the Disbursing Agent or the
indenture trustee, agent, or servicer, shall be returned to the Reorganized
Debtors until such distributions are claimed. All claims for undeliverable
distributions must be made on or before the second (2{nd}) anniversary of the
Consummation Date, after which date all unclaimed property shall revert to the
Reorganized Debtors free of any restrictions thereon and the claim of any
holder or successor to such holder with respect to such property shall be
discharged and forever barred, notwithstanding any federal or state escheat
laws to the contrary.
K. FRACTIONAL DOLLARS; DE MINIMIS DISTRIBUTIONS
Any other provision of the Plan notwithstanding, payments of fractions of
dollars shall not be made. Whenever any payment of a fraction of a dollar under
the Plan would otherwise be called for, the actual payment made shall reflect a
rounding of such fraction to the nearest whole dollar (up or down), with half
dollars being rounded down. The Disbursing Agent, or any indenture trustee,
agent, or servicer, as the case may be, shall not make any payment of less than
twenty-five dollars ($25.00) with respect to any Claim unless a request
therefor is made in writing to such Disbursing Agent, indenture trustee, agent,
or servicer, as the case may be.
L. WITHHOLDING AND REPORTING REQUIREMENTS
In connection with this Plan and all distributions hereunder, the
Disbursing Agent shall, to the extent applicable, comply with all tax
withholding and reporting requirements imposed by any federal, state, local, or
foreign taxing authority, and all distributions hereunder shall be subject to
any such withholding and reporting requirements. The Disbursing Agent shall be
authorized to take any and all actions that may be necessary or appropriate to
comply with such withholding and reporting requirements.
M. SETOFFS
The Reorganized Debtors may, but shall not be required to, set off
against any Claim, and the payments or other distributions to be made pursuant
to the Plan in respect of such Claim, claims of any nature whatsoever that the
Debtors or Reorganized Debtors may have against the holder of such Claim;
PROVIDED, HOWEVER, that neither the failure to do so nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Reorganized Debtors
of any such claim that the Debtors or Reorganized Debtors may have against such
holder.
ARTICLE VIII.
TREATMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES
A. ASSUMED CONTRACTS AND LEASES
Except as otherwise provided in the Plan, or in any contract, instrument,
release, indenture or other agreement or document entered into in connection
with the Plan, as of the Consummation Date each Debtor shall be deemed to have
assumed each executory contract and unexpired lease to which it is a party,
unless such contract or lease (i) was previously assumed or rejected by such
Debtor, (ii) previously expired or terminated pursuant to its own terms, or
(iii) is the subject of a motion to reject filed on or before the Confirmation
Date. The Confirmation Order shall constitute an order of the Bankruptcy Court
under Section 365 of the Bankruptcy Code approving the contract and lease
assumptions described above, as of the Consummation Date.
Each executory contract and unexpired lease that is assumed and relates
to the use, ability to acquire, or occupancy of real property shall include (a)
all modifications, amendments, supplements, restatements, or other agreements
made directly or indirectly by any agreement, instrument, or other document
that in any manner affect such executory contract or unexpired lease and (b)
all executory contracts or unexpired leases appurtenant to the premises,
including all easements, licenses, permits, rights, privileges, immunities,
options, rights of first refusal, powers, uses, usufructs, reciprocal easement
agreements, vaults, tunnel or bridge agreements or franchises, and any other
interests in real estate or rights IN REM related to such premises, unless any
of the foregoing agreements has been rejected pursuant to an order of the
Bankruptcy Court.
B. PAYMENTS RELATED TO ASSUMPTION OF CONTRACTS AND LEASES
Any monetary amounts by which each executory contract and unexpired lease
to be assumed pursuant to the Plan is in default shall be satisfied, under
Section 365(b)(1) of the Bankruptcy Code, at the option of the Debtor party to
the contract or lease or the assignee of such Debtor party assuming such
contract or lease, by Cure. If there is a dispute regarding (i) the nature or
amount of any Cure, (ii) the ability of any Reorganized Debtor or any assignee
to provide "adequate assurance of future performance" (within the meaning of
Section 365 of the Bankruptcy Code) under the contract or lease to be assumed,
or (iii) any other matter pertaining to assumption, Cure shall occur following
the entry of a Final Order resolving the dispute and approving the assumption
or assumption and assignment, as the case may be.
C. REJECTED CONTRACTS AND LEASES
Except as otherwise provided in the Plan or in any contract, instrument,
release, indenture or other agreement or document entered into in connection
with the Plan, none of the executory contracts and unexpired leases to which
the Debtors, or either of them, are a party shall be rejected under the Plan;
PROVIDED, HOWEVER, that the Debtors reserve the right, at any time prior to the
Confirmation Date, to seek to reject any executory contract or unexpired lease
to which they, or either of them, are a party.
D. BAR TO REJECTION DAMAGES
If the rejection by a Debtor, pursuant to the Plan or otherwise, of an
executory contract or unexpired lease results in a Claim that is not
theretofore evidenced by a timely filed proof of Claim or a proof of Claim that
is deemed to be timely filed under applicable law, then such Claim shall be
forever barred and shall not be enforceable against any Debtor or Reorganized
Debtor, or the properties of any of them, unless a proof of Claim is filed with
the clerk of the Bankruptcy Court and served on counsel for the Debtors within
thirty (30) days after service of the earlier of (i) notice of entry of the
Confirmation Order or (ii) other notice that the executory contract or
unexpired lease has been rejected.
E. COMPENSATION AND BENEFIT PROGRAMS
1. Except and to the extent previously assumed by an order of the
Bankruptcy Court on or before the Confirmation Date, and except as set forth in
(2) below, all employee compensation and benefit programs of the Debtors,
including programs subject to Sections 1114 and 1129(a)(13) of the Bankruptcy
Code, entered into before or after the Petition Date and not since terminated,
shall be deemed to be, and shall be treated as though they are, executory
contracts that are assumed under Article VIII.A of the Plan, but only to the
extent that rights under such programs are held by a Debtor or Persons who are
employees of a Debtor as of the Confirmation Date, and the Debtors' obligations
under such programs to persons who are employees of a Debtor on the
Confirmation Date shall survive confirmation of this Plan, except for (i)
executory contracts or plans specifically rejected pursuant to the Plan (to the
extent such rejection does not violate Sections 1114 and 1129(a)(13) of the
Bankruptcy Code) and (ii) executory contracts or plans as have previously been
rejected, are the subject of a motion to reject, or have been specifically
waived by the beneficiaries of any plans or contracts; PROVIDED, HOWEVER, that
the Debtors' obligations, if any, to pay all "retiree benefits" as defined in
Section 1114(a) of the Bankruptcy Code shall continue.
2. Notwithstanding the foregoing, the Employment Agreements to be
entered into with the Key Employees on the Consummation Date shall amend and
supersede any other employment agreements and severance plans with or for the
benefit of the Key Employees, and, as amended, shall be assumed pursuant to the
Plan. On the Consummation Date, the Severance Plan shall be terminated.
ARTICLE IX.
PROCEDURES FOR RESOLVING DISPUTED,
CONTINGENT, AND UNLIQUIDATED CLAIMS
A. OBJECTION DEADLINE; PROSECUTION OF OBJECTIONS
As soon as practicable, but in no event later than 120 days after the
Consummation Date (unless extended by an order of the Bankruptcy Court), the
Debtors or Reorganized Debtors, as the case may be, shall file objections to
Claims with the Bankruptcy Court and serve such objections upon the holders of
each of the Claims to which objections are made. Nothing contained herein,
however, shall limit the Reorganized Debtors' right to object to Claims, if
any, filed or amended more than 120 days after the Consummation Date.
B. NO DISTRIBUTIONS PENDING ALLOWANCE
Notwithstanding any other provision of the Plan, no payments or
distributions shall be made with respect to all or any portion of a Disputed
Claim unless and until all objections to such Disputed Claim have been settled
or withdrawn or have been determined by Final Order, and the Disputed Claim, or
some portion thereof, has become an Allowed Claim.
C. DISTRIBUTION RESERVE
1. The Disbursing Agent shall withhold the Distribution Reserve from the
Cash, New Senior Notes, New Common Stock, or other property to be distributed
under the Plan. As to any Disputed Claim, upon a request for estimation by a
Debtor, the Bankruptcy Court shall determine what amount is sufficient to
withhold as the Distribution Reserve. The Debtors may request estimation for
every Disputed Claim that is unliquidated and the Disbursing Agent shall
withhold the Distribution Reserve based upon the estimated amount of such Claim
as set forth in a Final Order. If the Debtors elect not to request such an
estimation from the Bankruptcy Court with respect to a Disputed Claim that is
liquidated, the Disbursing Agent shall withhold the Distribution Reserve based
upon the Face Amount of such Claim. Nothing in the Plan or herein shall be
deemed to entitle the holder of a Disputed Claim to post-petition interest on
such Claim, and such holder shall not be entitled to any such interest.
2. Neither the Disbursing Agent, nor any other party, shall be entitled
to vote any shares of the New Common Stock held in the Distribution Reserve.
In the event that any matter requires approval by the shareholders of
Reorganized CAI prior to the distribution or cancellation of all shares of New
Common Stock from the Distribution Reserve, the shares of New Common Stock held
by the Disbursing Agent shall be deemed not to have been issued, for voting
purposes only.
3. If practicable, the Disbursing Agent shall invest any Cash that is
withheld as the Distribution Reserve in a manner that shall yield a reasonable
net return, taking into account the safety of the investment.
D. DISTRIBUTIONS AFTER ALLOWANCE
The Reorganized Debtors or the Disbursing Agent, as the case may be,
shall make payments and distributions from the Distribution Reserve to each
holder of a Disputed Claim that has become an Allowed Claim in accordance with
the provisions of the Plan governing the class of Claims to which such holder
belongs. On the next succeeding interim distribution date after the date that
the order or judgment of the Bankruptcy Court allowing all or part of such
Claim becomes a Final Order, the Disbursing Agent shall distribute to the
holder of such Claim any Cash, New Senior Notes, New Common Stock, or other
property in the Distribution Reserve that would have been distributed on the
Distribution Date had such Allowed Claim been allowed on the Distribution Date.
After a Final Order has been entered, or other final resolution has been
reached, with respect to each Disputed Claim (i) any New Senior Notes or New
Common Stock held in the Distribution Reserve shall be distributed Pro Rata to
holders of Allowed Claims entitled thereto under the terms of this Plan and
(ii) any Cash or other property remaining in the Distribution Reserve shall
become property of the Reorganized Debtors. All distributions made under this
Article IX.D of the Plan on account of an Allowed Claim shall be made together
with any dividends, payments, or other distributions made on account of, as
well as any obligations arising from, the distributed property, as if such
Allowed Claim had been an Allowed Claim on the Distribution Date.
Notwithstanding the foregoing, the Disbursing Agent shall not be required to
make distributions under Article IX.D more frequently than once every 180 days
or to make any individual payments in an amount less than $25.00
.
ARTICLE X.
CONDITIONS PRECEDENT TO CONFIRMATION AND
CONSUMMATION OF THE PLAN
A. CONDITIONS TO CONFIRMATION
The following are conditions precedent to confirmation of the Plan that
must be (i) satisfied or (ii) waived in accordance with Article X.C below:
1. The proposed Confirmation Order shall be in form and substance
reasonably acceptable to the Debtors and the Exit Lenders.
2. The Debtors shall have arranged for credit availability under the New
Senior Secured Facility, in amount, form and substance acceptable to CAI, to
provide the Reorganized Debtors with working capital to meet ordinary and peak
requirements and additional borrowings to support future projects.
B. CONDITIONS TO CONSUMMATION
The following are conditions precedent to the occurrence of the
Consummation Date, each of which must be (i) satisfied or (ii) waived in
accordance with Article X.C below:
1. The Confirmation Order, in form and substance reasonably acceptable
to the Debtors and the Exit Lenders, confirming the Plan, as the same may have
been modified, must have become a Final Order and must, among other things,
provide that:
a. the Debtors and Reorganized Debtors are authorized and directed
to take all actions necessary or appropriate to enter into, implement and
consummate the contracts, instruments, releases, leases, indentures and other
agreements or documents created in connection with the Plan or the
Restructuring;
b. the provisions of the Confirmation Order are nonseverable and
mutually dependent;
c. all executory contracts or unexpired leases assumed or assumed
and assigned by the Debtors during the Chapter 11 Case or under the Plan shall
remain in full force and effect for the benefit of the Reorganized Debtors or
their assignees notwithstanding any provision in such contract or lease
(including those described in Sections 365(b)(2) and (f) of the Bankruptcy
Code) that prohibits such assignment or transfer or that enables, permits or
requires termination of such contract or lease;
d. the transfers of property by the Debtors (a) to the Reorganized
Debtors (i) are or will be legal, valid, and effective transfers of property,
(ii) vest or will vest the Reorganized Debtors with good title to such property
free and clear of all liens, charges, Claims, encumbrances, or interests,
except as expressly provided in the Plan or Confirmation Order, (iii) do not
and will not constitute avoidable transfers under the Bankruptcy Code or under
applicable bankruptcy or nonbankruptcy law, and (iv) do not and will not
subject any Reorganized Debtor to any liability by reason of such transfer
under the Bankruptcy Code or under applicable nonbankruptcy law, including,
without limitation, any laws affecting successor or transferee liability, and
(b) to holders of Claims under the Plan are for good consideration and value
and are in the ordinary course of the Debtors' business;
e. except as expressly provided in the Plan, the Debtors are
discharged effective upon the Confirmation Date from any "debt" (as that term
is defined in Section 101(12) of the Bankruptcy Code), and the Debtors'
liability in respect thereof is extinguished completely, whether reduced to
judgment or not, liquidated or unliquidated, contingent or noncontingent,
asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or
undisputed, legal or equitable, or known or unknown, or that arose from any
agreement of a Debtor that has either been assumed or rejected in the Chapter
11 Case or pursuant to the Plan, or obligation of a Debtor incurred before the
Confirmation Date, or from any conduct of a Debtor prior to the Confirmation
Date, or that otherwise arose before the Confirmation Date, including, without
limitation, all interest, if any, on any such debts, whether such interest
accrued before or after the Petition Date;
f. the Plan does not provide for the liquidation of all or
substantially all of the property of the Debtors' and its confirmation is not
likely to be followed by the liquidation of the Reorganized Debtors or the need
for further financial reorganization;
g. all Interests in CAI shall be terminated effective upon the
Consummation Date; and
h. the New Senior Notes and New Common Stock issued under the Plan
in exchange for Claims against CAI are exempt from registration under the
Securities Act of 1933 pursuant to Section 1145 of the Bankruptcy Code, except
to the extent that holders of New Senior Notes and New Common Stock are
"underwriters," as that term is defined in Section 1145 of the Bankruptcy Code.
2. The Reorganized Debtors shall have credit availability under the New
Senior Secured Facility, in amount, form and substance acceptable to CAI, to
provide the Reorganized Debtors with working capital to meet ordinary and peak
requirements and additional borrowings to support future projects.
3. The FCC shall have granted CAI's and CS Wireless' transfer of control
applications concerning the ownership changes contemplated by the Plan on terms
and conditions reasonable satisfactory to CAI.
4. The FCC's grant of CAI's and CS Wireless' transfer of control
applications shall have become final on terms and conditions reasonable
satisfactory to CAI.
5. The following agreements, in form satisfactory to the Debtors, shall
have been executed and delivered, and all conditions precedent thereto shall
have been satisfied:
a. Amended Certificate of Incorporation and By-laws of CAI;
b. Amended Certificate of Incorporation and By-laws of PCT;
c. New Senior Notes Indenture;
d. Management Option Plan and Management Option Agreements;
e. Employment Agreements;
f. Registration Rights Agreement; and
g. New Senior Secured Facility.
6. All actions, documents and agreements necessary to implement the Plan
shall have been effected or executed.
C. WAIVER OF CONDITIONS
Each of the conditions set forth in Articles X.A and X.B above, other
than those set forth in Article X.A.1 and X.B.1, may be waived in whole or in
part by the Debtors or Reorganized Debtors in their sole and absolute
discretion without any notice to parties in interest or the Bankruptcy Court
and without a hearing. The failure to satisfy or waive any condition to the
Consummation Date may be asserted by the Debtors or Reorganized Debtors
regardless of the circumstances giving rise to the failure of such condition to
be satisfied (including any action or inaction by a Debtor or Reorganized
Debtor). The failure of a Debtor or Reorganized Debtor to exercise any of the
foregoing rights shall not be deemed a waiver of any other rights, and each
such right shall be deemed an ongoing right that may be asserted at any time.
ARTICLE XI.
MODIFICATIONS AND AMENDMENTS
The Debtors may alter, amend, or modify the Plan or any Exhibits thereto
under Section 1127(a) of the Bankruptcy Code at any time prior to the
Confirmation Date. After the Confirmation Date and prior to substantial
consummation of the Plan, as defined in Section 1101(2) of the Bankruptcy Code,
the Debtors may, under Section 1127(b) of the Bankruptcy Code, institute
proceedings in the Bankruptcy Court to remedy any defect or omission or
reconcile any inconsistencies in the Plan, the Disclosure Statement, or the
Confirmation Order, and such matters as may be necessary to carry out the
purposes and effects of the Plan so long as such proceedings do not materially
adversely affect the treatment of holders of Claims or Interests under the
Plan; PROVIDED, HOWEVER, that prior notice of such proceedings shall be served
in accordance with the Bankruptcy Rules or order of the Bankruptcy Court.
ARTICLE XI.
RETENTION OF JURISDICTION
Under Sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding entry of the Confirmation Order and occurrence of the
Consummation Date, the Bankruptcy Court shall retain exclusive jurisdiction
over all matters arising out of, and related to, the Chapter 11 Case and the
Plan to the fullest extent permitted by law, including, among other things,
jurisdiction to:
A. Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim or Interest,
including the resolution of any request for payment of any Administrative Claim
and the resolution of any objections to the allowance or priority of Claims or
Interests;
B. Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under Sections
330, 331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy Code; PROVIDED,
HOWEVER, that from and after the Consummation Date, the payment of the fees and
expenses of the retained professionals of the Reorganized Debtors shall be made
in the ordinary course of business and shall not be subject to the approval of
the Bankruptcy Court;
C. Hear and determine all matters with respect to the assumption or
rejection of any executory contract or unexpired lease to which a Debtor is a
party or with respect to which a Debtor may be liable, including, if necessary,
the nature or amount of any required Cure or the liquidation or allowance of
any Claims arising therefrom;
D. Effectuate performance of and payments under the provisions of the
Plan;
E. Hear and determine any and all adversary proceedings, motions,
applications, and contested or litigated matters arising out of, under, or
related to, the Chapter 11 Case, including, but not limited to, any and all
motions for approval of asset sales by the Debtors filed by the Debtors on or
before the Consummation Date;
F. Enter such orders as may be necessary or appropriate to execute,
implement, or consummate the provisions of the Plan and all contracts,
instruments, releases, and other agreements or documents created in connection
with the Plan, the Disclosure Statement or the Confirmation Order;
G. Hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the Plan,
including disputes arising under agreements, documents or instruments executed
in connection with the Plan;
H. Consider any modifications of the Plan, cure any defect or omission,
or reconcile any inconsistency in any order of the Bankruptcy Court, including,
without limitation, the Confirmation Order;
I. Issue injunctions, enter and implement other orders, or take such
other actions as may be necessary or appropriate to restrain interference by
any entity with implementation, consummation, or enforcement of the Plan or the
Confirmation Order;
J. Enter and implement such orders as may be necessary or appropriate if
the Confirmation Order is for any reason reversed, stayed, revoked, modified,
or vacated;
K. Hear and determine any matters arising in connection with or relating
to the Plan, the Disclosure Statement, the Confirmation Order, or any contract,
instrument, release, or other agreement or document created in connection with
the Plan, the Disclosure Statement or the Confirmation Order;
L. Enforce all orders, judgments, injunctions, releases, exculpations,
indemnifications and rulings entered in connection with the Chapter 11 Case;
M. Recover all assets of the Debtors and property of the Debtors'
Estates, wherever located;
N. Hear and determine matters concerning state, local, and federal taxes
in accordance with Sections 346, 505, and 1146 of the Bankruptcy Code;
O. Hear and determine all disputes involving the existence, nature, or
scope of the Debtors' discharge;
P. Hear and determine such other matters as may be provided in the
Confirmation Order or as may be authorized under, or not inconsistent with,
provisions of the Bankruptcy Code;
Q. Enter a final decree closing the Chapter 11 Case.
ARTICLE XIII.
COMPROMISES AND SETTLEMENTS
Pursuant to Fed. R. Bankr. P. 9019(a), the Debtors may compromise and
settle various Claims against them and/or claims that they may have against
other Persons. The Debtors expressly reserve the right (with Bankruptcy Court
approval, following appropriate notice and opportunity for a hearing) to
compromise and settle Claims against them and claims that they may have against
other Persons up to and including the Consummation Date. After the
Consummation Date, such right shall pass to the Reorganized Debtors pursuant to
Articles IV.F and IV.G of the Plan.
ARTICLE XIV.
MISCELLANEOUS PROVISIONS
A. BAR DATES FOR CERTAIN CLAIMS
1. ADMINISTRATIVE CLAIMS; SUBSTANTIAL CONTRIBUTION CLAIMS
The Confirmation Order will establish an Administrative Claims Bar Date
for filing of all Administrative Claims, including Substantial Contribution
Claims (but not including claims for Professional Fees or the expenses of the
members of the Creditors' Committee (if one has been appointed)), which date
will be 45 days after the Confirmation Date. Holders of asserted
Administrative Claims, other than claims for Professional Fees or the expenses
of the members of the Creditors' Committee (if one has been appointed), not
paid prior to the Confirmation Date must submit proofs of Administrative Claim
on or before such Administrative Claims Bar Date or forever be barred from
doing so. The notice of Confirmation to be delivered pursuant to Fed. R.
Bankr. P. 3020(c) and 2002(f) will set forth such date and constitute notice of
this Administrative Claims Bar Date. The Debtors or Reorganized Debtors, as
the case may be, shall have 45 days (or such longer period as may be allowed by
order of the Bankruptcy Court) following the Administrative Claims Bar Date to
review and object to such Administrative Claims before a hearing for
determination of allowance of such Administrative Claims.
2. PROFESSIONAL FEE CLAIMS
All final requests for compensation or reimbursement of Professional Fees
pursuant to Sections 327, 328, 330, 331, 503(b) or 1103 of the Bankruptcy Code
for services rendered to the Debtors or the Creditors' Committee (if one has
been appointed) prior to the Consummation Date (other than Substantial
Contribution Claims under Section 503(b)(4) of the Bankruptcy Code) must be
filed and served on the Reorganized Debtors and their counsel no later than 45
days after the Consummation Date, unless otherwise ordered by the Bankruptcy
Court. Objections to applications of such Professionals or other entities for
compensation or reimbursement of expenses must be filed and served on the
Reorganized Debtors and their counsel and the requesting Professional or other
entity no later than 45 days (or such longer period as may be allowed by order
of the Bankruptcy Court) after the date on which the applicable application for
compensation or reimbursement was served. Notwithstanding anything in this
Article XIV.A.2 to the contrary, the reasonable fees and expenses incurred on
or after the Petition Date by the Indenture Trustee that are required to be
paid by the Debtors pursuant to the Senior Notes Indenture, shall be paid by
the Debtors and/or the Reorganized Debtors as Administrative Claims in the
ordinary course of the Debtors' business (but in no event later than the
Consummation Date), without application by or on behalf of the Indenture
Trustee to the Bankruptcy Court, and without notice and a hearing, unless
specifically required by the Bankruptcy Court. If the Debtors and/or
Reorganized Debtors and the Indenture Trustee cannot agree on the amount of
fees and expenses to be paid to the Indenture Trustee, the amount of any such
fees and expenses to be paid by the Debtors and/or Reorganized Debtors shall be
determined by the Bankruptcy Court.
B. PAYMENT OF STATUTORY FEES
All fees payable pursuant to Section 1930 of title 28 of the United
States Code, as determined by the Bankruptcy Court at the Confirmation shall be
paid on or before the Consummation Date.
C. SEVERABILITY OF PLAN PROVISIONS
If, prior to Confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy
Court, at the request of any Debtor, shall have the power to alter and
interpret such term or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable, and such term or provision
shall then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and
provisions of the Plan shall remain in full force and effect and shall in no
way be affected, impaired or invalidated by such holding, alteration or
interpretation. The Confirmation Order shall constitute a judicial
determination and shall provide that each term and provision of the Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
D. SUCCESSORS AND ASSIGNS
The rights, benefits and obligations of any entity named or referred to
in the Plan shall be binding on, and shall inure to the benefit of, any heir,
executor, administrator, successor or assign of such entity.
E. RELEASES AND SATISFACTION OF SUBORDINATION RIGHTS
All Claims of the holders of the Secured Notes, Senior Notes and the
Subordinated Notes against the Debtors and all rights and claims between or
among such holders relating in any manner whatsoever to any claimed
subordination rights (if any), shall be deemed satisfied by the distributions
under, described in, contemplated by, and/or implemented by this Plan to
holders of Claims having such subordination rights, and such subordination
rights shall be deemed waived, released, discharged, and terminated as of the
Consummation Date, and all actions related to the enforcement of such
subordination rights shall be permanently enjoined. Distributions under,
described in, contemplated by, and/or implemented by this Plan to the various
Classes of Claims hereunder shall not be subject to levy, garnishment,
attachment, or like legal process by any holder of a Claim, including, but not
limited to, holders of Secured Note Claims, Senior Note Claims and Subordinated
Note Claims, by reason of any claimed subordination rights or otherwise, so
that each holder of a Claim shall have and receive the benefit of the
distributions in the manner set forth in the Plan.
F. DISCHARGE OF THE DEBTORS
All consideration distributed under the Plan shall be in exchange for,
and in complete satisfaction, settlement, discharge, and release of, all Claims
of any nature whatsoever against the Debtors or any of their assets or
properties, and, except as otherwise provided herein or in the Confirmation
Order, and regardless of whether any property shall have been distributed or
retained pursuant to the Plan on account of such Claims, upon the Consummation
Date, the Debtors, and each of them, shall be deemed discharged and released
under Section 1141(d)(1)(A) of the Bankruptcy Code from any and all Claims,
including, but not limited to, demands and liabilities that arose before the
Confirmation Date, any liability (including withdrawal liability) to the extent
such Claims relate to services performed by employees of a Debtor prior to the
Petition Date and that arises from a termination of employment or a termination
of any employee or retiree benefit program regardless of whether such
termination occurred prior to or after the Confirmation Date, and all debts of
the kind specified in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code,
whether or not (a) a proof of Claim based upon such debt is filed or deemed
filed under Section 501 of the Bankruptcy Code, (b) a Claim based upon such
debt is Allowed under Section 502 of the Bankruptcy Code, or (c) the holder of
a Claim based upon such debt accepted the Plan. The Confirmation Order shall
be a judicial determination of discharge of all liabilities of the Debtors,
subject to the Consummation Date occurring.
G. EMPLOYMENT AGREEMENTS
On the Consummation Date, Reorganized CAI shall enter into Employment
Agreements with the Key Employees listed on Exhibit G to this Plan.
H. COMMITTEES
Effective on the Consummation Date, the duties of the Creditors'
Committee (if one has been appointed) shall terminate, except with respect to
any appeal of an order in the Chapter 11 Case and applications for Professional
Fees.
I. EXCULPATION AND LIMITATION OF LIABILITY
Neither the Reorganized Debtors, nor any statutory committee, MLGAF, or
any of their respective present or former members, officers, directors,
employees, advisors, attorneys, or agents, shall have or incur any liability to
any holder of a Claim or an Interest, or any other party in interest, or any of
their respective agents, employees, representatives, financial advisors,
attorneys, or affiliates, or any of their successors or assigns, for any act or
omission in connection with, relating to, or arising out of, the Chapter 11
Case, the solicitation of acceptances of the Plan, the pursuit of confirmation
of the Plan, the consummation of the Plan, or the administration of the Plan or
the property to be distributed under the Plan, except for their willful
misconduct, and in all respects shall be entitled to reasonably rely upon the
advice of counsel with respect to their duties and responsibilities under the
Plan.
Notwithstanding any other provision of this Plan, no holder of a Claim or
Interest, no other party in interest, none of their respective agents,
employees, representatives, financial advisors, attorneys, or affiliates, and
no successors or assigns of the foregoing, shall have any right of action
against any Reorganized Debtor, or any statutory committee, MLGAF, or any of
their respective present or former members, officers, directors, employees,
advisors, attorneys, or agents, for any act or omission in connection with,
relating to, or arising out of, the Chapter 11 Case, the solicitation of
acceptances of the Plan, the pursuit of confirmation of the Plan, the
consummation of the Plan, or the administration of the Plan or the property to
be distributed under the Plan, except for their willful misconduct.
The foregoing exculpation and limitation on liability shall not, however,
limit, abridge, or otherwise affect the rights, if any, of the Reorganized
Debtors to enforce, sue on, settle, or compromise the Litigation Claims
retained pursuant to Article IV.G hereof.
J. BINDING EFFECT
The Plan shall be binding upon and inure to the benefit of the Debtors,
all present and former holders of Claims against and Interests in the Debtors,
their respective successors and assigns, including, but not limited to, the
Reorganized Debtors, and all other parties-in-interest in this Chapter 11 Case.
K. REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan at any time
prior to the Confirmation Date and to file subsequent plans of reorganization.
If the Debtors revoke or withdraw the Plan, or if Confirmation or Consummation
does not occur, then (i) the Plan shall be null and void in all respects, (ii)
any settlement or compromise embodied in the Plan (including the fixing or
limiting to an amount certain any Claim or Class of Claims), assumption or
rejection of executory contracts or leases effected by the Plan, and any
document or agreement executed pursuant to the Plan shall be deemed null and
void, and (iii) nothing contained in the Plan, and no acts taken in preparation
for consummation of the Plan, shall (a) constitute or be deemed to constitute a
waiver or release of any Claims by or against, or any Interests in, any Debtor
or any other Person, (b) prejudice in any manner the rights of any Debtor or
any Person in any further proceedings involving a Debtor, or (iii) constitute
an admission of any sort by any Debtor or any other Person.
L. PLAN SUPPLEMENT
Any and all exhibits, lists, or schedules not filed with the Plan shall
be contained in the Plan Supplement and filed with the Clerk of the Bankruptcy
Court at least five (5) Business Days prior to date of the commencement of the
Confirmation Hearing. Upon its filing with the Bankruptcy Court, the Plan
Supplement may be inspected in the office of the Clerk of the Bankruptcy Court
during normal court hours. Holders of Claims or Interests may obtain a copy of
the Plan Supplement upon written request to the Debtors in accordance with
Article XIV.L of the Plan.
M. NOTICES
Any notice, request, or demand required or permitted to be made or
provided to or upon a Debtor or Reorganized Debtor under the Plan shall be (i)
in writing, (ii) served by (a) certified mail, return receipt requested, (b)
hand delivery, (c) overnight delivery service, (d) first class mail, or (e)
facsimile transmission, and (iii) deemed to have been duly given or made when
actually delivered or, in the case of notice by facsimile transmission, when
received and telephonically confirmed, addressed as follows:
CAI WIRELESS SYSTEMS, INC.
18 Corporate Woods Boulevard
Third Floor
Albany, New York 12211
Att'n: Wayne R. Barr, Jr., Esq.
Telephone: (518) 462-2632
Facsimile: (518) 462-3045
with a copy to:
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022-3897
Att'n: J. Gregory Milmoe, Esq.
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
N. INDEMNIFICATION OBLIGATIONS
Except as otherwise specifically limited in this Plan, any obligations or
rights of any Debtor to indemnify its present and former directors, officers,
or employees pursuant to such Debtors' certificate of incorporation, by-laws,
policy of providing employee indemnification, applicable state law, or specific
agreement in respect of any claims, demands, suits, causes of action, or
proceedings against such directors, officers, or employees based upon any act
or omission related to such present and former directors', officers', or
employees' service with, for, or on behalf of such Debtor, shall survive
confirmation of this Plan and remain unaffected thereby, irrespective of
whether indemnification is owed in connection with an occurrence before or
after the Petition Date.
O. PREPAYMENT
Except as otherwise provided in this Plan or the Confirmation Order, the
Debtors shall have the right to prepay, without penalty, all or any portion of
an Allowed Claim at any time; PROVIDED, HOWEVER, that any such prepayment shall
not be violative of, or otherwise prejudice, the relative priorities and
parities among the classes of Claims.
P. TERM OF INJUNCTIONS OR STAYS
Unless otherwise provided herein or in the Confirmation Order, all
injunctions or stays provided for in the Chapter 11 Case under Sections 105 or
362 of the Bankruptcy Code or otherwise, and extant on the Confirmation Date
(excluding any injunctions or stays contained in this Plan or the Confirmation
Order), shall remain in full force and effect until the Consummation Date.
Q. GOVERNING LAW
Unless a rule of law or procedure is supplied by federal law (including
the Bankruptcy Code and Bankruptcy Rules), the laws of (i) the State of
Delaware shall govern the construction and implementation of the Plan and any
agreements, documents, and instruments executed in connection with the Plan and
(ii) the laws of the state of incorporation of each Debtor shall govern
corporate governance matters with respect to such Debtor, in either case
without giving effect to the principles of conflicts of law thereof.
Dated: Albany, New York
June 30, 1998
(as modified on September 9, 1998)
CAI WIRELESS SYSTEMS, INC.,
By: /S/
Name: Jared E. Abbruzzese
Title: Chief Executive Officer
PHILADELPHIA CHOICE
TELEVISION, INC.,
By: /S/
Name: John J. Prisco
Title: President
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
Attorneys for CAI Wireless Systems, Inc. and
Philadelphia Choice Television, Inc.
By: /S/
J. Gregory Milmoe
Carlene J. Gatting
Lawrence V. Gelber
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
-and-
Gregg M. Galardi (I.D. #2991)
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
<PAGE>
EXHIBIT A
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
AMENDED CAI CERTIFICATE OF
INCORPORATION AND BY-LAWS
[INCLUDED IN PLAN SUPPLEMENT FILED WITH
THE BANKRUPTCY COURT ON SEPTEMBER 2, 1998]
<PAGE>
EXHIBIT B
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
AMENDED PCT CERTIFICATE OF
INCORPORATION AND BY-LAWS
[INCLUDED IN PLAN SUPPLEMENT FILED WITH
THE BANKRUPTCY COURT ON SEPTEMBER 2, 1998]
<PAGE>
EXHIBIT C
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
SUBSIDIARIES OF CAI WIRELESS SYSTEMS, INC.
<PAGE>
SUBSIDIARIES OF CAI WIRELESS SYSTEMS, INC.
<TABLE>
<CAPTION>
WHOLLY-OWNED SUBSIDIARIES
<S> <C>
Atlantic Microsystems, Inc. AMI License Corp.
Baltimore Choice Television, Inc. Baltimore License, Inc.
Buffalo Choice Television, Inc. Buffalo License, Inc.
CAI/AMI Spectrum Management, Inc. CAI CT Holdings Corp.
CAI Data Systems, Inc. CAI Development, Inc.
CAI Satellite Communications, Inc. CAI Wireless Internet, Inc.
Chenango Associates, Inc. Commonwealth Choice Television, Inc.
Commonwealth License, Inc. Communications Transport, Inc.
Connecticut Choice Television, Inc. Connecticut License, Inc.
Eastern New England TV, Inc. Eastern New England License,Inc.
Greater Albany Wireless Systems, Inc. Greater Albany License, Inc.
Greensboro Choice Television, Inc. Greensboro License, Inc.
Hampton Roads Wireless, Inc. Hampton Roads License, Inc.
Housatonic Wireless, Inc. Long Island Choice Television, Inc.
Long Island License, Inc. Memphis Choice Television, Inc.
Memphis License, Inc. MMDS Satellite Ventures, Inc.
New York Choice Television, Inc. New York License, Inc.
Niskayuna Associates, Inc. Onondaga Wireless, Inc.
Ontega Associates, Inc. Philadelphia Choice Television, Inc.
PC License, Inc. Pittsburgh Choice Television, Inc.
Pittsburgh License, Inc. Rochester Choice Television, Inc.
Rochester License, Inc. Springfield License, Inc.
Syracuse Choice Television, Inc. Syracuse License, Inc.
Washington Choice Television, Inc. Washington License, Inc.
Winston-Salem Choice Television, Inc. Winston-Choice License, Inc.
OTHER EQUITY INTERESTS
CS Wireless Systems, Inc. -- 60.00% (approx.)
TelQuest Satellite Services LLC -- 25.00%
Wireless Programming Cooperative, LLC -- 25.00%
<PAGE>
EXHIBIT D
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
NEW SENIOR NOTES INDENTURE
[INCLUDED IN PLAN SUPPLEMENT FILED WITH
THE BANKRUPTCY COURT ON SEPTEMBER 2, 1998]
<PAGE>
EXHIBIT E
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
DESCRIPTION OF NEW COMMON STOCK
<PAGE>
CAI WIRELESS SYSTEMS, INC.
DESCRIPTION OF NEW COMMON STOCK
The principal terms of the New Common Stock to be issued by Reorganized
CAI under the Plan shall be as follows:
AUTHORIZATION: 25 million shares
INITIAL ISSUANCE: 15 million shares
PAR VALUE: $.01 per share
VOTING RIGHTS: One vote per share
PREEMPTIVE RIGHTS: None
DIVIDENDS: Payable at the discretion of the board of
directors of Reorganized CAI
<PAGE>
EXHIBIT F
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
DESCRIPTION OF NEW MANAGEMENT OPTIONS
<PAGE>
CAI WIRELESS SYSTEMS, INC.
DESCRIPTION OF MANAGEMENT OPTIONS
GRANT OF MANAGEMENT OPTIONS
On or prior to the Consummation Date, CAI or Reorganized CAI, as the case
may be, shall adopt the Management Option Plan, pursuant to which the
Management Option Plan Participants shall be granted the Management Options to
acquire up to 10 percent of the outstanding shares of New Common Stock to be
issued upon consummation of the Plan.
EXERCISE PRICE
The Management Options shall become exercisable upon completion of one or
more Trigger Events, at the following prices:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES (AND %)
REPRESENTED BY MANAGEMENT DEEMED RECOVERY BY HOLDERS
OPTIONS TO BE EXERCISED EXERCISE PRICE OF ALLOWED CLASS CAI-5 CLAIMS{1}
<S> <C> <C>
300,000 (2%) $4.76 60%
300,000 (2%) $6.78 70%
300,000 (2%) $8.79 80%
600,000 (4%) $10.81 90%
</TABLE>
{1} The deemed recovery by holders of Allowed Class CAI-5 Claims (the
"Bondholder Recovery") shall be calculated as (a) the sum of (i) the
accreted value of the New Senior Notes on the date of issuance thereof PLUS
(ii) the value of the New Common Stock distributed to holders of Allowed
Class CAI-5 Claims under the Plan, DIVIDED BY (b) $275 million.
<PAGE>
VESTING
The Management Options shall vest and become exercisable in accordance
with the schedule described in the chart above. Vesting will be accelerated
for 50% of the Management Options if the average trading price of the New
Common Stock is at or above $12.82, corresponding to a 100% Bondholder
Recovery, for 60 consecutive trading days following the Consummation Date
(assuming an appropriate average trading volume). The unvested portion of the
Management Options shall be reduced by 50% (on a pro rata basis from each price
tranche) after the 18{th} monthly anniversary of the Consummation Date. The
unvested portion of the Management Options shall be reduced by 100% after the
24{th} monthly anniversary of the Consummation Date.
In the event of a Participant's termination of employment prior to the 9
month anniversary of the Consummation Date other than for Cause or in the event
of a voluntary termination for Good Reason (as defined in the Employment
Agreements), the Participant Management Options continue unaffected by the
termination and remain subject to the terms of the Management Option Plan,
provided that 50% of such Management Options, to the extent exercisable, must
be exercised within six (6) months of the effective date of the termination of
employment. Any of that 50% portion of the Participant's Management Options
that are not exercisable within such six (6) month period will thereafter
lapse. If a Participant's employment has not terminated within the 9 months
following the Consummation Date, all of that Participant's Management Options
will continue unaffected by any subsequent termination of employment and will
remain subject to the terms of the Management Option Plan.
<PAGE>
EXHIBIT G
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
KEY EMPLOYEES OF CAI
<PAGE>
CAI WIRELESS SYSTEMS, INC.
KEY EMPLOYEES
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION(S) WITH CAI
<S> <C>
Jared E. Abbruzzese Chairman of the Board and Chief Executive Officer
John J. Prisco President and Chief Operating Officer
James P. Ashman Executive Vice President and Chief Financial Officer
George M. Williams Executive Vice President and Chief Administrative Officer
Timothy J. Santora Executive Vice President -- Licensing
Gerald Stevens-Kittner Senior Vice President -- Spectrum Management
Bruce W. Kostreski Senior Vice President -- Engineering and Chief Technical
Officer
Derwood R. Edge Senior Vice President -- Engineering and Chief Systems
Officer
George J. Parise Senior Vice President -- Finance
Wayne R. Barr, Jr. Associate General Counsel
Donna A. Balaguer Vice President -- Government Affairs
Arthur J. Miller Controller
</TABLE>
<PAGE>
EXHIBIT H
TO
REORGANIZATION PLAN OF
CAI WIRELESS SYSTEMS, INC. AND
PHILADELPHIA CHOICE TELEVISION, INC.
MANAGEMENT OPTION PLAN PARTICIPANTS
<PAGE>
CAI WIRELESS SYSTEMS, INC.
MANAGEMENT OPTION PLAN PARTICIPANTS
<PAGE>
<TABLE>
<CAPTION>
NAME POSITION(S) WITH CAI ALLOCATION (AS % OF OPTION POOL)
<S> <C> <C>
Jared E. Abbruzzese Chairman of the Board and Chief 29.034
Executive Officer
John J. Prisco President and Chief Operating Officer 14.517
James P. Ashman Executive Vice President and Chief 11.61
Financial Officer
Gerald Stevens-Kittner Senior Vice President -- Spectrum 8.712
Management
Bruce W. Kostreski Senior Vice President -- Engineering and 8.712
Chief Technical Officer
George J. Parise Senior Vice President -- Finance 5.805
Derwood R. Edge Senior Vice President -- Engineering and 4.644
Chief Systems Officer
Wayne R. Barr, Jr. Associate General Counsel 4.644
George M. Williams Vice President and General Manager 2.322
Donna A. Balaguer Vice President -- Governmental Affairs 2.00
Michael Ray Vice President -- Government and 1.00
Regulatory Affairs
Todd Marshall Director of License Relations 1.00
Richard LaMontagne Vice President -- Project Development 1.00
Sanjay Nagdev RF Program Manager 1.00
Robert Tenten Senior Staff Engineer 1.00
Christopher Gunnufsen Director of Field Operations 1.00
Robert McCarthy Director of Network Engineering 1.00
Yang Weng RF Engineer 1.00
</TABLE>
October 14, 1998
CAI WIRELESS SYSTEMS, INC., as Issuer
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
INDENTURE
Dated as of October 14, 1998
$212,909,624
13% Senior Notes due 2004
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as October 14, 1998
<TABLE>
<CAPTION>
Trust Indenture Indenture
ACT SECTION SECTION
<S> <C>
310(a)(1) 7.11
(a)(2) 7.11
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.11
(b) 7.09; 7.11; 11.02
(c) N.A.
311(a) 7.12
(b) 7.12
(c) N.A.
312(a) 2.05
(b) 11.03
(c) 11.03
313(a) 7.07
(b)(1) N.A.
(b)(2) 7.07
(c) 7.07; 11.02
(d) 7.07
314(a) 4.07; 11.02
(b) N.A.
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) N.A.
(e) 11.05
(f) N.A.
315(a) 7.01
(b) 7.05; 11.02
(c) 7.01
(d) 7.01
(e) 6.11
316(a) (last
sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 9.04
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 11.01
(b) N.A.
(c) 11.01
________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
TABLE OF CONTENTS
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1
1.01. Definitions 1
1.02. Incorporation by Reference of Trust Indenture Act 16
1.03. Rules of Construction 16
ARTICLE TWO. THE SECURITIES 17
2.01. Forms and Dating 17
2.02. Execution and Authentication 17
2.03. Registrar and Paying Agent 18
2.04. Paying Agent to Hold Money in Trust 18
2.05. Securityholder Lists 18
2.06. Transfer and Exchange 18
2.07. Replacement Securities 19
2.08. Outstanding Securities 19
2.09. Treasury Securities 20
2.10. Temporary Securities 20
2.11. Cancellation 20
2.12. Defaulted Interest 20
2.13. CUSIP Number 20
2.14. Deposit of Moneys 21
ARTICLE THREE. REDEMPTION OF SECURITIES 21
3.01. Notices to the Trustee 21
3.02. Selection of Securities To Be Redeemed 21
3.03. Notice of Redemption 21
3.04. Effect of Notice of Redemption 22
3.05. Deposit of Redemption Price 22
3.06. Securities Redeemed or Purchased in Part 22
ARTICLE FOUR. COVENANTS 23
4.01. Payment of Securities 23
4.02. Maintenance of Office or Agency 23
4.03. Corporate Existence 23
4.04. Payment of Taxes and Other Claims 24
4.05. Maintenance of Properties; Insurance; Books and Records; Compliance
with Law 24
4.06. Compliance certificate 24
4.07. SEC Reports 25
4.08. Limitation on Incurrence of Additional Indebtedness 25
4.09. Limitation on Restricted Payments 26
4.10. Limitation on Issuance and Sale of Capital Stock of Restricted
Subsidiaries and Permitted Joint Ventures 29
4.11. Limitations on Liens 29
4.12. Disposition of Proceeds of Asset Sales 29
4.13. Limitation on Transactions with Affiliates 32
4.14. Limitation on Restricted and Unrestricted Subsidiaries 33
4.15. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries and Permitted Joint Ventures 34
<PAGE>
4.16. Intentionally Omitted 34
4.17. Limitation on Sale and Leaseback Transactions 34
4.18. Limitation on Line of Business 35
4.19. Waiver of Stay, Extension or Usury Laws 35
ARTICLE FIVE. SUCCESSOR CORPORATION 35
5.01. When Company May Merge, etc. 35
5.02. Successor Substituted 36
ARTICLE SIX. REMEDIES 37
6.01. Events of Default 37
6.02. Acceleration 38
6.03. Other Remedies 39
6.04. Waiver of Past Defaults 39
6.05. Control by Majority 39
6.06. Limitation on Suits 39
6.07. Right of Holders To Receive Payment 40
6.08. Collection Suit by Trustee 40
6.09. Trustee May File Proofs of Claim 40
6.10. Priorities 40
6.11. Undertaking for Costs 41
6.12. Restoration of Rights and Remedies 41
ARTICLE SEVEN. TRUSTEE 41
7.01. Duties 41
7.02. Rights of Trustee 42
7.03. Individual Rights of Trustee 43
7.04. Trustee's Disclaimer 43
7.05. Notice of Default 43
7.06. Money Held in Trust 43
7.07. Reports by Trustee to Holders 43
7.08. Compensation and Indemnity 44
7.09. Replacement of Trustee 44
7.10. Successor Trustee by Merger, etc. 45
7.11. Eligibility; Disqualification 45
7.12. Preferential Collection of Claims Against Company 45
ARTICLE EIGHT. SATISFACTION AND DISCHARGE OF INDENTURE 46
8.01. Termination of the Company's Obligations 46
8.02. Legal Defeasance and Covenant Defeasance 47
8.03. Application of Trust Money 49
8.04 Repayment to Company 49
8.05. Reinstatement 50
ARTICLE NINE. AMENDMENTS, SUPPLEMENTS AND WAIVERS 50
9.01. Without Consent of Holders 50
9.02. With Consent of Holders 50
9.03. Compliance with Trust Indenture Act 51
9.04. Revocation and Effect of Consents 51
<PAGE>
9.05. Notation on or Exchange of Securities 52
9.06. Trustee May Sign Amendments, etc. 52
ARTICLE TEN. [RESERVED] 52
ARTICLE ELEVEN. MISCELLANEOUS 53
11.01. Trust Indenture Act of 1939 53
11.02. Notices 53
11.03. Communication by Holders with Other Holders 54
11.04. Certificate and Opinion as to Conditions Precedent 54
11.05. Statements Required in Certificate or Opinion 54
11.06. Rules by Trustee, Paying Agent, Registrar 55
11.07. Governing Law 55
11.08. No Interpretation of Other Agreements 55
11.09. No Recourse Against Others 55
11.10. Successors 55
11.11. Duplicate Originals 55
11.12. Separability 55
11.13. Table of Contents, Headings, etc. 55
11.14. Benefits of Indenture 55
11.15. Business Days 56
</TABLE>
SIGNATURES
EXHIBIT A Form of Security
<PAGE>
INDENTURE, dated as of October 14, 1998, between CAI WIRELESS SYSTEMS, INC., a
corporation incorporated under the laws of the State of Connecticut (the
"Company"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 13%
Senior Notes due 2004 (the "Securities").
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.01. DEFINITIONS.
"Accreted Value" means, with respect to any Security, as of any
date of determination prior to maturity, the sum of (a) $469.68 per $1,000
principal amount at maturity and (b) the portion of the excess of the principal
amount of such Security that shall have been accreted thereon through such date
over $469.68, such amount to be so accreted on a daily basis at the rate of 13%
per annum, compounded semi-annually on each April 14 and October 14 from the
Issue Date through the date of determination.
"Acquired Indebtedness" means Indebtedness of a Person or any of
its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with the Company, any
Restricted Subsidiary or a Permitted Joint Venture or assumed in connection
with the acquisition of assets from such Person, including any such
Indebtedness incurred by such Person in connection with, or in anticipation or
contemplation of, such Person's becoming a Restricted Subsidiary or such
acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Company or any Restricted Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Notwithstanding the
foregoing, the term "Affiliate" shall not, with respect to the Company, include
any Wholly Owned Restricted Subsidiary of the Company.
"Agent" means any Registrar or Paying Agent of the Securities.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Subsidiary of the Company, or shall be merged with or into the Company
or any Restricted Subsidiary, (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person which constitute all or
substantially all of the assets of such Person or (c) the acquisition by the
Company or any Restricted Subsidiary of any division or line of business of any
Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of
business pursuant to ordinary business terms), assignment or other transfer or
disposition for value (for purposes of this definition, each, a "disposition")
by the Company, a Restricted Subsidiary or a Permitted Joint Venture
(including, without limitation, pursuant to any Sale and Leaseback Transaction
or any merger or consolidation of any Subsidiary of the Company with or into
another Person (other than the Company or any Wholly Owned Restricted
Subsidiary of the Company) whereby such Subsidiary shall cease to be a
Restricted Subsidiary) to any Person of (a) any Capital Stock of any Restricted
Subsidiary (other than in respect of directors' qualifying shares or
investments by foreign nationals mandated by applicable law) or any interest
held by the Company in any Permitted Joint Venture; (b) all or substantially
all of the properties and assets of any division or line of business of the
Company, a Restricted Subsidiary or a Permitted Joint Venture; or (c) any other
properties or assets of the Company, a Restricted Subsidiary or a Permitted
Joint Venture, other than in the ordinary course of business pursuant to
ordinary business terms; PROVIDED, HOWEVER, that for purposes of Section 4.12,
Asset Sales shall not include: (i) a transaction or series of related
transactions for which the Company or the applicable Restricted Subsidiary or
Permitted Joint Venture receives aggregate consideration of less than $500,000
in any fiscal year; (ii) transactions complying with Section 5.01; (iii) any
disposition to the Company; (iv) any disposition to a Wholly Owned Restricted
Subsidiary or to a Permitted Joint Venture; PROVIDED, HOWEVER that such Wholly
Owned Restricted Subsidiary or Permitted Joint Venture is not subject to any
Payment Restriction; (v) any Lien securing Indebtedness to the extent that such
Lien is granted in compliance with Section 4.11; (vi) any Restricted Payment
(or Permitted Investment) permitted by Section 4.09; (vii) any disposition of
assets or property in the ordinary course of business and on ordinary business
terms to the extent such property or assets are obsolete, worn out or no longer
useful in the Company's or the applicable Restricted Subsidiary's or Permitted
Joint Venture=s business; (viii) if approved by a majority of the members of
the Board of Directors, the disposition or other transfer of shares of common
stock of CS Wireless held by the Company in the nature of a purchase price or
other adjustment for which the Company is obligated pursuant to the terms of
the Participation Agreement; and (ix) if approved by a majority of the members
of the Board of Directors, the lease or sublease, as applicable, of spectrum
rights owned or leased by the Company, a Restricted Subsidiary or a Permitted
Joint Venture to any Person (other than to the Company, any of its Restricted
Subsidiaries or any Permitted Joint Venture, which dispositions are permitted
under clauses (iii) and (iv) above); PROVIDED, HOWEVER, that (A) such lease or
sublease provides for lease payments and other conditions which are no less
favorable to the Company, such Restricted Subsidiary or Permitted Joint Venture
in any material respect than then prevailing market conditions, as evidenced by
a resolution of and determined in good faith by the Board of Directors, in the
case of the Company and the Restricted Subsidiaries, or other equivalent
governing body, in the case of a Permitted Joint Venture, and set forth in an
officer=s certificate delivered to the Trustee, (B) the consideration received
by the Company or such Restricted Subsidiary in respect of such lease or
sublease consists of at least 100% cash or Cash Equivalents, and (C) the term
of such lease or sublease expires prior to the Stated Maturity.
"Asset Sale Offer" shall have the meaning set forth in Section
4.12.
"Asset Sale Purchase Date" shall have the meaning set forth in
Section 4.12.
"Attributable Value" means, as to any particular lease under which
any Person is at the time liable other than a Capitalized Lease Obligation, and
at any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
initial term thereof as determined in accordance with GAAP, discounted from the
last date of such initial term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be so terminated. "Attributable Value" means,
as to a Capitalized Lease Obligation under which any Person is at the time
liable and at any date as of which the amount thereof is to be determined, the
capitalized amount thereof that would appear on the face of a balance sheet of
such Person in accordance with GAAP.
"Bankruptcy Law" means Title 11, United States Code or any similar
law for the relief of debtors.
"Board of Directors" means the board of directors of the Company or
any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Boston,
Massachusetts, Hartford, Connecticut or New York, New York, are authorized or
obligated by law, regulation or executive order to close.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
Preferred Stock of such Person, and (b) with respect to any Person that is not
a corporation, any and all partnership or other equity interests of such
Person.
"Capitalized Lease Obligation" means any obligation under a lease
of (or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of this Indenture,
the amount of any such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (a) any evidence of
Indebtedness with a maturity of 180 days or less 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); (b) certificates of deposit
or acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (c) certificates
of deposit with a maturity of 180 days or less of any financial institution
that is organized under the laws of the United States, any state thereof or the
District of Columbia that are rated at least A-1 by S&P or at least P-1 by
Moody's or at least an equivalent rating category of another nationally
recognized securities rating agency; and (d) repurchase agreements and reverse
repurchase agreements with a term of not more than seven days relating to
marketable direct obligations issued or unconditionally guaranteed by the
government of the United States of America or issued by any agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within 180 days from the date of acquisition; PROVIDED that the
terms of such agreements comply with the guidelines set forth in the Federal
Financial Agreements of Depository Institutions With Securities Dealers and
Others, as adopted by the Comptroller of the Currency on October 31, 1985.
"Closing Price" means on any Trading Day with respect to the per
share price of any shares of Capital Stock the last reported sale price regular
way or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices regular way, in either case on the
New York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on Nasdaq
or, if such shares are not listed or admitted to trading on any national
securities exchange or quoted on such automated quotation system but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reported closing bid and asked
prices regular way on such principal exchange or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on such
automated quotation system and the issuer and principal securities exchange do
not meet such requirements, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm that is selected from time to time by the Company for that purpose.
"Common Stock" means, with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of, such Person's common stock,
whether outstanding at the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it (or any previous successor) pursuant to this Indenture,
and thereafter means such successor.
"Company Additional Debt Ratio" means, at any date of
determination, the ratio of (a) the aggregate principal amount of additional
Indebtedness that shall have been incurred by the Company, the Restricted
Subsidiaries and any Permitted Joint Venture pursuant to Section 4.08(a) and is
outstanding on such date, to (b) the aggregate amount of cash that shall have
been raised by the Company and the Restricted Subsidiaries as of such date in
one or more Qualified Transactions.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the
Board, its Vice-Chairman, its President, an Executive Vice President or a Vice
President, and by any one of its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Worth" means, with respect to the Company, at any
date, the consolidated stockholders' equity of the Company and its Restricted
Subsidiaries and any Permitted Joint Ventures, as determined on a consolidated
basis in accordance with GAAP, less any amounts attributable to Disqualified
Capital Stock of the Company, and any Preferred Stock of any of its Restricted
Subsidiaries or Permitted Joint Ventures (other than to the extent held by the
Company or any of its Wholly Owned Restricted Subsidiaries).
"consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its Subsidiaries (or
its Restricted Subsidiaries, as the case may be) if and to the extent the
accounts of such Person and each of its Subsidiaries (or its Restricted
Subsidiaries, as the case may be) would normally be consolidated, all in
accordance with GAAP. The term "consolidated" shall have a meaning correlative
to the foregoing.
"control" means, with respect to any specified Person, the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Corporate Trust Office" means the corporate trust office of the
Trustee at which at any particular time its corporate trust business shall be
principally administered, which on the date hereof is located in Hartford,
Connecticut.
"covenant defeasance" has the meaning set forth in Section 8.02.
"CS Wireless" means CS Wireless Systems, Inc., a Delaware
corporation. Notwithstanding anything to the contrary contained in this
Indenture, for all purposes of this Indenture, CS Wireless, to the extent that
it is a Subsidiary of the Company, shall be deemed to be an Unrestricted
Subsidiary.
"CS Wireless Investment" means that certain Investment of the
Company in CS Wireless consisting of, collectively, all of the equity interest
in CS Wireless received by the Company as of the Issue Date.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is,
or with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof, in whole
or in part, on or prior to the Final Maturity Date.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Event of Default" has the meaning set forth in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"fair market value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length, free market
transaction, for cash, between an informed and willing seller and an informed
and willing and able buyer, neither of whom is under undue pressure or
compulsion to complete the transaction. Except as provided in the TIA, fair
market value shall be determined (a) with respect to any Asset Sale involving
consideration of less than $5,000,000, by management of the Company and (b) in
all other cases (whether or not involving an Asset Sale), by the Board of
Directors acting in good faith and shall be evidenced by a Board Resolution;
PROVIDED, HOWEVER, that if (i) the aggregate non-cash consideration to be
received by the Company or any Restricted Subsidiary from any Asset Sale shall
reasonably be expected to exceed $5,000,000 or (ii) if the net worth of any
Restricted Subsidiary to be designated as an Unrestricted Subsidiary shall
reasonably be expected to exceed $10,000,000, then fair market value shall be
determined by a nationally recognized investment banking firm.
"FCC" means the Federal Communications Commission, as from time to
time constituted, or if at any time after the execution of this Indenture such
Commission is not existing and performing the applicable duties now assigned to
it, then the body or bodies performing such duties at such time.
"Final Maturity Date" means October 14, 2004.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States of America, which are applicable
from time to time and are consistently applied.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); PROVIDED,
HOWEVER, that the term "guarantee" shall not include (i) endorsements for
collection or deposit in the ordinary course of business and (ii) guarantees
(other than guarantees of Indebtedness) by the Company in respect of assisting
one or more Restricted Subsidiaries in the ordinary course of their respective
businesses, including without limitation guarantees of trade obligations and
operating leases, on ordinary business terms. The term "guarantee" used as a
verb has a corresponding meaning.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"incur" shall have the meaning set forth in Section 4.08; and
"incurrence" and "incurred" shall have meanings correlative to the foregoing.
"Indebtedness" means with respect to any Person, without
duplication, any liability of such Person or such Person's Restricted
Subsidiaries or Permitted Joint Ventures (a) for borrowed money, (b) evidenced
by bonds, debentures, notes or other similar instruments, (c) constituting
Capitalized Lease Obligations, (d) incurred or assumed as the deferred purchase
price of property (including, without limitation, obligations which constitute
wireless channel rights obligations as they have been calculated in the
financial statements of the Company on the Issue Date), or pursuant to
conditional sale obligations and title retention agreements (but excluding
trade accounts payable arising in the ordinary course of business), (e) for
the reimbursement of any obligor on any letter of credit, banker's acceptance
or similar credit transaction, (f) for Indebtedness of others guaranteed by
such Person, (g) for Interest Swap Obligations, (h) for the higher of the
voluntary liquidation preference, involuntary liquidation preference, fixed
redemption price or repurchase price of all Disqualified Capital Stock, (i) the
Attributable Value of any lease permitted under Section 4.17, and (j) for
Indebtedness of any other Person of the type referred to in clauses (a) through
(i) which is secured by any Lien on any property or asset of such first
referred to Person, whether or not such Indebtedness is assumed by such Person
or is not otherwise such Person's legal liability; PROVIDED, HOWEVER, that if
the obligations so secured have not been assumed by such Person or are
otherwise not such Person's legal liability, the amount of such Indebtedness
for the purposes of this definition shall be limited to the lesser of the
amount of such Indebtedness secured by such Lien or the fair market value of
the assets or property securing such Lien. The amount of Indebtedness of any
Person at any date shall be the outstanding principal amount of all
unconditional obligations described above, as such amount would be reflected on
a balance sheet prepared in accordance with GAAP, and the maximum liability at
such date of such Person for any contingent obligations described above.
"Indenture" means this Indenture, as amended, modified or
supplemented from time to time.
"interest" means, with respect to any Security, the amount of all
interest accruing on such Security, including all interest accruing subsequent
to the occurrence of any events specified in Sections 6.01(e) and (f) or which
would have accrued but for any such event, whether or not such claims are
allowable under applicable law.
"Interest Swap Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap or other interest rate hedge
or agreement.
"Investment" by any Person means any direct or indirect (a) loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property (valued at the fair market value thereof as
of the date of transfer) to others or payments for property or services for the
account or use of others, or otherwise), (b) purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other Person (whether by merger, consolidation,
amalgamation or otherwise and whether or not purchased directly from the issuer
of such securities or evidences of Indebtedness) and (c) guarantee or
assumption of the Indebtedness of any other Person (except for an assumption of
Indebtedness for which the assuming Person receives consideration with a fair
market value at least equal to the principal amount of the Indebtedness
assumed). Investments shall exclude extensions of trade credit and advances to
customers and suppliers to the extent made in the ordinary course of business
on ordinary business terms. The amount of any non-cash Investment shall be the
fair market value of such Investment, as determined conclusively in good faith
by management of the Company unless the fair market value of such Investment
exceeds $5,000,000, in which case the fair market value shall be determined
conclusively in good faith by the Board of Directors at the time such
Investment is made. Notwithstanding the foregoing, the purchase or acquisition
of any securities of any other Person to the extent effected with Qualified
Capital Stock of the Company shall not be deemed to be an Investment. The
amount of any Investment shall not be adjusted for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
"Issue Date" means the actual date of original issuance of the
Securities.
"legal defeasance" shall have the meaning set forth in Section
8.02.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any option
or other agreement to sell, and any filing of or any agreement to give, any
security interest).
"Maturity Date" means, with respect to any Security, the date on
which any principal of such Security becomes due and payable as therein or
herein provided, whether at the Final Maturity Date with respect to such
principal or by declaration of acceleration, call for redemption or purchase or
otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company, a Restricted Subsidiary or a Permitted
Joint Venture from such Asset Sale (including distributions of Net Cash
Proceeds by Restricted Subsidiaries and Permitted Joint Ventures to the
Company) net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions, recording fees, title insurance premiums,
appraisers fees and costs reasonably incurred in preparation of any asset or
property for sale), (b) taxes paid or reasonably estimated to be payable as a
result of such Asset Sale (calculated based on the combined state, federal and
foreign statutory tax rates applicable to the Company, the Restricted
Subsidiary or the Permitted Joint Venture consummating such Asset Sale),
(c) repayment of Indebtedness secured by assets subject to such Asset Sale, (d)
appropriate amounts to be provided by the Company or the applicable Restricted
Subsidiary or Permitted Joint Venture as a reserve, in accordance with GAAP
against any liabilities associated with such assets and retained by the
Company, such Restricted Subsidiary or Permitted Joint Venture after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters and the after-tax
cost of any indemnification payments (fixed or contingent) attributable to the
seller's indemnities to the purchaser undertaken by the Company, such
Restricted Subsidiary or Permitted Joint Venture in connection with any such
Asset Sale (but excluding any payments which, by the terms of the indemnities
will not, under any circumstances, be made during the term of the Securities)
and (e) all distributions and other payments required to be made to minority
interests holders in Restricted Subsidiaries or joint ventures (including
Permitted Joint Ventures) as a result of such Asset Sale; PROVIDED, HOWEVER,
that if the instrument or agreement governing such Asset Sale requires the
transferor to maintain a portion of the purchase price in escrow (whether as a
reserve for adjustment of the purchase price or otherwise) or to provide for
indemnification of the transferee for specified liabilities in a maximum
specified amount, the portion of the cash or Cash Equivalents that is actually
placed in escrow or segregated and set aside by the transferor for such
indemnification obligations shall not be deemed to be Net Cash Proceeds until
the escrow terminates or the transferor ceases to segregate and set aside such
funds, in whole or in part, and then only to the extent of the proceeds
released from escrow to the transferor or that are no longer segregated and set
aside by the transferor.
"Officer" means the Chairman of the Board, the President, any
Executive Vice President, any Vice President, the Chief Financial Officer, the
Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of the
Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company.
"Participation Agreement" means that certain agreement dated as of
December 15, 1995 by and among the Company, CS Wireless Systems, Inc. and
Heartland Wireless Communications, Inc., as amended by Amendment No. 1 to
Participation Agreement dated as of February 22, 1996, as such agreement is in
effect on the Issue Date.
"Paying Agent" has the meaning set forth in Section 2.03, except
that, for the purposes of Section 4.12 and Articles Three and Eight, the Paying
Agent shall not be the Company or a Subsidiary of the Company or any of their
respective Affiliates.
"Payment Restriction" shall have the meaning set forth in
Section 4.15.
"Permitted Business" means the Wireless Broadband Business
conducted by the Company and its Restricted Subsidiaries as of the date of the
Indenture and any businesses that in the good faith judgment of the Board of
Directors are reasonably related thereto.
"Permitted Exchange" shall have the meaning set forth in
Section 4.12.
"Permitted Indebtedness" means, without duplication, each of the
following:
(a) the Securities;
(b) the Indebtedness of the Company under the Senior Secured
Facility (and the incurrence by any Restricted Subsidiary of guarantees
thereof) in an aggregate principal amount at any one time outstanding not
to exceed $80 million, less any amounts applied to the permanent
reduction of such credit facility pursuant to Section 4.12;
(c) Indebtedness of the Company and Permitted Subsidiary
Indebtedness outstanding on the Issue Date less any prepayments or
repayments in respect thereof, together with (subject to approval of a
majority of the Board of Directors) Indebtedness incurred by the Company
in satisfaction of any purchase price or other adjustments arising out of
the transactions contemplated by the Participation Agreement;
(d) Interest Swap Obligations; PROVIDED, HOWEVER, that such
Interest Swap Obligations are entered into to protect the Company from
fluctuations in interest rates of its Indebtedness, to the extent the
notional principal amount of such Interest Swap Obligation does not
exceed the principal amount of the Indebtedness to which such Interest
Swap Obligations relate;
(e) Refinancing Indebtedness;
(f) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; PROVIDED, HOWEVER,
that such Indebtedness is extinguished within two business days of
incurrence;
(g) Indebtedness of a Wholly Owned Restricted Subsidiary owed to
and held by the Company or another Wholly Owned Restricted Subsidiary, in
each case which is not subordinated in right of payment to any
Indebtedness of such Restricted Subsidiary, except that (i) any transfer
of such Indebtedness by the Company or a Wholly Owned Restricted
Subsidiary (other than to the Company or to a Wholly Owned Restricted
Subsidiary) and (ii) the sale, transfer or other disposition by the
Company or any Restricted Subsidiary of Capital Stock of a Wholly Owned
Restricted Subsidiary which is owed Indebtedness of another Wholly Owned
Restricted Subsidiary such that it ceases to be a Wholly Owned Restricted
Subsidiary shall, in each case, be an incurrence of Indebtedness by such
Restricted Subsidiary subject to the other provisions of Section 4.08;
(h) Indebtedness of the Company owed to and held by a Wholly
Owned Restricted Subsidiary which is unsecured and subordinated in right
of payment to the payment and performance of the Company's obligations
under this Indenture and the Securities, except that (i) any transfer of
such Indebtedness by a Wholly Owned Restricted Subsidiary (other than to
another Wholly Owned Restricted Subsidiary) and (ii) the sale, transfer
or other disposition by the Company or any Restricted Subsidiary of
Capital Stock of a Wholly Owned Restricted Subsidiary which holds
Indebtedness of the Company such that it ceases to be a Wholly Owned
Restricted Subsidiary shall, in each case, be an incurrence of
Indebtedness by the Company, subject to the other provisions of Section
4.08;
(i) Indebtedness of the Company, any Restricted Subsidiary or
Permitted Joint Venture represented by letters of credit for the account
of the Company, such Restricted Subsidiary or Permitted Joint Venture, as
the case may be, in order to provide security for workers' compensation
claims, payment obligations in connection with self-insurance or similar
requirements in the ordinary course of business pursuant to ordinary
business terms; and
(j) Indebtedness incurred by the Company or any Restricted
Subsidiary the proceeds of which are to be used to fund the operation of
the Wireless Broadband Business of the Company and its Restricted
Subsidiaries; PROVIDED, HOWEVER, that the aggregate principal amount of
Indebtedness incurred and outstanding pursuant to this clause (j) shall
not exceed $5 million in the aggregate at any time outstanding.
"Permitted Investments" means, without duplication, each of the
following:
(a) Investments by the Company or any Wholly Owned Restricted
Subsidiary to acquire the stock or assets of any Person (or Indebtedness
of such Person acquired in connection with a transaction in which such
Person becomes a Restricted Subsidiary) engaged in the Wireless Broadband
Business including related activities and services; PROVIDED, HOWEVER,
that the aggregate amount of Investments made and outstanding pursuant to
this clause (a) which at the time of determination has been made in
entities which are not Wholly Owned Restricted Subsidiaries or Permitted
Joint Ventures shall not at any time exceed $15,000,000 and each such
Investment must be approved by a majority of the Board of Directors;
(b) Investments arising as a result of the receipt by the Company
or any Restricted Subsidiary of non-cash consideration for an Asset Sale
effected in compliance with Section 4.12 (other than pursuant to a
Permitted Exchange);
(c) Investments by the Company or any Wholly Owned Restricted
Subsidiary in any Wholly Owned Restricted Subsidiary (whether existing on
the Issue Date or created thereafter) or any Person that after such
Investment and, as a result thereof, becomes a Wholly Owned Restricted
Subsidiary and Investments in the Company by any Subsidiary of the
Company;
(d) Cash and Cash Equivalents;
(e) Investments in securities of trade creditors, wholesalers or
customers received pursuant to any plan of reorganization or similar
arrangement;
(f) Investments by the Company or any Restricted Subsidiary made
after the Issue Date in Permitted Joint Ventures; and
(g) Investments, including the CS Wireless Investment, existing
on the Issue Date to the extent and in the manner so existing on the
Issue Date.
"Permitted Joint Venture" means any joint venture, partnership or
other Person designated by the Board of Directors, (i) at least a majority of
whose Capital Stock with voting power under ordinary circumstances to elect
directors (or Persons having similar or corresponding powers and
responsibilities) is at the time owned (beneficially or directly) by the
Company and/or by one or more Wholly Owned Restricted Subsidiaries of the
Company, (ii) all of whose Indebtedness, if any, is subject to Section 4.08,
(iii) which is engaged in a Permitted Business, and (iv) in which any
Investment made as a result of designating such Person a Permitted Joint
Venture will not violate the provisions of Section 4.09; PROVIDED, HOWEVER,
that if any participation in such Person requires the Company or any Wholly-
Owned Restricted Subsidiary to contribute or otherwise transfer to such Person
greater than 50% of the spectrum rights then held by the Company or any Wholly-
Owned Restricted Subsidiary in any market(s) in which the Permitted Business is
to be transacted by such Person, the Board of Directors may designate such
Person a "Permitted Joint Venture" only if such Person is a Strategic Partner.
Any such designation shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the resolution giving effect to such designation and an
officer=s certificate certifying that such designation complied with the
foregoing provisions.
"Permitted Joint Venture Additional Debt Ratio" means, at any date
of determination, the ratio of (a) the aggregate principal amount of additional
Indebtedness that shall have been incurred by a Permitted Joint Venture
pursuant to Section 4.08(b) and is outstanding on such date, to (b) the
aggregate amount of cash that shall have been raised by such Permitted Joint
Venture as of such date in one or more Qualified Transactions.
"Permitted Liens" means, without duplication, each of the
following:
(a) Liens in favor of the Trustee in its capacity as trustee for
the Holders;
(b) Liens existing on the Issue Date as in effect on such date;
(c) Liens to secure the Indebtedness permitted under clause (b)
of Permitted Indebtedness;
(d) Liens on property of the Company or its Restricted
Subsidiaries securing up to either $25,000,000 (in the case of the
Company) or $75,000,000 (in the case of the Restricted Subsidiaries)
aggregate principal amount of additional Indebtedness (other than
Permitted Indebtedness) incurred pursuant to Section 4.08, less the sum
of (A) any Indebtedness that is secured by Liens contemplated by clauses
(f) and (s) below, and (B) any unsecured Indebtedness (other than
Permitted Indebtedness) that is incurred by Restricted Subsidiaries
pursuant to Section 4.08;
(e) Liens on property existing on the date of acquisition
thereof; PROVIDED, HOWEVER, that such Liens are not incurred as a result
of, or in connection with or in anticipation of, such transaction and
such Liens relate solely to the property so acquired;
(f) Liens to secure additional Indebtedness incurred by the
Company or a Restricted Subsidiary pursuant to Section 4.08 in the form
of purchase money Indebtedness for all or a part of the purchase price of
Productive Assets or construction costs of acquired or constructed
property which is to be used by the Company or such Restricted Subsidiary
exclusively in the Wireless Broadband Business, including related
activities and services, after the Issue Date; PROVIDED, HOWEVER, that
(i) the Indebtedness secured by such Liens shall not exceed $75,000,000
less the sum of (A) any Indebtedness that is secured by Liens
contemplated by clause (d) above and clause (s) below, and (B) any
unsecured Indebtedness (other than Permitted Indebtedness) that is
incurred by Restricted Subsidiaries pursuant to Section 4.08, and (ii)
such Liens shall not extend to any other property or assets of the
Company or its Restricted Subsidiaries other than the property or assets
so acquired;
(g) Liens on assets of a Permitted Joint Venture to secure
additional Indebtedness incurred by such Permitted Joint Venture pursuant
to Section 4.08;
(h) Liens for taxes, assessments and governmental charges to the
extent not required to be paid under this Indenture;
(i) statutory Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens to the
extent not required to be paid under this Indenture;
(j) pledges or deposits to secure lease obligations or
nondelinquent obligations under workers' compensation, unemployment
insurance or similar legislation (other than ERISA);
(k) Liens to secure the performance of public statutory
obligations that are not delinquent, performance bonds or other
obligations of a like nature (other than for borrowed money), in each
case incurred in the ordinary course of business pursuant to ordinary
business terms;
(l) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances
incurred in the ordinary course of business pursuant to ordinary business
terms not interfering in any material respect with the business of the
Company, any Restricted Subsidiary or any Permitted Joint Venture;
(m) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
letters of credit or bankers' acceptances issued or created for the
account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods in the ordinary course of business pursuant
to ordinary business terms;
(n) judgment and attachment Liens not giving rise to an Event of
Default;
(o) leases or subleases granted to others in the ordinary course
of business pursuant to ordinary business terms and consistent with past
practice not interfering in any material respect with the business of the
Company, any Restricted Subsidiary or any Permitted Joint Venture;
(p) any interest or title of a lessor in the property subject to
any lease, whether characterized as capitalized or operating other than
any such interest or title resulting from or arising out of a default by
the Company, any Restricted Subsidiary or any Permitted Joint Venture of
its obligations under such lease;
(q) Liens arising from filing UCC financing statements for
precautionary purposes in connection with true leases of personal
property that are otherwise permitted under this Indenture and under
which the Company, any Restricted Subsidiary or any Permitted Joint
Venture is a lessee;
(r) Liens with respect to Acquired Indebtedness incurred by the
Company, the Restricted Subsidiaries or Permitted Joint Ventures in
accordance with Section 4.08; PROVIDED, HOWEVER, that (i) such Liens
secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness and were not granted as a result
of, in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness and (ii) such Liens do not extend to or cover any
property or assets of the Company, any Restricted Subsidiary or any
Permitted Joint Venture other than the property or assets that secured
the Acquired Indebtedness prior to the time such Indebtedness was
incurred and are no more favorable to the lienholders than those securing
the Acquired Indebtedness prior to the incurrence of such Acquired
Indebtedness by the Company;
(s) Liens to secure Capitalized Lease Obligations incurred by the
Company, a Restricted Subsidiary or a Permitted Joint Venture to the
extent arising from transactions consummated in compliance with
Section 4.08 and Section 4.17; PROVIDED, HOWEVER, that (i) such Liens do
not extend to or cover any property or assets of the Company, any
Restricted Subsidiary or any Permitted Joint Venture, other than the
property or assets subject to such Capitalized Lease Obligation, and
(ii), in the case of the Company and its Restricted Subsidiaries, the
Indebtedness that is secured by such Liens shall not exceed $75,000,000
less the sum of (A) any Indebtedness that is secured by Liens
contemplated by clauses (d) and (f) above, and (B) any unsecured
Indebtedness (other than Permitted Indebtedness) that is incurred by
Restricted Subsidiaries pursuant to Section 4.08; and
(s) subject to the provisions concerning Refinancing
Indebtedness, and without increasing the amount of Indebtedness permitted
to be secured hereunder, any Lien to secure the refinancing of any
Indebtedness described in the foregoing clauses; PROVIDED, HOWEVER, that
to the extent any such clause limits the amount secured or the asset
subject to such Liens, no refinancing shall increase the assets subject
to such Liens or the amount secured thereby beyond the assets or amounts
set forth in such clauses.
"Permitted Subsidiary Indebtedness" means, collectively, (i)
Indebtedness of Philadelphia Choice Television, Inc. evidenced by a promissory
note with an aggregate remaining principal balance of $9,303.48, and (ii)
Indebtedness of Washington Choice Television, Inc. evidenced by a promissory
note with an aggregate remaining principal balance of $28,657.67.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Philadelphia MDU Operation" means the assets relating to the
provision of video programming to certain multi-dwelling units located in and
around the Philadelphia, PA market.
"Predecessor Security" means, with respect to any particular
Security, every previous Security evidencing all or a portion of the same debt
as that evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 2.07 hereof
in exchange for a mutilated Security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" means, with respect to any debt security, the principal
of the security plus, when appropriate, the premium, if any, on the security
and any interest on overdue principal.
"Productive Assets" means assets of a kind used or usable by the
Company, the Restricted Subsidiaries and Permitted Joint Ventures in wireless
broadband businesses or businesses reasonably related thereto.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Transaction" means the sale of Qualified Capital Stock
of the Company by the Company, of a Restricted Subsidiary by such Restricted
Subsidiary (with the result that it becomes a Permitted Joint Venture), or of
an interest in a Permitted Joint Venture by such Permitted Joint Venture, to
any Person for cash.
"Redemption Date" means, with respect to any Security to be
redeemed, the date fixed by the Company for such redemption pursuant to this
Indenture and the Securities.
"refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part; "refinanced" and "refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any refinancing of Indebtedness of
the Company, any Restricted Subsidiary or any Permitted Joint Venture incurred
in accordance with Section 4.08 (other than pursuant to clauses (d), (e), (f),
(g), (h), (i) and (j) of the definition of Permitted Indebtedness); PROVIDED,
HOWEVER, that such Indebtedness so incurred to refinance such other
Indebtedness (the "Existing Indebtedness") (a) is not in an aggregate principal
amount as of the date of the consummation of such proposed refinancing in
excess of (or if such Indebtedness being incurred to refinance the Existing
Indebtedness is issued with original issue discount, at an original issue price
not in excess of) the sum of (i) the aggregate principal amount outstanding of
the Existing Indebtedness (provided that (A) if such Existing Indebtedness was
issued with original issue discount, in excess of the accreted amount of such
Existing Indebtedness (as determined in accordance with GAAP) as of the date of
such proposed refinancing, (B) if such Existing Indebtedness was incurred
pursuant to a revolving credit facility or any other agreement providing a
commitment for subsequent borrowings, with a maximum commitment under the
agreement governing the Indebtedness proposed to be incurred not in excess of
the maximum commitment amount under such Existing Indebtedness and (C) any
amount of such Existing Indebtedness owned or held by the Company, any of its
Wholly Owned Restricted Subsidiaries or any Permitted Joint Venture shall not
be deemed to be outstanding for the purposes hereof) as of the date of such
proposed refinancing, PLUS (ii) the amount of any premium required to be paid
under the terms of the instrument governing such Existing Indebtedness, PLUS
(iii) the amount of reasonable expenses incurred by the Company, a Restricted
Subsidiary or a Permitted Joint Venture in connection with such refinancing and
(b) does not have (i) a Weighted Average Life to Maturity that is less than the
Weighted Average Life to Maturity of the Existing Indebtedness or (ii) a final
maturity earlier than the final maturity of the Existing Indebtedness;
PROVIDED, FURTHER, HOWEVER, that (x) if such Existing Indebtedness is
subordinate or pari passu to the Securities, then such Indebtedness proposed to
be incurred to refinance the Existing Indebtedness shall be subordinate or pari
passu to the Securities at least to the same extent and in the same manner as
the Existing Indebtedness and (y) such Indebtedness proposed to be incurred to
refinance the Existing Indebtedness is not incurred more than three months
prior to the complete retirement or defeasance of the Existing Indebtedness
with the proceeds thereof.
"Registrar" has the meaning set forth in Section 2.03.
"Restricted Payment" shall have the meaning set forth in Section
4.09.
"Restricted Subsidiary" means any Subsidiary of the Company which,
as of the determination date, is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing
for the leasing to the Company, a Restricted Subsidiary or a Permitted Joint
Venture of any property, whether owned by the Company, any Restricted
Subsidiary or a Permitted Joint Venture at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company, such Restricted
Subsidiary or such Permitted Joint Venture to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such property.
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, or if at any time after the execution of this Indenture such
Commission is not existing and performing the applicable duties now assigned to
it, then the body or bodies performing such duties at such time.
"Security" or "Securities" means the security or securities that
are issued under this Indenture, as amended or supplemented from time to time
pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Senior Secured Facility" means the financing agreement to be
entered into on or prior to the Confirmation Date by the Company, the lenders
named therein, and the agent named therein, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, as such facility may be amended, restated, supplemented,
refinanced, extended or otherwise modified from time to time.
"S&P" means Standard & Poor's Corporation, and its successors.
AStrategic Partner@ means (i) any Person engaged in the
telecommunications business (including, without limitation, Wireless Broadband
Business) which, both as of the Trading Day immediately before the day of
determination and the Trading Day immediately after the day of determination,
has a Total Market Capitalization of at least $500 million (or, in the case of
a private company, a fair market equivalent value, as determined by a
nationally recognized investment bank), and (ii) any Person which is majority
owned and controlled by any Person or Persons referred to in clause (i) of this
definition. In calculating Total Market Capitalization for the purpose of
clause (i) of this definition, the consolidated Indebtedness of such Person,
solely when calculated as of the Trading Day immediately after the date of
determination, will be calculated after giving effect to the transactions to
occur on such date of determination (including any Indebtedness incurred in
connection with any sale of Capital Stock to such Person) and the Closing Price
of the Common Stock of such Person, solely when calculated as of the Trading
Day immediately after the day of determination, will be deemed to be the
Closing Price of such Common Stock on such succeeding Trading Day, subject to
the last sentence of the definition of ATotal Market Capitalization.@ For
purposes of this definition, the date of determination shall be the date on
which any transaction which requires a determination of whether a Person is a
Strategic Partner under this Indenture shall have been consummated.
"Subsidiary," with respect to any Person, means (a) any corporation
of which at least a majority of the outstanding Voting Stock shall at the time
be owned, directly or indirectly, by such Person or (b) any other Person of
which at least a majority of the outstanding Voting Stock is at the time,
directly or indirectly, owned by such Person.
"Surviving Entity" shall have the meaning set forth in Section
5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
'' 77aaa-77bbbb) as in effect on the Issue Date (other than with respect to
Section 9.03); PROVIDED, HOWEVER, that in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by such
amendment, the Trust Indenture Act of 1939 as so amended.
"Total Market Capitalization" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Strategic
Partner"), the sum of (1) the consolidated Indebtedness of such Person and its
Subsidiaries on such day, plus (2) the product of (i) the aggregate number of
outstanding primary shares of Common Stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of Common Stock of such Person) and (ii) the average
Closing Price of such Common Stock over the 20 consecutive Trading Days
immediately preceding such day, plus (3) the liquidation value of any
outstanding shares of Preferred Stock of such Person on such day. If no such
Closing Price exists with respect to shares of any such class, the value of
such shares for purposes of clause (2) of the preceding sentence shall be
determined by the Company's Board of Directors in good faith and evidenced by a
Board Resolution.
"Trading Day" means with respect to a securities exchange or
automated quotation system, a day on which such exchange or system is open for
a full day of trading.
"Trust Officer" means any officer in the Corporate Trustee
Administration Department of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces such party (or any previous successor) in accordance with
the provisions of this Indenture, and thereafter means such successor.
"Unrestricted Subsidiary" means a Subsidiary of the Company created
after the Issue Date and so designated by a resolution adopted by the Board of
Directors in accordance with Section 4.14.
"U.S. Government Securities" means securities that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government obligation or a specific payment of principal of or interest on any
such U.S. Government obligation held by such custodian for the account of the
holder of such depository receipt; PROVIDED that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government obligation or the specific payment
of principal of or interest on the U.S. Government obligation evidenced by such
depository receipt.
"Voting Stock" means, with respect to any Person, any class or
classes of Capital Stock in such Person entitling the holders thereof (whether
at all times or only so long as no senior class of Capital Stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or other equivalent governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Preferred Stock at any date, the number of years obtained by
dividing (a) the then outstanding aggregate principal amount or liquidation
preference of such Indebtedness or Preferred Stock into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal or liquidation preference, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest one-
twelfth) which will elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Subsidiary of such Person of which all the outstanding Capital Stock (other
than directors' qualifying shares) are owned by such Person or any Wholly Owned
Restricted Subsidiary of such Person. Unless otherwise indicated, references
to "Wholly Owned Restricted Subsidiaries" shall mean Wholly Owned Restricted
Subsidiaries of the Company.
"Wireless Broadband Business" means transmitting and receiving
video, voice or data primarily through wireless broadband transmission
facilities, alone or in conjunction with satellite transmission services,
utilizing wireless channels for any commercial purpose permitted by the FCC and
other activities directly related thereto.
1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture
(unless expressly excluded herefrom). The following TIA terms used in this
Indenture have the following meanings:
"COMMISSION" means the SEC;
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Securityholder or Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
and
"OBLIGOR" on the indenture securities means the Company or any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
1.03. RULES OF CONSTRUCTION.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) words in the singular include the plural, and words in the
plural include the singular;
(c) "or" is not exclusive;
(d) provisions apply to successive events and transactions;
(e) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(f) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to $ or dollars shall refer to the lawful
currency of the United States of America.
ARTICLE TWO
THE SECURITIES
2.01. FORMS AND DATING.
The Securities and the Trustee's certificate of authentication
thereon shall be in substantially the form of Exhibit A hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with any applicable law or with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such Securities, as evidenced by their execution thereof.
The Securities shall be issuable only in registered form without coupons.
The definitive Securities shall be printed, typewritten,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of the Securities,
annexed hereto as EXHIBIT A shall constitute, and are hereby expressly made, a
part of this Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall execute the Securities on behalf of the Company
by either manual or facsimile signature. The Company's seal shall be
impressed, affixed, imprinted or reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security or at any time
thereafter, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Security. Such
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate Securities for original issue in an
aggregate principal amount at maturity not to exceed $212,909,624 upon receipt
of an Officers' Certificate signed by two Officers of the Company directing the
Trustee to authenticate the Securities and certifying that all conditions
precedent to the issuance of the Securities contained herein have been complied
with. The aggregate Accreted value at maturity of Securities outstanding at
any time may not exceed $212,909,624, except as provided in Section 2.07.
With the prior written approval of the Company, the Trustee may
appoint an authenticating agent acceptable to the Company to authenticate
Securities. Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. Such authenticating agent shall have the same
rights as the Trustee in any dealings hereunder with the Company or with any of
the Company's Affiliates.
2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan, The City of New York, State of New York)
where Securities may be presented for registration of transfer or for exchange
(the "Registrar"), an office or agency (which shall be located in the Borough
of Manhattan, The City of New York, State of New York) where Securities may be
presented for payment of principal and interest, if any , (the "Paying Agent"),
and an office or agency where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-Registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
Except as otherwise expressly provided in this Indenture, the Company or any
Affiliate thereof may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Registrar or Paying Agent or
agent for service of notices and demands. The Company shall notify the Trustee
of the name and address of any such Registrar or Paying Agent. If the Company
fails to maintain a Registrar, Paying Agent or agent for service of notices and
demands, or fails to give the foregoing notice, the Trustee shall act as such
and shall be entitled to appropriate compensation in accordance with
Section 7.08.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
Each Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of the Accreted
Value of and interest, if any, on, the Securities (whether such money has been
distributed to it by the Company or any other obligor on the Securities), and
the Company (or any other obligor on the Securities) and the Paying Agent shall
notify the Trustee of any default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate the money and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to
distribute all money held by it to the Trustee and account for any funds
disbursed and the Trustee may at any time during the continuance of any default
in the payment of the Accreted Value of and interest, if any, on the
Securities, upon written request to a Paying Agent, require such Paying Agent
to pay all money held by it to the Trustee and to account for any funds
distributed. Upon doing so, the Paying Agent (other than an obligor on the
Securities) shall have no further liability for the money so paid over to the
Trustee.
2.05. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ' 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at such times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, which
list may be conclusively relied upon by the Trustee.
2.06. TRANSFER AND EXCHANGE.
When Securities are presented to the Registrar or a co-Registrar
with a request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or
make the exchange as requested if its requirements for such transaction are
met; PROVIDED, HOWEVER, that the Securities surrendered for transfer or
exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar or co-Registrar,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Securities at the Registrar's or co-
Registrar's request. No service charge shall be made for any transfer,
exchange or redemption, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.07, 2.10, 3.06, 4.12
or 9.05). The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Security (a) during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(b) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Security being redeemed in part.
2.07. REPLACEMENT SECURITIES.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by the
Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Paying Agent or Registrar from any loss
which any of them may suffer if a Security is replaced. The Company may charge
such Holder for its reasonable, out-of-pocket expenses in replacing a Security,
including reasonable fees and expenses of counsel. Every replacement Security
is an additional obligation of the Company.
In case any such mutilated, lost, destroyed or wrongfully taken
Security has become or is about to become due and payable within one year, the
Company in its discretion may, subject to compliance with the foregoing
conditions, instead of issuing a new Security, pay such Security.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
2.08. OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.
A Security does not cease to be outstanding because the Company or any of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a BONA FIDE purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.07.
If on a Redemption Date or a Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds cash or U.S. Government
Obligations sufficient to pay all of the Accreted Value and interest, if any,
due on the Securities and payable on that date, and is not prohibited from
paying such cash or U.S. Government Obligations to the Holders of such
Securities pursuant to the terms of this Indenture, then on and after that date
such Securities cease to be outstanding and interest on them shall cease to
accrue.
2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or any of its Affiliates shall be disregarded, except
that, for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities that the
Trustee knows or has reason to know are so owned shall be disregarded.
2.10. TEMPORARY SECURITIES.
Until definitive Securities are prepared and ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as definitive
Securities.
2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
promptly cancel and, at the written direction of the Company, shall dispose of
all Securities surrendered for transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for cancellation. If
the Company shall acquire any of the Securities, such acquisition shall not
operate as a redemption or satisfaction of the Indebtedness represented by such
Securities unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
2.12. DEFAULTED INTEREST.
If the Company defaults on a payment of the Accreted Value of any
Securities that become due prior to the Final Maturity Date or on the payment
of the Accreted Value of the Securities on the Final Maturity Date, it shall
pay interest from time to time on demand, plus (to the extent permitted by law)
interest on any overdue amounts of such interest, in accordance with the terms
hereof, to the persons who are Holders on a subsequent special record date,
which date shall be at least five Business Days prior to the payment date. The
Company shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
the Company shall mail to each Holder a notice that states the special record
date, the payment date and the amount of such interest, if any, to be paid.
2.13. CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP" number (if
then generally in use), and if so, the Trustee may use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; PROVIDED,
HOWEVER, that any such notice may state that no representation is made as to
the correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the
Trustee of any change in the CUSIP number.
2.14. DEPOSIT OF MONEYS.
On or before each Maturity Date, the Company shall deposit with the
Trustee or Paying Agent in immediately available funds money sufficient to make
cash payments, if any, due on such Maturity Date in a timely manner which
permits the Paying Agent to remit payment to the Holders on such Maturity Date.
ARTICLE THREE
REDEMPTION OF SECURITIES
3.01. NOTICES TO THE TRUSTEE.
If the Company elects to redeem Securities pursuant to Paragraph
2(a) of the Securities, it shall notify the Trustee of the Redemption Date and
principal amount of Securities to be redeemed.
The Company shall notify the Trustee by an Officers' Certificate,
stating that such redemption will comply with the provisions hereof and of the
Securities, of any redemption at least 45 days before the Redemption Date.
3.02. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed at any time, the
particular Securities or portions thereof to be redeemed shall be selected from
the outstanding Securities not previously called for redemption pro rata, by
lot or by such other method as the Trustee considers to be fair and
appropriate. In any proration pursuant to this Section, the Trustee shall make
such adjustments, reallocations and eliminations as it shall deem proper to the
end that the principal amount at maturity of Securities so prorated shall be
$1,000 or a multiple thereof, by increasing or decreasing or eliminating the
amount which would be allocable to any Holder on the basis of exact proportion
by an amount not exceeding $1,000. The Trustee in its discretion may determine
the particular Securities (if there are more than one) registered in the name
of any Holder which are to be redeemed, in whole or in part. No Securities
with a principal amount at maturity of $1,000 or less shall be redeemed in
part.
The Trustee shall promptly notify the Company and the Registrar in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the
portion of the Accreted Value of such Security which has been or is to be
redeemed.
3.03. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at the address of such
Holder appearing in the Security register maintained by the Registrar.
All notices of redemption shall identify the Securities to be
redeemed and shall state:
(a) the Redemption Date;
(b) the Accreted Value to be paid;
(c) that, unless the Company defaults in making the redemption
payment, Securities called for redemption cease to accrete in value on
and after the Redemption Date, and the only remaining right of the
Holders of such Securities is to receive payment of the Accreted Value
upon surrender to the Paying Agent of the Securities redeemed;
(d) if any Security is to be redeemed in part, the portion of the
Accreted Value (equal to $1,000 principal amount at maturity or any
integral multiple thereof) of such Security to be redeemed and that on
and after the Redemption Date, upon surrender for cancellation of such
original Security to the Paying Agent, a new Security or Securities in
the aggregate principal amount equal to the unredeemed portion thereof
will be issued without charge to the Holder;
(e) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price and the name and address
of the Paying Agent;
(f) the CUSIP number, if any, relating to such Securities, but no
representation is made as to the correctness or accuracy of any such
CUSIP numbers; and
(g) the paragraph of the Securities pursuant to which the
Securities are being redeemed.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's written
request, by the Trustee in the name and at the expense of the Company.
3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date at the Accreted Value.
Upon surrender to the Paying Agent, such Securities called for redemption shall
be paid at the Accreted Value on the Redemption Date.
3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with
the Paying Agent an amount of money in same day funds sufficient to pay the
Accreted Value of all the Securities or portions thereof which are to be
redeemed on that date.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Accreted Value, the Securities to
be redeemed will cease to accrete in value on and after the applicable
Redemption Date, whether or not such Securities are presented for payment. If
any Security called for redemption shall not be so paid upon surrender thereof
for redemption, the Accreted Value shall, until paid, bear interest from the
Redemption Date at the rate provided in the Securities, and the Company shall
pay to the Holder the Accreted Value, plus interest from the Redemption Date at
the rate provided in the Securities.
3.06. SECURITIES REDEEMED OR PURCHASED IN PART.
Upon surrender to the Paying Agent of a Security which is to be
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder in aggregate principal amount equal to, and in exchange for, the
unredeemed portion of the principal amount of maturity of the Security so
surrendered that is not redeemed.
ARTICLE FOUR
COVENANTS
4.01. PAYMENT OF SECURITIES.
The Company shall pay, or cause to be paid, the Accreted Value of
and interest, if any, on the Securities on the dates and in the manner provided
in the Securities and this Indenture. A payment of the Accreted Value or
interest, if any, shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company or any
Affiliate thereof) holds on that date money designated and set aside for and
sufficient to pay such amount in a timely manner and is not prohibited from
paying such money to the Holders of the Securities pursuant to the terms of
this Indenture.
The Company shall pay interest from time to time on demand on the
Accreted Value of any Securities that is not paid when due and, to the extent
lawful, interest on overdue amounts of such interest, at the rate and in the
manner provided in the Securities.
4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency where Securities may
be surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the address of the Trustee as set forth in Section 11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the office of the Trustee
located at Goodwin Square, 225 Asylum Street, Hartford, Connecticut 06120, as
such office of the Company in accordance with this Section 4.02.
4.03. CORPORATE EXISTENCE.
Subject to Article Five, the Company shall do or cause to be done
all things necessary to and will cause each of the Restricted Subsidiaries and
any Permitted Joint Ventures to, preserve and keep in full force and effect the
corporate or partnership existence and rights (charter and statutory), licenses
and/or franchises of the Company and each of the Restricted Subsidiaries and
any Permitted Joint Ventures; PROVIDED, HOWEVER, that neither the Company nor
any of the Restricted Subsidiaries or any Permitted Joint Venture shall be
required to preserve any such rights, licenses or franchises if the Board of
Directors shall reasonably determine that (a) the preservation thereof is no
longer desirable in the conduct of the business of the Company and the
Restricted Subsidiaries and any Permitted Joint Ventures taken as a whole and
(b) the loss thereof is not materially adverse to either the Company and the
Restricted Subsidiaries or any Permitted Joint Venture taken as a whole or to
the ability of the Company to otherwise satisfy its obligations hereunder.
4.04. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon the Company or any of the
Restricted Subsidiaries or any Permitted Joint Venture or upon the income,
profits or property of the Company or any of the Restricted Subsidiaries or any
Permitted Joint Venture, and (b) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon the property of the
Company or any Restricted Subsidiary or any Permitted Joint Venture; PROVIDED,
HOWEVER, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and which
stay the forfeiture of any property or assets of the Company and the Restricted
Subsidiaries or any Permitted Joint Venture and for which adequate provision
has been made or where the failure to effect such payment or discharge is not
adverse in any material respect to the Company.
4.05. MAINTENANCE OF PROPERTIES; INSURANCE; BOOKS AND RECORDS;
COMPLIANCE WITH LAW.
(a) The Company shall, and shall cause each of the Restricted
Subsidiaries and any Permitted Joint Ventures to, cause all properties and
assets to be maintained and kept in good condition, repair and working order
(reasonable wear and tear excepted) and supplied with all necessary equipment,
and shall cause to be made all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto, as shall be reasonably
necessary for the proper conduct of its business; PROVIDED, HOWEVER, that
nothing in this Section 4.05(a) shall prevent the Company or any of the
Restricted Subsidiaries or any Permitted Joint Venture from discontinuing the
operation and maintenance of any of its properties or assets if such
discontinuance is, in the judgment of the Board of Directors or such Restricted
Subsidiary or Permitted Joint Venture, desirable in the conduct of its business
and if such discontinuance is not materially adverse to either the Company and
the Restricted Subsidiaries and any Permitted Joint Ventures taken as a whole
or the ability of the Company to otherwise satisfy its obligations hereunder.
(b) The Company shall, and shall cause each of the Restricted
Subsidiaries and any Permitted Joint Ventures to, maintain with financially
sound and reputable insurers such insurance as may be required by law (other
than with respect to any environmental impairment liability insurance not
commercially available) and such other insurance to such extent and against
such hazards and liabilities, as is customarily maintained by companies
similarly situated (which may include self-insurance in the same form as is
customarily maintained by companies similarly situated).
(c) The Company shall, and shall cause each of the Restricted
Subsidiaries and any Permitted Joint Ventures to, keep proper books of record
and account, in which full and correct entries shall be made of all business
and financial transactions of the Company and each Restricted Subsidiary and
Permitted Joint Venture and reflect on its financial statements adequate
accruals and appropriations to reserves, all in accordance with GAAP
consistently applied to the Company and the Restricted Subsidiaries and any
Permitted Joint Ventures taken as a whole.
(d) The Company shall and shall cause each of the Restricted
Subsidiaries and any Permitted Joint Ventures to comply with all statutes,
laws, ordinances, or government rules and regulations to which it is subject,
non-compliance with which would materially adversely affect the business,
earnings, properties, assets or condition (financial or otherwise) of the
Company and the Restricted Subsidiaries and any Permitted Joint Ventures taken
as a whole.
4.06. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee within 60 days after
the end of each of the Company's first three fiscal quarters and within 90 days
after the end of the Company's fiscal year an Officers' Certificate stating
whether or not the signers know of any default in the performance by the
Company of its obligations under this Indenture. The Company shall also notify
the Trustee within 10 days of any event which is, or after notice or lapse of
time or both would become, an Event of Default under this Indenture. The
certificate shall describe any such Default, Event of Default or default and
its status. The first certificate to be delivered pursuant to this Section
4.06(a) shall be for the first fiscal quarter of the Company beginning after
the Issue Date. The Company shall also deliver within 90 days after the end of
the Company's fiscal year a certificate to the Trustee from its principal
executive, financial or accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Indenture,
such compliance to be determined without regard to any period of grace or
requirement of notice provided herein or therein.
(b) The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year a written statement by the Company's independent
certified public accountants stating that their audit examination has included
a review of the terms of this Indenture and the Securities as they relate to
accounting matters.
4.07. SEC REPORTS.
The Company shall deliver to the Trustee, within 15 days after it
files them with the Commission, copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act within the time periods prescribed under such rules
and regulations. Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act or otherwise report on an annual and quarterly basis on forms
provided for such annual and quarterly reporting pursuant to rules and
regulations promulgated by the Commission, the Company shall continue to file
with the Commission and provide to the Trustee such annual and interim reports
on Forms 10-K and 10-Q, respectively, as the Company would be required to file
were it subject to such reporting requirements within the time periods
prescribed under such rules and regulations. The Company shall not be
obligated to file any such reports with the Commission if the Commission does
not permit such filings but shall remain obligated to provide such reports to
the Trustee and the holders within the periods of time referred to in the
preceding sentence. The Company also shall comply with the other provisions of
TIA ' 314(a). In addition, the Company shall cause its annual reports to
shareholders and any quarterly or other financial reports furnished by it to
shareholders generally to be filed with the Trustee and mailed no later than
the date such materials are mailed or made available to the Company's
shareholders, to the Holders at their addresses as set forth in the register of
Securities maintained by the Registrar.
4.08. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, create,
incur, assume, guarantee, acquire or become liable, contingently or otherwise,
for (collectively "incur") any Indebtedness other than Permitted Indebtedness
(it being expressly understood that no Restricted Subsidiary may incur
(pursuant to a guarantee or assumption thereof) any Permitted Indebtedness
which has been incurred by the Company) or issue any Disqualified Capital
Stock. Notwithstanding the foregoing limitations, the Company, its Restricted
Subsidiaries and any Permitted Joint Ventures may incur additional Indebtedness
(including, without limitation, Acquired Indebtedness) or issue Disqualified
Capital Stock from and after the date as of which the aggregate amount of cash
raised by the Company and/or the Restricted Subsidiaries in one or more
Qualified Transactions equals or exceeds $25 million, if after giving PRO FORMA
effect to the incurrence of such Indebtedness or the issuance of such
Disqualified Capital Stock, the Company Additional Debt Ratio would not exceed
2.00 to 1, PROVIDED, HOWEVER, that in no event may the aggregate principal
amount of such additional Indebtedness that is permitted under this clause (a)
(i) exceed $150,000,000 less the aggregate principal amount of additional
Indebtedness that is outstanding from time to time under clause (b), and (ii)
that is incurred by Restricted Subsidiaries and/or is secured by Liens pursuant
to clauses (d), (f) and (s) of the definition of "Permitted Liens", exceed
$75,000,000.
(b) The Company shall not permit any Permitted Joint Venture to
incur any Indebtedness other than Permitted Indebtedness (it being expressly
understood that no Permitted Joint Venture may incur (pursuant to a guaranty or
assumption thereof) any Permitted Indebtedness which has been incurred by the
Company or a Restricted Subsidiary) or issue any Disqualified Capital Stock.
Notwithstanding the foregoing limitations, a Permitted Joint Venture may incur
additional Indebtedness (including, without limitation, Acquired Indebtedness)
or issue Disqualified Capital Stock from and after the date as of which the
aggregate amount of cash raised by such Permitted Joint Venture in one or more
Qualified Transactions equals or exceeds $25,000,000, if after giving PRO FORMA
effect to the incurrence of such Indebtedness or the issuance of such
Disqualified Capital Stock, the Permitted Joint Venture Additional Debt Ratio
would not exceed 2.00 to 1, PROVIDED, HOWEVER, that in no event may the
aggregate principal amount of such additional Indebtedness that is permitted
under this clause (b) exceed $150,000,000 less the aggregate principal amount
of additional Indebtedness that may be outstanding from time to time under
clause (a).
(c) Any Indebtedness of an entity existing at the time it becomes
a Restricted Subsidiary (whether by merger, consolidation, acquisition of
Capital Stock or otherwise) or is merged with or into the Company or any
Restricted Subsidiary shall be deemed to be incurred as of the date such entity
becomes a Restricted Subsidiary or the date of such merger.
4.09. LIMITATION ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly:
(a) declare or pay any dividend or make any distribution (other
than dividends or distributions payable in Qualified Capital Stock of the
Company or payable by any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary or, in the case of a Permitted Joint
Venture, payable to the Company, its Wholly Owned Restricted Subsidiaries
and any other joint venture partner(s) in proportion to their respective
interests in the Permitted Joint Venture) on shares of Capital Stock of
the Company or any Restricted Subsidiary or Permitted Joint Venture;
(b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Restricted Subsidiary or Permitted
Joint Venture or any warrants, rights or options to acquire shares of any
class of such Capital Stock, other than (i) the exchange of such Capital
Stock or any warrants, rights or options to acquire shares of any class
of such Capital Stock for Qualified Capital Stock of the Company or
warrants, rights or options to acquire Qualified Capital Stock of the
Company or (ii) to the extent that such Capital Stock or warrants, rights
or options are owned by the Company or any Wholly Owned Restricted
Subsidiary or Permitted Joint Venture;
(c) make any principal payment on, or purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, any Indebtedness that is subordinate or junior in right of
payment to the Securities (other than any such Indebtedness owing to the
Company or any Wholly Owned Restricted Subsidiary or Permitted Joint
Venture); or
(d) make any Investment (other than any Permitted Investments)
after the Issue Date.
(each of the foregoing prohibited actions set forth in clauses (a), (b), (c)
and (d) being referred to as a "Restricted Payment") if at the time of such
Restricted Payment or immediately after giving effect thereto (i) a Default or
an Event of Default under this Indenture shall have occurred and be continuing
or would result therefrom, (ii) the Company, the Restricted Subsidiaries or
Permitted Joint Ventures are not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.08, or (iii) the aggregate amount of Restricted Payments made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined by the
Board of Directors in good faith) exceeds or would exceed the sum of:
(A) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Restricted Subsidiary) from the
issuance and sale subsequent to the Issue Date of Qualified Capital Stock
of the Company (excluding any net proceeds from any public offering of
any Qualified Capital Stock or any issuance or sale of Capital Stock
pursuant to a Qualified Transaction and excluding (i) any Qualified
Capital Stock of the Company paid as a dividend on any Capital Stock of
the Company or of any Restricted Subsidiary and (ii) any Qualified
Capital Stock of the Company with respect to which the purchase price
thereof has been financed directly or indirectly using funds (x) borrowed
from the Company or from any Restricted Subsidiary or Permitted Joint
Venture, unless and until and to the extent such borrowing is repaid, or
(y) contributed, extended, guaranteed or advanced by the Company or by
any Restricted Subsidiary or Permitted Joint Venture (including, without
limitation, in respect of any employee stock ownership or benefit plan)),
PLUS
(B) without duplication of any amounts included in the
immediately preceding subclause (A), 100% of the aggregate net proceeds
(determined pursuant to the penultimate paragraph of this Section 4.09)
received by the Company from the issuance and sale (other than to any
Restricted Subsidiary) of any Qualified Capital Stock of the Company upon
the conversion of, or in exchange for, any Indebtedness of the Company or
any Restricted Subsidiary (other than any Indebtedness outstanding
immediately after the Issue Date), PLUS
(C) an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from cash dividends, repayments of
loans or advances in cash, or other transfers of cash, in each case to
the Company or to any Wholly Owned Restricted Subsidiary from
Unrestricted Subsidiaries, or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (in each case valued as provided
in Section 4.14), not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made by the Company or
any Restricted Subsidiary in such Unrestricted Subsidiary and which was
treated as a Restricted Payment under this Indenture, PLUS
(D) without duplication of the immediately preceding subclause
(C), an amount equal to the lesser of the cost or net cash proceeds
received upon the sale or other disposition of any Investment made after
the Issue Date which had been treated as a Restricted Payment.
Notwithstanding the foregoing, these provisions do not prohibit:
(1) the payment of any dividend or the making of any distribution
within 60 days after the date of its declaration if the dividend or
distribution would have been permitted on the date of declaration; or
(2) other than out of the proceeds of a Qualified Transaction,
the acquisition of Capital Stock of the Company or any Restricted
Subsidiary or warrants, options or other rights to acquire such Capital
Stock through the application of the net proceeds of any capital
contribution (other than from a Restricted Subsidiary or Permitted Joint
Venture) or a substantially concurrent sale for cash (other than to a
Restricted Subsidiary or Permitted Joint Venture) of Qualified Capital
Stock of the Company or warrants, options or other rights to acquire
Qualified Capital Stock of the Company; or
(3) the acquisition of Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities, either (i)
solely in exchange for shares of Qualified Capital Stock of the Company
(or warrants, options or other rights to acquire Qualified Capital Stock
of the Company) or for Indebtedness of the Company which is subordinate
or junior in right of payment to the Securities, at least to the extent
that the Indebtedness being acquired is subordinated to the Securities,
is not in an aggregate principal amount in excess of (or if such
Indebtedness is issued with original issue discount, at an original issue
price not in excess of) the aggregate principal amount of the
Indebtedness being acquired (or if such acquired Indebtedness was issued
with original issue discount, in excess of the accreted amount of such
Indebtedness (as determined in accordance with GAAP)) and has a Weighted
Average Life to Maturity and final maturity no less than that of the
Indebtedness being exchanged or (ii) other than out of the proceeds of a
Qualified Transaction, through the application of the net proceeds of any
capital contribution or a substantially concurrent sale for cash (other
than to or from a Restricted Subsidiary or Permitted Joint Venture) of
Qualified Capital Stock of the Company (or warrants, options or other
rights to acquire Qualified Capital Stock of the Company) or Indebtedness
of the Company which is subordinate or junior in right of payment to the
Securities, at least to the extent and in the manner that the
Indebtedness being acquired is subordinated to the Securities, is not in
an aggregate principal amount in excess of (or if such Indebtedness is
issued with original issue discount, at an original issue price not in
excess of) the aggregate principal amount of the Indebtedness being
acquired (or if such acquired Indebtedness was issued with original issue
discount, in excess of the accreted amount of such Indebtedness (as
determined in accordance with GAAP)) and has a Weighted Average Life to
Maturity and final maturity no less than that of the Indebtedness being
refinanced; or
(4) with the approval of a majority of the Board of Directors,
the repurchase of Capital Stock of the Company (including options,
warrants or other rights to acquire such Capital Stock) from employees or
former employees of the Company or any Restricted Subsidiary for
consideration which, when added to all loans made pursuant to clause (5)
below of this paragraph during the same fiscal year and then outstanding
(determined as provided in clause (5) below) does not exceed $250,000 in
the aggregate in any fiscal year; or
(5) with the approval of a majority of the Board of Directors,
the making of loans and advances to employees of the Company or any
Restricted Subsidiary in an aggregate amount at any time outstanding
(including as outstanding any such loan or advance written off or
forgiven) which, when added to the aggregate consideration paid pursuant
to clause (4) of this paragraph during the same fiscal year, does not
exceed $250,000 in any fiscal year; or
(6) with the approval of a majority of the Board of Directors,
the making of any payment in the nature of a purchase price or other
adjustment for which the Company is obligated pursuant to the terms of
the Participation Agreement;
PROVIDED, HOWEVER, that in the case of the immediately preceding clauses (2),
(3), (4) and (5), and in the case of Investments permitted under clauses (a)
and (f) of the definition of "Permitted Investment", no Default or Event of
Default shall have occurred or be continuing at the time of such Restricted
Payment or would occur as a result thereof.
In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, amounts expended pursuant to clauses (1), (2),
(3) (but only to the extent that Indebtedness is acquired in exchange for, or
with the net proceeds from, the issuance of Qualified Capital Stock of the
Company or warrants, options or other rights to acquire Qualified Capital Stock
of the Company), (4) and (5) of the immediately preceding paragraph shall be
included in such calculation.
For purposes of calculating the net proceeds received by the
Company from the issuance or sale of its Capital Stock either upon the
conversion of, or exchange for, Indebtedness of the Company or any Restricted
Subsidiary, such amount will be deemed to be an amount equal to the difference
of (a) the sum of (i) the principal amount or accreted value (whichever is
less) of such Indebtedness on the date of such conversion or exchange and
(ii) the additional cash consideration, if any, received by the Company upon
such conversion or exchange, less any payment on account of fractional shares,
MINUS (b) all expenses incurred in connection with such issuance or sale. In
addition, for purposes of calculating the net proceeds received by the Company
from the issuance or sale of its Capital Stock upon the exercise of any options
or warrants of the Company, such amount will be deemed to be an amount equal to
the difference of (A) the additional cash consideration, if any, received by
the Company upon such exercise, MINUS (B) all expenses incurred in connection
with such issuance or sale.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculation may
be based on the Company's latest financial statements.
4.10. Limitation on Issuance and Sale of Capital Stock of
RESTRICTED SUBSIDIARIES AND PERMITTED JOINT VENTURES.
The Company (a) shall not permit any Restricted Subsidiary or
Permitted Joint Venture to issue any Capital Stock (other than to the Company
or a Wholly Owned Restricted Subsidiary) and (b) shall not, and shall not
permit any Restricted Subsidiary or Permitted Joint Venture to, transfer,
convey, sell, lease or otherwise dispose of any Capital Stock of any Restricted
Subsidiary or Permitted Joint Venture to any Person (other than the Company or
a Wholly Owned Restricted Subsidiary); PROVIDED, HOWEVER, that this Section
4.10 will not prohibit (i) the sale or other disposition of all, but not less
than all, of the issued and outstanding Capital Stock of a Restricted
Subsidiary owned by the Company and its Restricted Subsidiaries in compliance
with the other provisions of hereof, (ii) the sale or other disposition of a
portion of the issued and outstanding Capital Stock of an existing Wholly Owned
Restricted Subsidiary if as a result of such sale or disposition, such Wholly
Owned Restricted Subsidiary becomes a Permitted Joint Venture, (iii) the
ownership by directors of director's qualifying shares or the ownership by
foreign nationals of Capital Stock of any Restricted Subsidiary, to the extent
mandated by applicable law, or (iv) with respect to a Permitted Joint Venture,
the sale or other disposition of any Capital Stock so long as the Permitted
Joint Venture remains a Permitted Joint Venture as defined herein.
The Company shall not permit any Restricted Subsidiary to issue any
Preferred Stock.
4.11. LIMITATION ON LIENS.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, create,
incur, assume or suffer to exist any Liens upon any of their respective
property or assets or on any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits thereon, whether owned
on the date of this Indenture or thereafter acquired, unless (a) in the case of
Liens securing Indebtedness subordinate to the Securities, the Securities are
secured by a valid, perfected Lien on such property, assets or proceeds that is
senior in priority to such Liens and (b) in all other cases, the Securities are
equally and ratably secured; PROVIDED, HOWEVER, that the foregoing shall not
prohibit or restrict, and the Company need not equally and ratably secure the
Securities as a result of, Permitted Liens.
4.12. DISPOSITION OF PROCEEDS OF ASSET SALES.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, consummate
any Asset Sale unless:
(a) the Company or the applicable Restricted Subsidiary or
Permitted Joint Venture, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of
the assets sold or otherwise disposed of;
(b) at least 80% of such consideration received by the Company,
the Restricted Subsidiary or Permitted Joint Venture, as the case may be,
from such Asset Sale is cash or Cash Equivalents (other than in the case
where the Company, a Restricted Subsidiary or a Permitted Joint Venture
is exchanging all or substantially all of the assets of one or more
geographic service areas operated by the Company, such Restricted
Subsidiary or a Permitted Joint Venture (including by way of the transfer
of Capital Stock) for all or substantially all the assets (including by
way of the transfer of Capital Stock) constituting one or more geographic
service areas operated by another Person (each, a "Permitted Exchange"),
in which event the foregoing requirement with respect to the receipt of
cash or Cash Equivalents shall not apply) and is received at the time of
such disposition; and
(c) upon the consummation of an Asset Sale (other than any
Permitted Exchange), the Company applies, or causes such Restricted
Subsidiary or Permitted Joint Venture to apply, or enters into, or causes
such Restricted Subsidiary or Permitted Joint Venture to enter into, a
binding commitment to apply, any Net Cash Proceeds within 180 days of
receipt thereof (it being understood that any binding commitment to so
apply must be consummated within 240 days of such receipt) either (i) to
reinvest in Productive Assets, or (ii) to repay or prepay permanently
Indebtedness (other than non-recourse Indebtedness) of any Restricted
Subsidiary or Permitted Joint Venture (which repayment or prepayment
shall be accompanied by a permanent reduction of the commitment to lend
the amount so repaid or prepaid in the case of any revolving credit
facility), or (iii) to repay or prepay permanently any Indebtedness of
the Company that is secured by a Lien permitted to be incurred pursuant
to Section 4.11 (which repayment or prepayment shall be accompanied by a
permanent reduction of the commitment to lend the amount so repaid or
prepaid in the case of any revolving credit facility), or (iv) to the
extent not applied pursuant to the immediately preceding clauses (i),
(ii) or (iii), pro rata (based on the aggregate Accreted Value at
maturity of the Securities and, if required by the terms thereof, such
other Indebtedness then outstanding) to (A) if required by the terms
thereof, the repayment or prepayment of any Indebtedness of the Company
(other than the Securities, and any Indebtedness subordinated to the
Securities) that is at the time redeemable or prepayable (and is so
redeemed or prepaid) and (B) to purchase Securities tendered to the
Company for purchase at a price equal to 100% of the Accreted Value
thereof on the date of repurchase, plus unpaid interest, if any, to the
date of purchase pursuant to an offer to purchase made by the Company as
set forth below (an "Asset Sale Offer"); PROVIDED, HOWEVER, that if at
any time any non-cash consideration received by the Company or any
Restricted Subsidiary or Permitted Joint Venture, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise
disposed of for cash, then such conversion or disposition shall be deemed
to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof
shall be applied in accordance with this clause (C); PROVIDED, FURTHER,
HOWEVER, that the Company may defer making an Asset Sale Offer until the
aggregate Net Cash Proceeds from Asset Sales to be applied equal or
exceed $5,000,000; and PROVIDED, FURTHER, HOWEVER that the Net Cash
Proceeds received by the Company or a Restricted Subsidiary in connection
with the sale of the Philadelphia MDU Operation shall not be required to
be applied in accordance with this clause (c).
Each notice of an Asset Sale Offer shall be mailed, by first class
mail, by the Company to all Holders of Securities as shown on the applicable
register of holders of Securities, with a copy to the Trustee and the Paying
Agent (such copy to be accompanied by an Officers' Certificate stating that all
conditions precedent contained herein to such Asset Sale Offer have been
complied with). The notice, which shall govern the terms of the Asset Sale
Offer, shall include such disclosures as are required by law and shall state:
(i) that the Asset Sale Offer is being made pursuant to this
Section 4.12;
(ii) the purchase date, which shall be not less than 30 days nor
more than 45 days from the date such notice is mailed (the "Asset Sale
Purchase Date"), except as otherwise required by law;
(iii) the amount of Net Cash Proceeds available to repurchase
Securities and the purchase price per $1,000 principal amount at
maturity;
(iv) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest in accordance with the terms
thereof;
(v) that, unless the Company shall default in the payment of the
Net Cash Proceeds, any Security or portion thereof accepted for payment
pursuant to the Asset Sale Offer shall cease to accrete in value after
the Asset Sale Purchase Date;
(vi) that Holders electing to have Securities purchased in whole
or in part in integral multiples of $1,000 in principal amount at
maturity, pursuant to an Asset Sale Offer will be required to surrender
their Securities to the Paying Agent at the address specified in the
notice prior to 5:00 p.m., New York City time, on the Asset Sale Purchase
Date and must complete any form of letter of transmittal proposed by the
Company and reasonably acceptable to the Trustee and the Paying Agent;
(vii) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than 5:00 p.m., New York City time,
on the Asset Sale Purchase Date, a telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount at
maturity of Securities the Holder delivered for purchase, the Security
certificate number and a statement that such Holder is withdrawing its
election to have such Securities or portions thereof purchased;
(viii) that if the Accreted Value of Securities properly tendered
by Holders exceeds Net Cash Proceeds available to repurchase Securities
in the Asset Sale Offer, the Company shall repurchase Securities on a pro
rata basis (based upon the aggregate Accreted Value of Securities
tendered by each Holder, using the procedures set forth in Section 3.02);
(ix) that Holders whose Securities are purchased only in part will
be issued new Securities equal in principal amount at maturity to the
unpurchased portion of the Securities surrendered;
(x) the instructions that Holders must follow in order to tender
their Securities; and
(xi) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the SEC
pursuant to the Exchange Act (or, if the Company is not permitted to file
any such reports with the Commission, the comparable reports prepared
pursuant to Section 4.07), a description of material developments in the
Company's business, information with respect to PRO FORMA historical
financial information after giving effect to such Asset Sale and Asset
Sale Offer and such other information concerning the circumstances and
relevant facts regarding such Asset Sale Offer as would be material to a
Holder of Securities in connection with the decision of such Holder as to
whether or not it should tender Securities pursuant to the Asset Sale
Offer.
Portions of Securities tendered for purchase shall be in principal amount at
maturity equal to $1,000 or integral multiples thereof.
On the Asset Sale Purchase Date, the Company shall (A) accept for
payment, on a pro rata basis, Securities or portions thereof tendered pursuant
to the Asset Sale Offer, (B) deposit with the Paying Agent money, in
immediately available funds, in an amount sufficient to pay the purchase price
of all Securities or portions thereof so tendered and accepted and (C) deliver
to the Trustee the Securities so accepted together with an Officers'
Certificate setting forth the Securities or portions thereof tendered to and
accepted for payment by the Company. The Paying Agent shall promptly mail or
deliver to Holders of Securities so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail or deliver
to such Holders a new Security equal in principal amount to any unpurchased
portion of the Security surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Asset Sale Offer not later than the
first Business Day following the Asset Sale Purchase Date.
To the extent that the Accreted Value of Securities tendered
pursuant to an Asset Sale Offer is less than the amount of Net Cash Proceeds
available therefor, the Company may use any remaining portion of such available
Net Cash Proceeds not required to fund the repurchase of tendered Securities
for any purposes otherwise permitted by this Indenture. Upon consummation of
any Asset Sale Offer, the amount of Net Cash Proceeds from the Asset Sale in
question to be the subject of future Asset Sale Offers shall be deemed to be
zero. For purposes of this Section 4.12, the Trustee shall act as Paying
Agent.
In the event of the transfer of substantially all (but not all) of
the property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor Person shall be deemed to have sold the properties and assets of the
Company and the Restricted Subsidiaries not so transferred for purposes of this
Section 4.12 and shall comply with the provisions of this covenant with respect
to such deemed sale as if it were an Asset Sale. In addition, the fair market
value of such properties and assets of the Company or the Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.12.
The Company shall comply with the requirements of Rule 14e-1 of the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Securities pursuant to an Asset Sale Offer. To the extent the
provisions of any such rule conflict with the provisions of this Indenture
relating to an Asset Sale Offer, the Company shall comply with the provisions
of such rule and be deemed not to have breached its obligations relating to
such Asset Sale Offer by virtue thereof.
4.13. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, enter into,
amend or permit or suffer to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property, the
guaranteeing of any Indebtedness or the rendering of any service) with or for
the benefit of any of its Affiliates (an "Affiliate Transaction") other than
any Affiliate Transaction or Affiliate Transactions that are on terms that are
fair and reasonable to the Company and no less favorable to the Company than
those that might reasonably have been obtained at such time in a comparable
transaction by the Company on an arm's-length basis from a Person that is not
an Affiliate; PROVIDED, HOWEVER, that such determination shall be made in good
faith by a majority of the members of the Board of Directors and by a majority
of the disinterested members of the Board of Directors; PROVIDED, FURTHER,
HOWEVER, that for a transaction or series of related transactions involving
value of $5,000,000 or more, the Board of Directors shall have received, prior
to the consummation thereof, an opinion from a nationally recognized investment
banking firm that such Affiliate Transaction is fair, from a financial point of
view, to the Company, such Restricted Subsidiary or Permitted Joint Venture.
The foregoing provisions shall not prohibit or restrict (a)
transactions between the Company and a Wholly Owned Restricted Subsidiary or
among Wholly Owned Restricted Subsidiaries, (b) Restricted Payments and
Permitted Investments made in accordance with Section 4.09, (c) the payment of
reasonable and customary fees to directors of the Company who are not employees
of the Company and the payment of reasonable and customary compensation for
director and Board of Director observer fees, meeting expenses, insurance
premiums and indemnities, to the extent permitted by law, (d) any employment or
option agreement entered into by the Company or any Restricted Subsidiary in
the ordinary course of business that is approved by the Compensation Committee
of the Board of Directors, (e) Affiliate Transactions in existence, or for
which rights or agreements are in existence, on the Issue Date, in each case as
in effect on the Issue Date; PROVIDED, HOWEVER, that no additional payments
shall be made with respect thereto without the approval of a majority of the
members of the Board of Directors and a majority of the disinterested members
of the Board of Director, (f) channel leases and options with Affiliates
entered into after the Issue Date provided such leases are no less beneficial
to the Company or the applicable Subsidiary than any such leases in effect on
the Issue Date, and are approved by a majority of the Board of Directors, (g)
amendments to or renewals of the agreements and leases referred to in clause
(f) of this sentence; PROVIDED, HOWEVER, that any such amendments or renewals
are no less beneficial to the Company or applicable Restricted Subsidiary than
the agreement or lease being amended or renewed and are approved by a majority
of the Board of Directors and (h) the issuance of stock options (and shares of
stock upon the exercise thereof) pursuant to any stock option plan approved by
the Board of Directors and shareholders of the Company.
4.14. LIMITATION ON RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
The Board of Directors may, if no Default or Event of Default shall
have occurred and be continuing or would arise therefrom, designate an
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that
(a) any such redesignation shall be deemed to be an incurrence as of the date
of such redesignation by the Company and the Restricted Subsidiaries of the
Indebtedness (if any) of such redesignated Subsidiary for purposes of
Section 4.08; and (b) unless such redesignated Subsidiary shall not have any
Indebtedness outstanding, other than Indebtedness which would be Permitted
Indebtedness, no such designation shall be permitted (i) if immediately after
giving effect to such redesignation and the incurrence of any such additional
Indebtedness, the Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.08, and (ii) unless
the Indebtedness of such redesignated Subsidiary is assumed by the Company such
that such Subsidiary is no longer the obligor thereunder. The Board of
Directors also may, if no Default or Event of Default shall have occurred and
be continuing or would arise therefrom, designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if (A) such designation is at that time permitted
under Section 4.09 and (B) immediately after giving effect to such designation,
the Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.08. Any such designation by the Board of
Directors shall be evidenced to the Trustee by the filing with the Trustee of a
Board Resolution giving effect to such designation or redesignation and an
Officers' Certificate certifying that such designation or redesignation
complied with the foregoing conditions and setting forth in reasonable detail
the underlying calculations.
For purposes of the covenant described in Section 4.09, (A) an
"Investment" shall be deemed to have been made at the time any Restricted
Subsidiary is designated as an Unrestricted Subsidiary in an amount
(proportionate to the Company's equity interest in such Subsidiary) equal to
the net worth of such Restricted Subsidiary at the time that such Restricted
Subsidiary is designated as an Unrestricted Subsidiary; (B) at any date the
aggregate of all Restricted Payments made as Investments since the Issue Date
shall exclude and be reduced by an amount (proportionate to the Company's
equity interest in such Subsidiary) equal to the lesser of (I) the amount of
Investments made since the Issue Date in any Unrestricted Subsidiary that
becomes a Restricted Subsidiary after the date of such Investment and (II) the
net worth of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary, not to exceed, in the case of
any such redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the amount of Investments previously made by the Company and the
Restricted Subsidiaries in such Unrestricted Subsidiary since the Issue Date
(in each case (I) and (II) "net worth" to be calculated based upon the fair
market value of the assets of such Subsidiary as of any such date of
designation); and (III) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer.
Notwithstanding the foregoing, the Board of Directors may not
designate any Subsidiary of the Company to be an Unrestricted Subsidiary if,
after such designation, (x) the Company or any other Restricted Subsidiary
(1) provides credit support for, or a guarantee of, any Indebtedness of such
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness) or (2) is directly or indirectly liable for any Indebtedness of
such Subsidiary, (y) a default with respect to any Indebtedness of such
Subsidiary (including any right which the holders thereof may have to take
enforcement action against such Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of the Company or any
Restricted Subsidiary to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its final scheduled
maturity or (z) such Subsidiary owns any Capital Stock of, or owns or holds any
Lien on any property of, any Restricted Subsidiary which is not a Subsidiary of
the Subsidiary to be so designated.
Subsidiaries of the Company that are not designated by the Board of
Directors as Restricted or Unrestricted Subsidiaries will be deemed to be
Restricted Subsidiaries. Notwithstanding any provisions of this covenant, all
Subsidiaries of a Restricted Subsidiary will be Restricted Subsidiaries and all
Subsidiaries of an Unrestricted Subsidiary will be Unrestricted Subsidiaries.
The Board of Directors may not change the designation of a Subsidiary of the
Company more than twice in any period of five years.
4.15. Limitation on Dividend and Other Payment Restrictions
AFFECTING RESTRICTED SUBSIDIARIES AND PERMITTED JOINT
VENTURES.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, create or
otherwise cause or permit to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary or Permitted Joint
Venture to: (a) pay dividends or make any other distributions on its Capital
Stock, (b) make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any Restricted Subsidiary or Permitted Joint
Venture, (c) guarantee any Indebtedness or any other obligation of the Company
or any Restricted Subsidiary or Permitted Joint Venture, or (d) transfer any of
its property or assets to the Company or any Restricted Subsidiary or Permitted
Joint Venture (each of the foregoing restrictions, a "Payment Restriction"),
except for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Indenture, (iii) customary non-assignment provisions
of any lease governing a leasehold interest of the Company or any Restricted
Subsidiary, (iv) any instrument governing Acquired Indebtedness, which
encumbrance or restriction was not incurred in connection with, as a result of,
or in anticipation of the incurrence of such Indebtedness and is not applicable
to any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired, (v) agreements
existing on the Issue Date and agreements governing additional Indebtedness
that may be incurred under Section 4.08, as such agreements are from time to
time in effect; PROVIDED, HOWEVER, that any amendments or modifications of such
agreements which affect the encumbrances or restrictions of the types subject
to this covenant shall not result in such encumbrances or restrictions being
less favorable to the Company, a Restricted Subsidiary or a Permitted Joint
Venture in any material respect, as determined in good faith by the Board of
Directors, than the provisions as in effect before giving effect to the
respective amendment or modification, (vi) an agreement effecting a
refinancing, replacement or substitution of Indebtedness issued, assumed or
incurred pursuant to an agreement described in clause (iv) or (v) of this
Section 4.15; PROVIDED, HOWEVER, that the provisions relating to such
encumbrance or restriction contained in any such refinancing, replacement or
substitution agreement are not less favorable to the Company in any material
respect as determined in good faith by the Board of Directors than the
provisions relating to such encumbrance or restriction contained in agreements
referred to in such clause (iv) or (v) of this Section 4.15, (vii) Liens
permitted under this Indenture to the extent that such Liens restrict the
transfer of the asset or assets subject thereto, and (viii) with respect to
clause (d) above, purchase money obligations for property acquired in the
ordinary course of business pursuant to ordinary business terms.
4.16. INTENTIONALLY OMITTED.
4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Restricted
Subsidiary or Permitted Joint Venture to, directly or indirectly, enter into
any Sale and Leaseback Transaction, except that the Company or any Restricted
Subsidiary or Permitted Joint Venture may enter into a Sale and Leaseback
Transaction if (a) immediately prior thereto, and after giving effect to such
Sale and Leaseback Transaction (the Indebtedness thereunder being equivalent to
the Attributable Value thereof) the Company, such Restricted Subsidiary or
Permitted Joint Venture could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.08 and (b) the
Sale and Leaseback Transaction constitutes an Asset Sale effected in accordance
with the requirements of Section 4.12.
4.18. LIMITATION ON LINE OF BUSINESS.
For so long as any Securities are outstanding, the Company shall,
and shall cause any Restricted Subsidiary and Permitted Joint Venture to,
engage solely in (a) the Permitted Business, and (b) evaluating, participating
or pursuing any other activity or opportunity that is related to the Permitted
Business (including pursuant to acquisitions of entities or divisions or lines
of business of entities in the foregoing business).
4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the Accreted Value of, the principal of, or
interest, if any, or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
5.01. WHEN COMPANY MAY MERGE, ETC.
The Company shall not, in any transaction or series of
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to, any Person or Persons (other than a
Permitted Joint Venture), and the Company shall not permit any Restricted
Subsidiary or Permitted Joint Venture to enter into any such transaction or
series of transactions if such transaction or series of transactions, in the
aggregate, would result in a sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the properties and assets of
the Company or the Company and the Restricted Subsidiaries and Permitted Joint
Ventures, taken as a whole, to any other Person or Persons (other than a
Permitted Joint Venture), unless at the time of and after giving effect thereto
(a) either (i) if the transaction or series of transactions is a merger or
consolidation involving the Company or a Restricted Subsidiary or a Permitted
Joint Venture, the Company or such Restricted Subsidiary or Permitted Joint
Venture shall be the surviving Person of such merger or consolidation, or (ii)
the Person formed by such consolidation or into which the Company or a
Restricted Subsidiary or a Permitted Joint Venture is merged or to which the
properties and assets of the Company or such Restricted Subsidiary or Permitted
Joint Venture, as the case may be, are sold, assigned, conveyed, transferred,
leased or otherwise disposed of (including, with respect to the Restricted
Subsidiaries, by merger or consolidation) (any such surviving Person or Persons
of such merger or consolidation or to whom such sale, assignment, conveyance,
lease or other disposition has been made being the "Surviving Entity") shall be
a corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the Company
under the Securities and this Indenture and, in each case, this Indenture shall
remain in full force and effect; (b) immediately before and immediately after
giving effect to such transaction or series of transactions on a PRO FORMA
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series
of transactions), no Default or Event of Default shall have occurred and be
continuing and the Company, such Restricted Subsidiary or Permitted Joint
Venture or the Surviving Entity, as the case may be, after giving effect to
such transaction or series of transactions on a PRO FORMA basis (including,
without limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under Section 4.08 (assuming a market rate of interest with
respect to such additional Indebtedness); and (c) immediately after giving
effect to such transaction or series of transactions on a PRO FORMA basis
(including, without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series of
transactions), the Consolidated Net Worth of the Company or the Surviving
Entity, as the case may be, is at least equal to the Consolidated Net Worth of
the Company immediately before such transaction or series of transactions;
PROVIDED, HOWEVER, that any Restricted Subsidiary may merge or consolidate with
the Company if (A) the Company is the surviving Person of such merger or
consolidation and (B) immediately before and immediately after giving effect to
such transaction or series of transactions on a PRO FORMA basis (including,
without limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
no Default or Event of Default shall have occurred and be continuing.
In connection with any transaction contemplated by this Section
5.01, the Company or the Surviving Entity, as the case may be, shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each in form reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or other
disposition and, if a supplemental indenture is required in connection with
such transaction or series of transactions, such supplemental indenture comply
with this Indenture.
For the purposes of the foregoing and of Section 5.02, the transfer
(by lease, assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the properties and assets
of one or more Restricted Subsidiaries or Permitted Joint Ventures, the Capital
Stock of which constitutes all or substantially all of the properties and
assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
For all purposes of this Indenture and the Securities (including
the provisions of this Section 5.01 and Section 5.02 and the covenants
described in Sections 4.08, 4.11 and 4.14), Subsidiaries of any Surviving
Entity will, upon such transaction or series of transactions, become Restricted
Subsidiaries or Unrestricted Subsidiaries as provided pursuant to the covenant
described in Section 4.14 and all Indebtedness, and all Liens on property or
assets, of the Company and the Restricted Subsidiaries immediately prior to
such transaction or series of transactions shall be deemed to have been
incurred upon such transaction or series of transactions.
5.02. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger or any sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof in which the
Company is not the continuing corporation, the successor corporation formed by
such a consolidation or into which the Company is merged or to which such sale,
assignment, conveyance, transfer, lease or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE SIX
REMEDIES
6.01. EVENTS OF DEFAULT.
An "Event of Default" means any of the following events:
(a) the failure to pay the principal or Accreted Value of any
Security when such principal or Accreted Value becomes due and payable,
at maturity, upon acceleration, redemption, pursuant to a required offer
to purchase or otherwise;
(b) a default in the observance or performance of any other
covenant or agreement contained in the Securities or this Indenture
(other than Defaults specified in clause (a) above) and such Default
continues for a period of 60 days after the Company receives written
notice thereof from the Trustee specifying the default and stating that
such notice is a "Notice of Default" hereunder or the Company and the
Trustee receive such notice from Holders of at least 25% in aggregate
principal amount of the outstanding Securities;
(c) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary or Permitted Joint Venture (or the payment of which is
guaranteed by the Company or any Restricted Subsidiary or Permitted Joint
Venture), whether such Indebtedness or guarantee now exists, or is
created after the Issue Date, which default (i) is caused by a failure to
pay when due principal on such Indebtedness within the grace period
provided in such Indebtedness (which failure continues beyond any
applicable grace period) (a "Payment Default") or (ii) results in the
acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5,000,000 or more;
(d) one or more judgments in an aggregate amount in excess of
$5,000,000 (unless covered by insurance by a reputable insurer as to
which the insurer has acknowledged coverage) being rendered against the
Company or any Restricted Subsidiary or Permitted Joint Venture and such
judgments remain undischarged or unstayed for a period of 60 days after
such judgment or judgments become final and non-appealable;
(e) the Company or any Subsidiary of the Company or Permitted
Joint Venture pursuant to or under or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it
in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) shall generally not pay its debts when such debts
become due or shall admit in writing its inability to pay its debts
generally;
(f) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Subsidiary or
Permitted Joint Venture of the Company in an involuntary case or
proceeding,
(ii) appoints a Custodian of the Company, any Subsidiary or
Permitted Joint Venture of the Company for all or substantially all
of its properties, or
(iii) orders the liquidation of the Company, any Subsidiary
or Permitted Joint Venture of the Company,
and in each case the order or decree remains unstayed and in effect for
60 days; or
(g) any holder of at least $5,000,000 in aggregate principal
amount of Indebtedness of the Company, any Restricted Subsidiary or
Permitted Joint Venture shall foreclose upon assets of the Company or any
Restricted Subsidiary or Permitted Joint Venture having an aggregate fair
market value, individually or in the aggregate, of at least $5,000,000 or
shall have exercised any right under applicable law or applicable
security documents to take ownership of any such assets in lieu of
foreclosure.
6.02. ACCELERATION.
Upon the happening of any Event of Default (other than as specified
in Section 6.01(e) or (f) with respect to the Company), the Trustee, by written
notice to the Company, or the Holders of not less than 25% in aggregate
principal amount of the Securities then outstanding, by written notice to the
Trustee and the Company, in each case specifying the respective Event of
Default and that it is a "notice of acceleration", may declare the Accreted
Value of all of the Securities to be due and payable immediately, upon which
declaration, all amounts payable in respect of the Securities shall become
immediately due and payable, notwithstanding anything contained in the
Securities or this Indenture to the contrary. If an Event of Default specified
in Section 6.01(e) or (f) with respect to the Company occurs and is continuing,
then such amount shall IPSO FACTO become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder
of Securities.
At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, but before a judgment or
decree of money due in respect of the Securities has been obtained, the Holders
of not less than a majority in aggregate principal amount at maturity of the
Securities then outstanding, by written notice to the Company and the Trustee,
may rescind such declaration and its consequences if (a) the Company has paid
or deposited with the Trustee a sum sufficient to pay (i) all sums paid or
advanced by the Trustee under this Indenture and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
(ii) interest, if any, at the rate of 15% per annum that has accrued on the
Accreted Value of all Securities from the date of such declaration to the date
of such payment or deposit with the Trustee, (iii) the Accreted Value of any
Securities which have become due otherwise than by such declaration of
acceleration, and (iv) to the extent that payment of such interest is lawful,
interest, if any, at the rate of 15% per annum that has accrued on the Accreted
Value of any Securities which have become due otherwise than by such
declaration of acceleration; (b) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction; and (c) all Events of
Default, other than the non-payment of principal of, and interest, if any, on
the Securities that have become due solely by such declaration of acceleration,
have been cured or waived.
No such rescission shall affect any subsequent Default or Event of
Default or impair any right subsequent therein.
6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of the Accreted Value of, or interest, if any, on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
All rights of action and claims under this Indenture or the
Securities may be enforced by the Trustee even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
6.04. WAIVER OF PAST DEFAULTS.
Prior to the declaration of acceleration of the Securities, the
Holders of not less than a majority in principal amount of the Securities by
notice to the Trustee may, on behalf of the Holders of all the Securities,
waive any existing Default or Event of Default and its consequences under this
Indenture, except a Default or Event of Default specified in Section 6.01(a) or
in respect of any provision hereof which cannot be modified or amended without
the consent of the Holder so affected pursuant to Section 9.02. When a Default
or Event of Default is so waived, it shall be deemed cured and shall cease to
exist. This paragraph of this Section 6.04 shall be in lieu of ' 316(a)(1)(B)
of the TIA and such ' 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Securities, as permitted by the TIA.
6.05. CONTROL BY MAJORITY.
The Holders of not less than a majority in aggregate principal
amount at maturity of the outstanding Securities shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, PROVIDED, HOWEVER, that the Trustee may refuse to follow any direction
(a) that conflicts with any rule of law or this Indenture, (b) that the Trustee
determines may be unduly prejudicial to the rights of another Securityholder,
or (c) that may expose the Trustee to personal liability for which reasonable
indemnity provided to the Trustee against such liability shall be inadequate;
PROVIDED, FURTHER, HOWEVER, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. This
Section 6.05 shall be in lieu of ' 316(a)(1)(A) of the TIA, and such
' 316(a)(1)(A) of the TIA is hereby expressly excluded from this Indenture and
the Securities, as permitted by the TIA.
6.06. LIMITATION ON SUITS.
No Holder of any Securities shall have any right to institute any
proceeding with respect to this Indenture or the Securities or any remedy
hereunder unless such Holder has previously given written notice to the Trustee
of a continuing Event of Default, the Holders of at least 25% in aggregate
principal amount at maturity of the outstanding Securities have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee under the Securities and this Indenture, the Trustee has
failed to institute such proceeding within 30 days after receipt of such
notice, request and offer of indemnity and the Trustee, within such 30-day
period, has not received directions inconsistent with such written request by
Holders of not less than a majority in aggregate principal amount of the
outstanding Securities.
The foregoing limitations shall not apply to a suit instituted by a
Holder of a Security for the enforcement of the payment of the Accreted Value
of, or interest, if any, on such Security on or after the respective due dates
expressed or provided for in such Security.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
6.07. RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision in this Indenture, the right of
any Holder of a Security to receive payment of the Accreted Value of, and
interest, if any, on such Security, on or after the respective due dates
expressed or provided for in such Security, or to bring suit for the
enforcement of any such payment on or after the respective due dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in clause (a) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, or any other obligor on the
Securities, for the whole amount of the Accreted Value of, and interest, if
any, remaining unpaid, together with interest on overdue Accreted Value and, to
the extent that payment of such interest is lawful, interest on overdue amounts
of such interest, in each case at the rate per annum provided for by the
Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company, the
Subsidiaries of the Company or any Permitted Joint Venture (or any obligor upon
the Securities), their creditors or their property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agent and counsel, and any other amounts due the
Trustee under Section 7.08. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.08;
Second: to Holders for interest, if any, on overdue Accreted Value
of the Securities, and, to the extent that payment of such interest is
lawful, interest on overdue amounts of such interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for such interest;
Third: to Holders for the Accreted Value owing under the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for such
Accreted Value; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Security holders pursuant to
this Section 6.10.
6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in aggregate principal amount at maturity of the outstanding Securities.
6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture or any Security and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Company, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
ARTICLE SEVEN
TRUSTEE
7.01. DUTIES.
(a) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such rights and powers vested in it under this
Indenture, and use the same degree of care and skill in its exercise thereof,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default,
(i) the Trustee need perform only such duties as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (d) of this
Section 7.01.
7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01 hereof and the provisions of TIA ' 315:
(a) The Trustee may rely on any document reasonably believed by
it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 11.04 and 11.05. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action taken or
omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion, rights or powers conferred upon it
by this Indenture other than any liabilities arising out of its own
negligence.
(e) The Trustee may consult with counsel of its own choosing and
the advice or opinion of such counsel as to matters of law shall be full
and complete authorization and protection in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with
the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(g) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
(h) The Trustee shall not be charged with knowledge of any
Default or Event of Default unless (i) a Trust Officer shall have actual
knowledge thereof or (ii) the Trustee shall have received written notice
thereof pursuant to Section 11.02 from the Company or any Holder.
7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee, any Paying Agent, Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 7.11 and 7.12 and TIA '' 310 and
311, may otherwise deal with the Company and its Subsidiaries with the same
rights it would have if it were not the Trustee, Paying Agent, Registrar or
such other agent.
7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representations as to the validity or
sufficiency of this Indenture or the Securities, it shall not be accountable
for the Company's use or application of the proceeds from the Securities, it
shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be responsible for any
statement in the Securities other than the Trustee's certificate of
authentication.
7.05. NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is continuing and is
known to the Trustee, the Trustee shall mail to each Holder of the Securities
notice of the Default or Event of Default within 30 days after obtaining
knowledge thereof; PROVIDED, HOWEVER, that, except in the case of a Default or
an Event of Default in the payment of the Accreted Value of, principal of, or
interest, if any, on any Security, or a failure to comply with Sections 4.12 or
5.01, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee of the board of directors or
a committee of the directors of the Trustee and/or Trust Officers in good faith
determines that the withholding of such notice is in the interest of the
Holders. This Section 7.05 shall be in lieu of the proviso to ' 315(b) of the
TIA and such proviso to ' 315(b) of the TIA is hereby expressly excluded from
this Indenture and the Securities, as permitted by the TIA.
7.06. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required herein or by law. The Trustee shall not be under any liability for
interest on any moneys received by it hereunder, except as the Trustee may
agree with the Company.
7.07. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall, to the extent that any
of the events described in TIA ' 313(a) shall have occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as
of such May 15 that complies with TIA ' 313(a). The Trustee also shall comply
with TIA '' 313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall
be mailed to the Company and filed with the SEC and each securities exchange,
if any, on which the Securities are listed.
The Company shall notify the Trustee in writing if the Securities
become listed on any securities exchange.
7.08. COMPENSATION AND INDEMNITY.
The Company covenants and agrees to pay the Trustee from time to
time reasonable compensation for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances, including, without limitation, counsel
fees and disbursements, incurred or made by it. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it arising out of or in connection
with the administration of this trust and its rights or duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder or thereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its prior written consent. The Company need
not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's payment obligations in this Section 7.08,
the Trustee shall have a Lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay the Accreted Value of, principal of, or interest, if any, on
particular Securities.
Without limiting any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.01(e) or (f), the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
The Company's obligations under this Section 7.08 and any Lien
arising hereunder shall survive the resignation or removal of any trustee, the
discharge of the Company's obligations pursuant to Article Eight and/or the
termination of this Indenture.
7.09. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company. The Holders of
a majority in principal amount of the outstanding Securities may remove the
Trustee by so notifying the Company and the Trustee and may appoint a successor
trustee with the Company's prior written consent. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.11;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. The Trustee shall be
entitled to payment of its fees and reimbursement of its expenses while acting
as Trustee, and to the extent such amounts remain unpaid, the Trustee that has
resigned or has been removed shall retain the Lien afforded by Section 7.08.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the outstanding Securities may, with the
Company's prior written consent, appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee, subject to the Lien provided in Section 7.08, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or the Holders of at least 10% in principal amount at maturity of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.11, any Holder
permitted to do so by the TIA may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.09, the Company's obligations under Section 7.08 shall continue for the
benefit of the retiring Trustee.
7.10. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall, if such resulting, surviving or transferee corporation or national
banking association is otherwise eligible hereunder, be the successor Trustee.
7.11. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA '' 310(a)(1) and 310(a)(5) and which shall
have a combined capital and surplus of at least $50,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. The Trustee shall comply with TIA ' 310(b) (subject to the
penultimate paragraph thereof) and the Company shall comply with TIA ' 310.
7.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA ' 311(a), excluding any creditor
relationship listed in TIA ' 311(b). If the present or any future Trustee
shall resign or be removed, it shall be subject to TIA ' 311(a) to the extent
provided therein.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
8.01. TERMINATION OF THE COMPANY'S OBLIGATIONS.
The Company may terminate its obligations under the Securities and
this Indenture, except those obligations referred to in the penultimate
paragraph of this Section 8.01, if all Securities previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money has theretofore been
deposited with the Trustee or the Paying Agent in trust or segregated and held
in trust by the Company and thereafter repaid to the Company, as provided in
Section 8.04) have been delivered to the Trustee for cancellation and the
Company has paid all sums payable by it hereunder, or if:
(a) either (i) pursuant to Article Three, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Securities under arrangements
satisfactory to the Trustee for the giving of such notice or (ii) all
Securities have otherwise become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee, under the terms of an irrevocable trust
agreement in form satisfactory to the Trustee, as trust funds in trust
solely for the benefit of the Holders for that purpose, money in such
amount as is sufficient without consideration of reinvestment of such
interest, to pay the Accreted Value of, and interest, if any, on the
outstanding Securities to maturity or redemption, as certified in a
certificate of a nationally recognized firm of independent public
accountants; PROVIDED that the Trustee shall have been irrevocably
instructed to apply such money to the payment of said Accreted Value and
interest, if any, with respect to the Securities;
(c) no Default or Event of Default with respect to this Indenture
or the Securities shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit
will not result in a breach or violation of, or constitute a default
under, any other instrument to which the Company is a party or by which
it is bound;
(d) the Company shall have paid all other sums payable by it
hereunder; and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's obligation under
the Securities and this Indenture have been complied with.
Notwithstanding the foregoing paragraph, the Company's obligations
in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02 and 7.08 shall survive until
the Securities are no longer outstanding pursuant to the last paragraph of
Section 2.08. After the Securities are no longer outstanding, the Company's
obligations in Sections 7.08, 8.04 and 8.05 shall survive.
After such delivery or irrevocable deposit the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.
8.02. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.
(a) The Company may, at its option by Board Resolution, at any
time, with respect to the Securities, elect to have either paragraph (b) or
paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of paragraph (e) below and
the other Sections of and matters under this Indenture referred to in (i) and
(ii) below, and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (i) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the Accreted Value of, and interest, if any, on such Securities when
such payments are due, (ii) the Company's obligations with respect to such
Securities under Sections 2.05, 2.06, 2.07 and 4.02, and, with respect to the
Trustee, under Section 7.08, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (iv) this Article Eight. Subject to
compliance with this Section 8.02, the Company may exercise its option under
this paragraph (b) notwithstanding the prior exercise of its option under
paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article Five and in
Sections 4.07 (except to the extent required to be complied with by the TIA)
through 4.18 with respect to the outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the outstanding Securities, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01(c), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Securities:
(i) the Company shall irrevocably have deposited or caused
to be deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Securities,
(A) cash, in United States dollars, in an amount or (B) direct
non-callable obligations of, or non-callable obligations guaranteed by,
the United States of America for the payment of which guarantee or
obligation the full faith and credit of the United States is pledged
("U.S. Government Obligations") maturing as to principal, premium, if
any, and interest in such amounts of cash, in United States dollars, and
at such times as are sufficient without consideration of any reinvestment
of such interest, to pay the Accreted Value of, and interest, if any, on
the outstanding Securities not later than one day before the due date of
any payment, or (C) a combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee to pay and discharge
the Accreted Value of, and interest, if any, on the outstanding
Securities on the Final Maturity Date or on an earlier redemption date in
accordance with the terms of this Indenture and of such Securities;
PROVIDED, HOWEVER, that the Trustee shall have received an irrevocable
written order from the Company instructing the Trustee to apply such
money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities; PROVIDED, FURTHER, that if the
Securities are to be redeemed, either notice of such redemption shall
have been given or the Company shall have given the Trustee irrevocable
directions to give notice of such redemption in the name, and at the
expense of the Company, under arrangements satisfactory to the Trustee;
(ii) no Default or Event of Default or event which with
notice or lapse of time or both would become a Default or an Event of
Default with respect to the Securities shall have occurred and be
continuing on the date of such deposit or, insofar as Section 6.01(e) or
(f) is concerned, at any time during the period ending on the 91st day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(iii) such legal defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest with respect to any
securities of the Company;
(iv) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default or Event of
Default under, this Indenture or any other material agreement or
instrument to which the Company is a party or by which it is bound;
(v) in the case of an election under paragraph (b) above,
the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
of this Indenture, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of the outstanding Securities
will not recognize income, gain or loss for Federal income tax purposes
as a result of such legal defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such legal defeasance had not occurred;
(vi) in the case of an election under paragraph (c) above,
the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of such covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred;
(vii) in the case of an election under either paragraph (b)
or (c) above, an Opinion of Counsel to the effect that, (A) the trust
funds will not be subject to any rights of any other holders of
Indebtedness of the Company, and (B) after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable Bankruptcy Law; PROVIDED, HOWEVER, that if a court were to
rule under any such law in any case or proceeding that the trust funds
remained property of the Company, no opinion needs to be given as to the
effect of such laws on the trust funds except the following:
(I) assuming such trust funds remained in the Trustee's possession prior
to such court ruling to the extent not paid to Holders of Securities, the
Trustee will hold, for the benefit of the Holders of Securities, a valid
and enforceable security interest in such trust funds that is not
avoidable in bankruptcy or otherwise, subject only to principles of
equitable subordination, (II) the Holders of Securities will be entitled
to receive adequate protection of their interests in such trust funds if
such trust funds are used, and (III) no property, rights in property or
other interests granted to the Trustee or the Holders of Securities in
exchange for or with respect to any of such funds will be subject to any
prior rights of any other person, subject only to prior Liens granted
under Section 364 of Title 11 of the U.S. Bankruptcy Code (or any section
of any other Bankruptcy Law having the same effect), but still subject to
the foregoing clause (II); and
(viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
(A) all conditions precedent provided for relating to either the legal
defeasance under paragraph (b) above or the covenant defeasance under
paragraph (c) above, as the case may be, have been complied with and
(B) if any other Indebtedness of the Company shall then be outstanding or
committed, such legal defeasance or covenant defeasance will not violate
the provisions of the agreements or instruments evidencing such
Indebtedness.
(e) All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to paragraph (d) above in
respect of the outstanding Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent (other
than the Company or any Affiliate of the Company) as the Trustee may determine,
to the Holders of such Securities of all sums due and to become due thereon in
respect of the Accreted Value of, and interest, if any, on the Securities, but
such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to paragraph (d) above or the principal,
premium, if any, and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of the
outstanding Securities.
Anything in this Section 8.02 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request,
in writing, by the Company any money or U.S. Government Obligations held by it
as provided in paragraph (d) above which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
legal defeasance or covenant defeasance.
8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Sections 8.01 and 8.02, and shall
apply the deposited money and the money from U.S. Government Obligations in
accordance with this Indenture to the payment of the Accreted Value of, and
interest, if any, on the Securities.
8.04. REPAYMENT TO COMPANY.
Subject to Sections 7.08, 8.01 and 8.02, the Trustee shall promptly
pay to the Company upon receipt by the Trustee of an Officers' Certificate, any
excess money, determined in accordance with Section 8.02, held by it at any
time. The Trustee and the Paying Agent shall pay to the Company, upon receipt
by the Trustee or the Paying Agent, as the case may be, of an Officers'
Certificate, any money held by it for the payment of the Accreted Value of, and
interest, if any, on the Securities that remains unclaimed for two years after
payment to the Holders is required; PROVIDED, HOWEVER, that the Trustee and the
Paying Agent before being required to make any payment may, but need not, at
the expense of the Company cause to be published once in a newspaper of general
circulation in The City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such publication or
mailing, any unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Holders entitled to money must look
solely to the Company for payment as general creditors unless an applicable
abandoned property law designates another person, and all liability of the
Trustee or Paying Agent with respect to such money shall thereupon cease.
8.05. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then and only then the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had been made
pursuant to this Indenture until such time as the Trustee is permitted to apply
all such money or U.S. Government Obligations in accordance with this
Indenture; PROVIDED, HOWEVER, that if the Company has made any payment of the
Accreted Value of, or interest, if any, on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.01. WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by a Board Resolution, and the Trustee
may amend, waive or supplement this Indenture or the Securities without notice
to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article Five;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to comply with any requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(e) to make any change that would provide any additional benefit
or rights to the Holders or that does not adversely affect the rights of
any Holder.
Notwithstanding the above, the Trustee and the Company may not make
any change that adversely affects the rights of any Holders hereunder or under
the Securities. The Company shall be required to deliver to the Trustee an
Opinion of Counsel stating that any such change made pursuant to paragraph (a)
or (e) of this Section 9.01 does not adversely affect the rights of any Holder.
9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.04, the Company, when authorized by a Board
Resolution, and the Trustee may amend this Indenture or the Securities with the
written consent of the Holders of not less than a majority in aggregate
principal amount of the Securities then outstanding, and the Holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may waive future compliance by the
Company with any provision of this Indenture or the Securities.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(a) reduce the percentage in outstanding aggregate principal
amount at maturity of Securities the Holders of which must consent to an
amendment, supplement or waiver of any provision of this Indenture or the
Securities;
(b) reduce the rate or change the time for payment of interest on
the Accreted Value of any Security after the same shall have become due
and payable;
(c) reduce the principal amount at maturity (or rate of
accretion) of, or extend the fixed maturity of any Security, or change
the date on which any Security may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor;
(d) waive a default in the payment of the Accreted Value of, or
interest, if any, on, or redemption or an offer to purchase required
hereunder with respect to, any Security;
(e) make the Accreted Value of, or interest, if any, on any
Security payable in money other than that stated in the Security;
(f) modify this Section 9.02 or Section 6.04 or Section 6.07;
(g) subordinate in right of payment, or otherwise subordinate,
the Securities to any other Indebtedness or obligation of the Company; or
(h) impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holder of each Security
affected thereby, with a copy to the Trustee, a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any amendment, supplement or waiver.
9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment of or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.
9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by such Holder and every
subsequent Holder of that Security or portion of that Security that evidences
the same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security prior
to such amendment, supplement or waiver becoming effective. Such revocation
shall be effective only if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective.
Notwithstanding the above, nothing in this paragraph shall impair the right of
any Holder under ' 316(b) of the TIA.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those persons who were Holders at such record date (or their duly
designated proxies), and only those persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders after such record date.
Such consent shall be effective only for actions taken within 90 days after
such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder unless it makes a change described in any of clauses
(a) through (h) of Section 9.02; if it makes such a change, the amendment,
supplement or waiver shall bind every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security.
9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee shall (in accordance with the specific direction of the
Company) request the Holder of the Security to deliver it to the Trustee. The
Trustee shall (in accordance with the specific direction of the Company) place
an appropriate notation on the Security about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or issue a new Security shall not affect the validity
and effect of such amendment, supplement or waiver.
9.06. TRUSTEE MAY SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article Nine if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver, the Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver is authorized or permitted by this Indenture,
that it is not inconsistent herewith and that it will be valid and binding upon
the Company in accordance with its terms.
ARTICLE TEN
[RESERVED]
ARTICLE ELEVEN
MISCELLANEOUS
11.01. TRUST INDENTURE ACT OF 1939.
This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable,
be governed by such provisions.
If any provision of this Indenture modifies or excludes any
provision of the TIA that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or excluded, as the
case may be.
The provisions of Sections 310 through 317 of the TIA that impose
duties on any person (including the provisions automatically deemed included
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
11.02. NOTICES.
Any notice or communication shall be sufficiently given if in
writing and delivered in person or mailed by first class mail, postage prepaid,
addressed as follows:
If to the Company to:
CAI Wireless Systems, Inc.
18 Corporate Woods Blvd., Third Floor
Albany, New York 12211
Attention: Chief Financial Officer
With a copy to:
Day, Berry & Howard LLP
One Canterbury Green
Stamford, Connecticut 06901
Attention: Sabino Rodriguez III, Esq.
If to the Trustee to:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06120
Attention: Corporate Trustee Administration Department
Ref: CAI Wireless Systems
The parties hereto by notice to the other parties may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed, postage prepaid, to a Holder,
including any notice delivered in connection with TIA ' 310(b), TIA ' 313(c),
TIA ' 314(a) and TIA ' 315(b), shall be mailed by first class mail to such
Holder at the address of such Holder as it appears on the Securities' register
maintained by the Registrar and shall be sufficiently given to such Holder if
so mailed within the time prescribed. Copies of any such communication or
notice to a Holder shall also be mailed to the Trustee. Any notice or
communication shall also be mailed to any other persons described in TIA '
313(c) to the extent and in the manner required by the TIA.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Holders. Except for a notice to the Trustee, which is deemed given only when
received, if a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it.
11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA ' 312(b) with other Holders
with respect to their rights under this Indenture or the Securities. The
obligor, the Trustee, the Registrar and any other person shall have the
protection of TIA ' 312(c).
11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, such obligor shall furnish to the
Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with; PROVIDED,
HOWEVER, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
11.06. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules
for its functions.
11.07. GOVERNING LAW.
The laws of the State of New York shall govern this Indenture and
the Securities without regard to principles of conflicts of law. The Trustee,
the Company and the Holders agree to submit to the jurisdiction of the courts
of the State of New York in any action or proceeding arising out of or relating
to this Indenture or the Securities.
11.08. NO INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
11.09. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or Affiliate, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder by accepting
a Security waives and releases all such liability.
11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
11.11. DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all such executed copies together
represent the same agreement.
11.12. SEPARABILITY.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
11.14. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any person, other than the parties hereto and their successors
hereunder, and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
11.15. BUSINESS DAYS.
If a payment date is not a Business Day, payment shall be made on
the next succeeding day that is a Business Day, and no interest shall accrue
for the intervening period.
[Balance of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
CAI WIRELESS SYSTEMS, INC.
By: /S/ JAMES P. ASHMAN
Name: James P. Ashman
Title: Executive Vice President
Attest: /s/ Sabino Rodriguez III
Name: Sabino Rodriguez III
Title: Assistant Secretary
[Seal]
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /S/ RINETTE N. ELOVECKY
Name: Rinette N. Elovecky
Title: Vice President
Attest: /s/ WILLIAM HUNTER
Name: William Hunter
Title:
[Seal]
<PAGE>
EXHIBIT A
[FORM OF SECURITY]
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER, THIS SECURITY IS
BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF
THIS SECURITY, (1) THE "ISSUE PRICE" IS $469.68; (2) THE "STATED REDEMPTION
PRICE AT MATURITY" IS $1,000; (3) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT (THE
EXCESS OF THE "STATED REDEMPTION PRICE AT MATURITY" OVER THE "ISSUE PRICE") IS
$530.32; (4) THE ISSUE DATE IS October 14, 1998; AND (5) THE YIELD TO MATURITY
(COMPOUNDED SEMI-ANNUALLY) IS 13%.
CAI WIRELESS SYSTEMS, INC.
13% SENIOR NOTE DUE 2004
No. __________ $__________
CAI WIRELESS SYSTEMS, INC., a corporation incorporated under the
laws of the State of Connecticut (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to _______________ or
registered assigns, the Accreted Value (as defined below) of _______________
Dollars on October 14, 2004, at the office or agency of the Company referred to
below. This Security shall accrete in value from the date of issue to October
14, 2004, at a rate of 13% per annum, compounded semi-annually (the "Accreted
Value"). Cash interest on this Security shall neither accrue nor be payable
prior to maturity. The Company shall pay interest on the Accreted Value in the
event this Security becomes due prior to maturity and on the Accreted Value
after final maturity and, to the extent lawful, interest on any overdue amounts
of such interest, from time to time on demand, at the rate of 15% per annum.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months and, in the case of a partial month, the actual number of days elapsed.
The interest, if any, so payable will, as provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the date of each such demand.
Payment of the Accreted Value of, and interest, if any, on this
Security will be made at the office or agency of the Company maintained for
that purpose, or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; PROVIDED, HOWEVER, that payment of interest, if any, may be made
at the option of the Company by check mailed to the address of the person
entitled thereto as such address shall appear on the security register
maintained by the Registrar.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
and a seal has been affixed hereon, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
CAI WIRELESS SYSTEMS, INC.
By:
Name:
Title:
By:
Name:
Title:
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
Authorized Officer
Dated: ,
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<PAGE>
(Reverse of Security)
CAI WIRELESS SYSTEMS, INC.
13% SENIOR NOTE DUE 2004
1. INDENTURE. CAI Wireless Systems, Inc., a Connecticut
corporation (the "Company"), issued the Securities (as defined below) under an
Indenture, dated as of October 14, 1998 (the "Indenture"), between the Company
and State Street Bank and Trust Company, a Massachusetts trust company, as
trustee (herein called the "Trustee," which term includes any successor Trustee
under the Indenture). This Security is one of a duly authorized issue of
Securities of the Company designated as its 13% Senior Notes due 2004 (the
"Securities"). The Securities are limited (except as otherwise provided in the
Indenture) in aggregate principal amount at maturity to
$212,909,624. Reference is hereby made to the Indenture and all indentures
supplemental thereto, for a statement of the respective rights, limitations of
rights, duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
All capitalized terms used in this Security which are defined in
the Indenture and not otherwise defined herein shall have the meanings assigned
to them in the Indenture.
No reference herein to the Indenture and no provisions of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, and
interest, if any, on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
2. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Securities are subject to
redemption, at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' prior notice, at a redemption price equal to the
Accreted Value.
(b) PARTIAL REDEMPTION. In the event of redemption of this
Security in part only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the cancellation
hereof.
3. OFFERS TO PURCHASE. Sections 4.12 of the Indenture provides
that following certain Asset Sales, and subject to further limitations
contained therein, the Company shall make an offer to purchase certain amounts
of the Securities in accordance with the procedures set forth in the Indenture.
4. DEFAULTS AND REMEDIES. If an Event of Default shall occur
and be continuing, the Accreted Value of all of the outstanding Securities may
be declared due and payable in the manner and with the effect provided in the
Indenture.
5. DEFEASANCE. The Indenture contains provisions (which
provisions apply to this Security) for defeasance at any time of (a) the entire
indebtedness of the Company under this Security and (b) certain restrictive
covenants and related Defaults and Events of Default, in each case upon
compliance by the Company with certain conditions set forth therein.
- 1 -
<PAGE>
6. AMENDMENTS AND WAIVERS. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Securities at the time outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past Defaults under the Indenture and this Security and
their consequences. Any such consent or waiver by or on behalf of the Holder
of this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Security.
7. DENOMINATIONS, TRANSFER AND EXCHANGE. The Securities are
issuable only in registered form without coupons. As provided in the Indenture
and subject to certain limitations therein set forth, the Securities are
exchangeable, only in whole dollar denominations, for an aggregate principal
amount of Securities of a different authorized denomination, as requested by
the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable on the security
register of the Company, upon surrender of this Security for registration of
transfer at the office or agency of the Company maintained for such purpose, or
at such other office or agency of the Company as may be maintained for such
purpose, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
8. PERSONS DEEMED OWNERS. Prior to and at the time of due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security shall be overdue, and neither the Company, the
Trustee nor any agent shall be affected by notice to the contrary.
9. GOVERNING LAW. This Security shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.
- 2 -
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 4.12 of the Indenture, check the box below:
I wish to have this Security purchased [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 4.12 of the Indenture, state the amount:
$
Date: Your Signature:
(Sign exactly as your name
appears on the other side
of this Security)
Signature Guarantee:
The holder's signature must be guaranteed by an eligible guarantor institution
which is a member of one of the following recognized signature guarantee
programs:
1) The Securities Transfer Agents Medallion Program;
2) The NYSE Medallion Signature Program; and
3) The Stock Exchanges Medallion Program.
- 3 -
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
(Insert assignee's social security or tax ID number)
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date: _____________ Your signature:
(Sign exactly as your name appears on
the other
side of this Security)
Signature Guarantee:
The holder's signature must be guaranteed by an eligible
guarantor institution which is a member of one of the
following recognized signature guarantee programs:
1) The Securities Transfer Agents Medallion Program;
2) The NYSE Medallion Signature Program; and
3) The Stock Exchanges Medallion Program.
- 4 -
CAI WIRELESS SYSTEMS, INC.
18 CORPORATE WOODS BOULEVARD
ALBANY, NEW YORK 12211
Senior Secured Notes due October 14, 2000
As of October 14, 1998
TO EACH OF THE PURCHASERS LISTED IN
SCHEDULE I ATTACHED HERETO
Ladies and Gentlemen:
CAI WIRELESS SYSTEMS, INC., a Connecticut corporation (the
"COMPANY"), agrees with you as follows:
PRELIMINARY STATEMENTS.
On July 30, 1998, the Company and Philadelphia Choice Television,
Inc., a Delaware corporation and wholly owned Subsidiary of the Company
("PHILADELPHIA CHOICE"), filed voluntary petitions with the Bankruptcy Court
under Chapter 11 of the Bankruptcy Code.
The Company, as debtor and debtor in possession, issued promissory
notes (the "EXISTING NOTES") pursuant to an Amended and Restated Note Purchase
Agreement dated as of July 30, 1998 in an aggregate principal amount equal to
$60,000,000 to Merrill Lynch Global Allocation Fund, Inc. (as amended through
the date hereof, the "EXISTING NOTE PURCHASE AGREEMENT").
On September 30, 1998 (the "CONFIRMATION DATE"), the Reorganization
Plan (as hereinafter defined) was confirmed by the Bankruptcy Court and the
Confirmation Order (as hereinafter defined) was entered which provided, among
other things, for the issuance by the reorganized Company of the Notes (as
hereinafter defined).
Accordingly, the parties hereto hereby agree as follows:
1. AUTHORIZATION OF NOTES.
<PAGE>
The Company will authorize the issue and sale of (i) $30,000,000 aggregate
principal amount of its 10.50% Senior Secured A Notes due October 14, 2000 (the
"A NOTES") and (ii) $50,000,000 aggregate principal amount of its 13.00% Senior
Secured B Notes due October 14, 2000 (the "B NOTES", and together with the A
Notes and the Notes delivered pursuant to Section 2 of this Agreement and the
Other Agreements (as hereinafter defined) and any such Notes issued in
substitution or exchange therefor pursuant to Section 12 of this Agreement or
the Other Agreements, the "NOTES"). Each of the A Notes shall be in
substantially the form of Exhibit A-1 attached hereto and each of the B Notes
shall be in substantially the form of Exhibit A-2 hereto, in each case, with
such amendments, supplements and other modifications thereto, if any, as shall
be approved from time to time by you and the Company. Capitalized terms used
in this Agreement shall have the meanings specified in Schedule II attached
hereto; and references to a "Schedule" or an "Exhibit" are, unless otherwise
specified herein, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
The Company will issue and sell to you and, subject to the terms and
conditions of this Agreement, you will purchase from the Company, at the
Closing provided for in Section 3, A Notes and/or B Notes in the aggregate
principal amount specified opposite your name in Schedule I attached hereto at
the purchase price of 100% of the aggregate principal amount thereof.
Contemporaneously with entering into this Agreement, the Company is entering
into separate Note Purchase Agreements (collectively, the "OTHER AGREEMENTS")
identical with this Agreement (except as to the identity of the Other
Purchasers and the principal amount of the Notes to be purchased thereby) with
each of the other Purchasers named in Schedule I attached hereto (the "OTHER
PURCHASERS"), providing for the sale at such Closing to each of the Other
Purchasers of A Notes and/or B Notes in the aggregate principal amount
specified opposite the name of such Other Purchaser in Schedule I attached
hereto. Your obligation hereunder and the obligations of the Other Purchasers
under the Other Agreements are several and not joint obligations and you shall
have no obligation under any Other Agreement and no liability to any Person for
the performance or nonperformance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York 10022, at 11:30 A.M. (New York City time),
at a closing (the "CLOSING") at least 10 days after the entry of the
Confirmation Order or on such other Business Day thereafter as may be agreed
upon among the Company, the Other Purchasers and you but in any event no later
than October 14, 1998 (the "CLOSING DATE"). At the Closing, the Company will
deliver to you the (i) A Notes to be purchased by you in the form of a single
A Note and (ii) the B Notes to be purchased by you in the form of a single
B Note (or such greater number of A Notes or B Notes, as the case may be, in
denominations of at least $1,000,000 or integral multiples of $100,000 in
excess thereof as you may request) dated the Closing Date and registered in
your name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount of the
aggregate purchase price therefor by wire transfer of immediately available
funds for the account of the Company to Fleet Bank, N.A., Account No.
0001562960. If at the Closing the Company shall fail to tender such Notes to
you as provided above in this Section 3 or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at
your election, be relieved of all further obligations under this Agreement,
without hereby waiving any rights you may have by reason of such failure or
such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to or
at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each of the Obligors contained
in this Agreement and in each of the other Note Documents shall be complete and
correct when made and at the time of the Closing, before and after giving
effect to the issue and sale of the Notes and to the application of the
proceeds therefrom as contemplated by Section 5.14.
4.2. PERFORMANCE; NO DEFAULT.
Each of the Obligors shall have performed and complied with all
agreements and conditions contained in this Agreement and the other Note
Documents required to be performed or complied with by it prior to or at the
Closing and, after giving effect to the issue and sale of the Notes and to the
application of the proceeds therefrom as contemplated by Section 5.14, no
Default or Event of Default shall have occurred and be continuing.
4.3. DOCUMENTS REQUIRED.
You or the Agent shall have received the following documents, each
dated as of the Closing Date (except as otherwise specified below) and in the
form of the respective Exhibit attached hereto, if any, or otherwise in form
and substance satisfactory to you:
(a) SECURITY AGREEMENT. A security agreement, in substantially the
form of Exhibit B attached hereto (as amended, supplemented or otherwise
modified hereafter from time to time in accordance with the terms hereof
and thereof, the "SECURITY AGREEMENT"), duly executed by the Company and
each other Obligor together with:
(i) certificates representing the Pledged Shares referred to
therein accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt referred to therein indorsed
in blank,
(ii) acknowledgment copies or stamped receipt copies of proper
financing statements, duly filed on or before the Closing Date under
the Uniform Commercial Code of the States of Connecticut, New York,
Pennsylvania and Virginia, covering the Collateral described in the
Security Agreement,
(iii) completed requests for information, dated on or before
the Closing Date, listing the financing statements referred to in
clause (ii) above and all other effective financing statements filed
in the jurisdictions referred to in clause (ii) above that name the
Company or any other Obligor as debtor, together with copies of such
other financing statements,
(iv) evidence of the completion of all other recordings and
filings of or with respect to the Security Agreement that you may
deem necessary or desirable in order to perfect and protect the
Liens created thereby,
(v) evidence of the insurance required by the terms of the
Security Agreement,
(vi) copies of the Assigned Agreements referred to in the
Security Agreement, together with a consent to such assignment, in
substantially the form of Exhibit B to the Security Agreement, duly
executed by each party to such Assigned Agreements other than the
Company,
(vii) the Blocked Account Letters referred to in the Security
Agreement, duly executed by each Blocked Account Bank referred to in
the Security Agreement, and
(viii) evidence that all other action that you may deem
necessary or desirable in order to perfect and protect the first
priority liens and security interests created under the Security
Agreement has been taken.
(b) CORPORATE AND SIMILAR DOCUMENTATION.
(i) A copy of the charter of the Company and each of its
Subsidiaries and each amendment thereto, certified (as of a date
reasonably near the Closing Date) by the Secretary of State of the
jurisdiction of this incorporation as being a true and correct copy
thereof.
(ii) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the Closing
Date, listing the charter of the Company and each of its
Subsidiaries (other than the Subsidiaries set forth on Schedule
5.25) and each amendment thereto on file in his office and
certifying that (A) such amendments are the only amendments to the
Company's or such Subsidiary's charter on file in his office and (B)
the Company and each of its Subsidiaries have paid all franchise
taxes to the date of such certificate and the Company and each of
its Subsidiaries are duly incorporated and in good standing under
the laws of the State of the jurisdiction of its incorporation.
(iii) A copy of a certificate dated reasonably near the
Closing Date of the Secretary of State, of each jurisdiction in
which the Company or any Subsidiary is qualified as a foreign
corporation, stating that the Company or such Subsidiary is duly
qualified and in good standing as a foreign corporation in such
State and have filed all annual reports required to be filed to the
date of such certificate.
(c) SECRETARY'S CERTIFICATE. A certificate from the secretary or
an assistant secretary (or a person performing similar functions) of each
of the Company and each of the Obligors certifying:
(i) copies of the resolutions of the board of directors (or
persons performing similar functions) of the Company or such
Obligor, as the case may be, approving this Agreement, the Notes and
each of the other Note Documents to which it is or is to be a party
and of all documents evidencing other necessary corporate or other
necessary action and governmental approvals, if any, with respect
thereto,
(ii) the names and true signatures of the officers of the
Company or such Obligor, as the case may be, authorized to sign this
Agreement, the Notes and each of the other Note Documents to which
it is or is to be a party and the other agreements, instruments and
other documents to be delivered hereunder and thereunder, and
(iii) such other matters relating to the existence and good
standing of the Company or such Obligor, as the case may be, the
corporate and other necessary authority for, and the validity of,
each of the Note Documents to which it is or is to be a party and
any other matters relevant thereto.
(d) OFFICER'S CERTIFICATE. An Officer's Certificate certifying that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
(e) INSURANCE. Copies of all insurance policies or certificates of
insurance of the Company and its Subsidiaries evidencing liability and
casualty insurance meeting the requirements of Section 8.3.
(f) OTHER COLLATERAL DOCUMENTS. You shall have received the
following documents, each dated as of the Closing Date and in form of the
respective Exhibit attached hereto, if any, or otherwise in form and
substance satisfactory to you:
(i) a securities account pledge agreement, substantially in
the form of Exhibit C (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the "PLEDGE
AGREEMENT"),
(ii) a cooperation agreement (as amended, supplemented or
otherwise modified from time to time in accordance with its terms,
the "FCC COOPERATION AGREEMENT"),
(iii) the Collateral Access Agreements from the lessor of the
Company's leased premises located in or about Albany, New York, and
(iv) the Control Agreement.
(g) EMPLOYMENT AGREEMENTS. Certified copies of each employment
agreement and other compensation arrangement with each officer of the
Company and its Subsidiaries (the "EMPLOYMENT AGREEMENTS").
(h) MATERIAL CONTRACTS. Certified copies of all Material Contracts
of the Company and its Subsidiaries.
(i) ADDITIONAL DOCUMENTATION. Such other documents, agreements or
information as you may reasonably request.
(j) AMI SUBSIDIARIES. The Agent shall have received certificates
representing shares of stock of the Subsidiaries of AMI listed in
Schedule 4.3(j) (the "AMI SUBSIDIARIES") accompanied by undated stock
powers executed in blank.
(k) GUARANTY. A guaranty in substantially the form of Exhibit D
(as amended from time to time in accordance with its terms, the
"GUARANTY") duly executed by each Obligor (other than the Company).
(l) CONFIRMATION ORDER. A certified copy of an order of the
Bankruptcy Court confirming the plan of reorganization of the Company and
Philadelphia Choice (the "REORGANIZATION PLAN"), filed with the Bankruptcy
Court on September 30, 1998, substantially in the form of Exhibit E (the
"CONFIRMATION ORDER").
(m) COMMON STOCK. Each of the Purchasers of the A Notes shall have
received its pro rata portions of new common stock of the Company ("COMMON
STOCK") representing, in the aggregate, 2% of the issued and outstanding
Common Stock. Each of the Purchasers of the B Notes shall have received
its pro rata portion of the Common Stock representing in the aggregate 11%
of the issued and outstanding Common Stock.
(n) REGISTRATION RIGHTS AGREEMENT. A registration rights
agreement, in substantially the form of Exhibit G (the "REGISTRATION RIGHTS
AGREEMENT"), pertaining to the Common Stock.
4.4. OPINIONS OF COUNSEL.
You shall have received favorable opinions, dated the Closing Date,
from:
(a) Day, Berry & Howard, counsel for the Obligors, in form and
substance acceptable to you, and addressing such other matters incident to
the Transaction and the other transactions contemplated hereby as you or
your counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to you); and
(b) Shearman & Sterling and Squire Sanders & Dempsey, your counsel.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
The purchase of and any payment for the Notes to be purchased by you
at the Closing (a) shall be permitted by the applicable laws, statutes, rules
and regulations, including without limitation the Communications Act, FCC Rules
and those relating to copyright of each jurisdiction to which you are subject,
(b) shall not violate any applicable law, statute, rule or regulation
(including, without limitation, Regulation T or Regulation X) and (c) shall not
subject you to any tax, penalty or liability under or pursuant to any
applicable law, statute, rule or regulation. You shall have received an
Officer's Certificate on or prior to the Closing Date, dated the Closing Date,
certifying such matters of fact as you may reasonably specify to enable you to
determine whether such purchase and payment are so permitted.
4.6. CONSENTS AND APPROVALS.
Except as set forth on Schedule 4.6, all orders, consents and
approvals licenses, validations of any Governmental Authority or public body or
authority or any subdivision thereof and any other third party (including, but
not limited to, Subsidiaries of the Company) including any radio, television or
other license, Permit, certificate or approval granted or issued by the FCC or
any other Governmental Authority (including any MDS, MMDS, ITFS, business
radio, earth station or experimental licenses or permits issued by the FCC)
(except for filings to perfect security interests granted pursuant to this
Agreement or any other Note Document) necessary in connection with any aspect
of the Transaction or this Agreement or any other Note Document shall have been
obtained (without the imposition of any conditions that are not acceptable to
you) and shall remain in full force and effect; and all applicable waiting
periods shall have expired without any action being taken by any competent
authority.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 14.1, the Company shall
have paid on or before the Closing the reasonable fees, charges and
disbursements of your counsel referred to in Section 4.4(b) and any other
professional you may retain in connection with the Transaction.
4.8. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 4.8 attached hereto, none of the
Obligors shall have changed its jurisdiction of incorporation or been a party
to any merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent audited consolidated financial statements of the
Company and its Subsidiaries referred to in Section 5.4(a).
4.9. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
Transaction and the other transactions contemplated hereby and all documents
and instruments incident to the Transaction and such other transactions shall
be satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably request.
4.10. NO MATERIAL ADVERSE CHANGE.
(a) In your reasonable judgment, before giving effect to the
Transaction, there shall have occurred no Material Adverse Change (or
development involving a prospective Material Adverse Change) since the
Confirmation Date except as otherwise disclosed to you in writing prior to the
Closing Date, PROVIDED that such disclosure is acceptable to you.
(b) No material adverse change (or development involving a
prospective Material Adverse Change) shall have occurred in the loan
syndication or financial capital market conditions generally from those in
effect on November 24, 1997 which could reasonably be expected to adversely
affect the consummation of the transactions contemplated hereunder and
thereunder.
4.11. LITIGATION.
Except as disclosed on Schedule 5.7, there shall exist no action,
suit, investigation, litigation or proceeding or counterclaim affecting the
Company or any of its Subsidiaries pending or threatened by or before any court
or governmental, administrative or regulatory agency or authority, domestic or
foreign, seeking to obtain, or having resulted in the entry of, any judgment,
order or injunction that (a) would restrain, prohibit or impose adverse
conditions on your ability to purchase the Notes, (b) could be reasonably
likely to have a Material Adverse Effect, or (c) could purport to affect the
legality, validity or enforceability of this Agreement or any of the Note
Documents.
4.12. CAPITAL STRUCTURE.
You shall be satisfied with the corporate and legal structure and
capitalization of the Company and each of its Subsidiaries, including the terms
and conditions of the Charter, bylaws and each class of capital stock of the
Company and each of its Subsidiaries and of each agreement or instrument
relating to such structure or capitalization.
4.13. DUE DILIGENCE.
You shall have completed a due diligence investigation of the
Company and its Subsidiaries in scope and with results, satisfactory to you and
you shall have been given such access to the management, records, books of
account, contracts and properties of the Company and its Subsidiaries and shall
have received such financial, business and other information regarding the
Company and its Subsidiaries as you shall have requested.
4.14. FINANCIAL STATEMENTS.
The Company shall have delivered pro forma financial statements as
to the Company and its Subsidiaries, in a form satisfactory to you.
4.15. KEY MAN LIFE INSURANCE.
You shall have received evidence satisfactory to you that the
Company shall have obtained and pledged to you key man life insurance on Jared
Abbruzzese and Bruce Kostreski, in an amount, from an insurance company and on
terms acceptable to you.
4.16. APPROVED BUDGET.
The Company shall have delivered an operating and financial budget
covering the period from the Closing Date through the Maturity Date, which
shall set forth on a monthly basis anticipated cash receipts and all Material
expenditures proposed to be made during such month and shall be satisfactory in
all respects to you and shall be in the form of Exhibit F hereto (as amended,
supplemented or otherwise modified hereafter from time to time pursuant to the
terms of Section 16, the "APPROVED BUDGET").
4.17. RETAINER AMOUNTS.
You shall have received evidence satisfactory to you that the
Company shall have paid retainer amounts to Shearman & Sterling, Squire Sanders
& Dempsey and the Agent, in amounts acceptable to you, which shall be held as
retainer for services rendered to you in connection with the Transaction and
the Note Documents and the transactions contemplated thereby.
4.18. MARCH 1997 NOTE.
The March 1997 Note shall have been secured by the Haig Interests
pursuant to a pledge agreement in form and substance satisfactory to you and
such Note and security shall have been pledged and collaterally assigned to
you.
4.19. SALE OF OTHER NOTES.
Contemporaneously with the Closing, the Company shall sell to the
Other Purchasers, and the Other Purchasers shall purchase, the Notes to be
purchased by them at the Closing as specified in Schedule I attached hereto at
100% of the aggregate principal amount thereof, and the Company shall have
received payment in full therefor.
4.20. EXISTING NOTES.
Evidence satisfactory to you that all obligations outstanding under
the Existing Note Purchase Agreement, including without limitation, all
principal and interest under the Existing Notes, have been repaid in full
contemporaneously with the Closing.
4.21 SATISFACTION OF CONDITIONS TO ISSUANCE OF SENIOR NOTES.
The Company shall have satisfied the following conditions to the
issuance of the Senior Notes: (i) the conditions required to be complied with
under Sections 4.1, 4.2, 4.6, 4.10, 4.11 hereof shall have been complied with;
(ii) the Company shall have delivered to the Trustee the documents and
certificates required to be delivered under Sections 4.3(b), 4.3(c), 4.3(d),
4.3(m) and 4.4(a); (iii) the Company shall have caused (x) its corporate
counsel to deliver a legal opinion to the Trustee in form reasonably acceptable
to Trustee's counsel and (as to the Registration Rights Agreement) to Shearman
& Sterling as to the due authorization, execution and delivery and
enforceability of the Note Documents, no conflicts, qualification of the Senior
Note Indenture under the Trust Indenture Act, the exemption from registration
under the Securities Act of 1933, as amended (the "Securities Act") of the
Senior Notes, the availability of all consents, the exemption from registration
of the Company under the Investment Company Act of 1940 and (y) its bankruptcy
counsel to deliver a legal opinion in form reasonably acceptable to Trustee's
counsel as to the entry and unappeability of the Confirmation Order, (iv) at
the Closing Date, the Senior Notes shall be eligible for clearance and
settlement through the facilities of the Depository Trust Company; (v) the
Senior Notes to be issued to Persons who are not eligible for the exemption
under Section 1145 of the Bankruptcy Code from registration under the
Securities Act, shall have been issued in physical certificated form to such
Persons; (vi) the Senior Note Indenture, the Senior Notes and the Registration
Rights Agreement shall have been duly executed and delivered by the Company and
be in full force and effect; and (vii) the Company shall have filed a Form T-3
with the Securities and Exchange Commission (the "COMMISSION") in accordance
with the Trust Indenture Act which shall have been declared effective by the
Commission. For purposes of this Section 4.21, all references in Sections.
4.1, 4.2, 4.3, 4.4, 4.6, 4.10 and 4.11 and the conditions to be satisfied
thereunder to: (i) the Transaction shall be deemed to refer to the issuance of
the Senior Notes pursuant to and in accordance with the provisions of the
Senior Note Indenture; and (ii) the Note Documents shall be deemed to refer to
the Senior Note Indenture, the Senior Notes and the Registration Rights
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company and each of its Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and are duly qualified as foreign
corporations and are in good standing in each other jurisdiction in which the
ownership, lease or operation of their respective property and assets or the
conduct of their respective businesses requires such qualification, other than
in any such jurisdiction in which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company and each of its Subsidiaries have
all corporate and other necessary power and authority, and the legal right, to
own or to hold under lease the properties they purport to own or hold under
lease and to transact the business they transact and propose to transact. The
Company and each of its Subsidiaries has all corporate and other necessary
power and authority, and the legal right, to execute and deliver this
Agreement, the Notes and the other Note Documents to which it is or is to be a
party, and to perform its obligations hereunder and thereunder and to
consummate the Transaction. All of the outstanding capital stock of the
Company and its Subsidiaries has been validly issued, is fully paid and non-
assessable.
5.2. AUTHORIZATION, ENFORCEABILITY, ETC.
This Agreement and each of the other Note Documents have been duly
authorized by all necessary corporate action (including, without limitation,
all necessary shareholder action) on the part of each of the Obligors intended
to be a party thereto. This Agreement has been, and each of the other Note
Documents, when delivered hereunder, will have been, duly executed and
delivered by each of the Obligors intended to be a party thereto. This
Agreement constitutes, and each of the other Note Documents, when delivered
hereunder will constitute, the legal, valid and binding obligation of each of
the Obligors intended to be a party thereto, enforceable against such Obligor
in accordance with its terms, except as such enforceability may be limited by
(a) the effect of applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and (b) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law.
5.3. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.3 attached hereto sets forth (i) all of the
Subsidiaries of each Obligor, (ii) CS Wireless and (iii) TelQuest as of the
Closing Date, showing, as to each such Subsidiary, CS Wireless and TelQuest,
the correct name thereof, the jurisdiction of its incorporation and the
percentage of shares of each class of its capital stock or similar equity
interests or membership interests outstanding as of the Closing Date that are
owned by such Obligor and/or one or more of its Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary, CS Wireless and TelQuest referred to in
Schedule 5.3 attached hereto as being owned by such Obligor and/or one or more
of its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by such Obligor and/or one or more of its Subsidiaries free and
clear of all Liens, except for the Liens created under the Collateral Documents
and Liens disclosed on Schedule 9.2(iii).
(c) Except for the Seller Restricted Subsidiaries, neither any
Subsidiary nor CS Wireless nor TelQuest is a party to or otherwise subject to
any legal restriction or any agreement (other than the Collateral Documents and
customary limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary, CS Wireless or TelQuest to pay dividends out of
profits or make any other similar distributions of profits to such Obligor or
any of its Subsidiaries that owns shares of capital stock of or similar equity
interests in such Subsidiary.
5.4. FINANCIAL STATEMENTS.
(a) The audited consolidated balance sheet of the Company and its
Subsidiaries as of March 31, 1998 and the audited consolidated statements of
earnings and cash flows of the Company and its Subsidiaries for the fiscal
years ended March 31, 1997, and March 31, 1998, in each case including the
related schedules and notes, copies of each of which have previously been
furnished to each Purchaser, (i) have been audited by independent public
accountants acceptable to you, (ii) have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby and (iii) present
fairly (on the basis disclosed in the footnotes to such financial statements)
in all material respects the consolidated financial condition, results of
operations and cash flows of the Company and its Subsidiaries as of such dates
and for such periods.
(b) The unaudited consolidating balance sheet of the Company and
its Subsidiaries as of June 30, 1998 and the unaudited consolidating statements
of earnings and cash flows of the Company and its Subsidiaries for the six
months ended June 30, 1998 in each case including the related schedules and
notes, copies of each of which have previously been furnished to each
Purchaser, (i) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby and (ii) present fairly in all material
respects the consolidated financial condition, results of operations and cash
flows of the Company and its Subsidiaries as of such dates and for such
periods.
(c) Since June 30, 1998, except as otherwise disclosed to you in
writing prior to the Closing Date (PROVIDED that such disclosure is acceptable
to you), there has been no sale, transfer or other disposition by the Company
or any of its Subsidiaries of any material part of the business or property and
assets of the Company and its Subsidiaries, taken as a whole, except for sales
of inventory and other assets in the ordinary course of business, and no
purchase or other acquisition by any of them of any business or property or
assets (including, without limitation, any shares of capital stock of any other
Person) material in relation to the consolidated financial condition of the
Company and its Subsidiaries, taken as a whole, except for purchases of raw
materials, inventory and other property and assets in the ordinary course of
business, in each case, which is not reflected in the financial statements
referred to in this Section 5.4 or in the notes thereto and has not otherwise
been disclosed in writing to each of the Purchasers on or prior to the date of
this Agreement.
(d) Since the Confirmation Date, except as otherwise disclosed to
you in writing prior to the Closing Date (PROVIDED that such disclosure is
acceptable to you), there has been (i) no Material Adverse Change, and (ii) no
development or event relating to or affecting the Company or any of its
Subsidiaries that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
5.5. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
(a) Except as set forth on Schedule 4.6, the execution, delivery
and performance by each of the Obligors of each of the Note Documents to which
it is or is to be a party and the consummation of the Transaction and the other
transactions contemplated hereby do not and will not (i) contravene such
Obligor's charter or bylaws (or equivalent organizational documents), (ii)
violate any law, statute, rule or regulation, including without limitation the
Communications Act, FCC Rules and those relating to copyright, or any order,
writ, judgment, injunction, decree, determination or award in any manner that,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (iii) conflict with or result in the breach of, or
constitute a default under, any contract, loan agreement, indenture, including,
without limitation, the Confirmation Order, the Senior Note Indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting any
Obligor, any of its Subsidiaries, CS Wireless, TelQuest, or any of their
properties in any manner that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, or (iv) except for
the Liens created under the Collateral Documents, result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties or revenues of any Obligor or any of its Subsidiaries. Neither any
Obligor nor any of its Subsidiaries is in violation of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
or in breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument referred to in the immediately preceding
sentence, the violation or breach of which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed on Schedule 4.6, all Channel Licenses, FCC
Licenses and related facility Licenses are in full force and effect and there
are no pending or threatened complaints, investigations, inquiries or
proceedings by or before the FCC or other Governmental Authority or any actions
or events that (i) could result in the revocation, cancellation, adverse
modification or non-renewal of any Channel License, FCC License, or related
facility License or the imposition of a material fine or forfeiture, (ii)
materially impair the Company's or any of its Subsidiaries' ability to develop
or operate any of the Channels or Systems, or (iii) otherwise result in a
Material Adverse Change. The Systems, Channels, Channel Licenses, FCC
Licenses, and related facilities are currently providing and, to the knowledge
of the Company, have been providing service to the public (rather than a test
signal or color bar) and are being operated and/or developed in material
compliance with the respective FCC License, Channel License, related facility
License, and other Permits and with all other Legal Requirements.
(c) Except as set forth on Schedule 4.6, all material reports and
other documents required to be filed with the FCC or other Governmental
Authority with respect to the Systems, Channels, Channel Licenses, FCC
Licenses, Booster Licenses, System Agreements, and Channel Leases have been
timely filed, including, without limitation certifications of completion of
construction. Notwithstanding anything contained herein to the contrary, to
the knowledge of the Company, except as set forth on Schedule 4.6, there have
been no failures to make filings with the FCC or any Governmental Authority at
any time that would reasonably be likely to have a material adverse effect on
any of the Channels, Channel Licenses, FCC Licenses, System Agreements, or
Systems, or any of the Company or any of its Subsidiaries, or what would
reasonably be likely to result in the imposition of a material fine or
forfeiture, including copyright filings, extension requests, and reports
required by Sections 21.11(a), 21.911 and 21.920 of the FCC Rules.
5.6. GOVERNMENTAL AUTHORIZATIONS, ETC.
Except as set forth on Schedule 4.6, no order, consent, approval,
license, validation or authorization of, or registration, filing or declaration
with, or any exemption by any Governmental Authority or public body or
authority or any subdivision thereof or any other third party including any
radio, television or other license, Permit, certificate or approval granted or
issued by the FCC or any other Governmental Authority (including any MDS, MMDS,
ITFS, business radio, earth station or experimental licenses or permits issued
by the FCC) (except for filings to perfect security interests granted pursuant
to this Agreement or any other Note Document) is required for (a) the due
execution, delivery, recordation, filing or performance by any Obligor of this
Agreement or any other Note Document to which it is or is to be a party, or for
the consummation of any aspect of the Transaction or the other transactions
contemplated hereby, (b) the grant by any Obligor of the Liens granted by it
pursuant to the Collateral Documents or (c) the perfection or maintenance of
the Liens created under the Collateral Documents (including the first priority
nature thereof), except for the filing of the financing statements or the
equivalent thereof referred to in Section 4.3(a).
5.7. LITIGATION.
(a) Except as disclosed in Schedule 5.7, there are no actions,
suits, investigations or proceedings pending or, to the best knowledge of the
Obligors, threatened against or affecting the Company or any of its
Subsidiaries or any property or revenues of the Company or any of its
Subsidiaries in any court or before any arbitrator of any kind or before or by
any Governmental Authority that (i) either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or (ii) purports
to adversely affect this Agreement, any of the other Note Documents, the
Transaction or any of the other transactions contemplated hereby.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgement decree or ruling of any count, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.8. TAXES.
(a) The Company and each of its Subsidiaries have filed or caused
to be filed all United States federal income tax returns and all other tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all taxes shown to be
due and payable on any assessments of which the Company or any such Subsidiary,
as the case may be, has received notice and all other taxes, assessments,
levies, fees and charges imposed upon it or any of its properties, assets,
income or franchises, to the extent such taxes, assessments, levies, fees and
charges have become due and payable and before they have become delinquent,
except for any tax, assessment, levy, fee or charge (i) the amount of which is
not, either individually or in the aggregate, Material or (ii) the amount,
applicability or validity of which is being contested in good faith and by
appropriate proceedings and with respect to which the Company or such
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. Neither the Company nor any of the its Subsidiaries knows of any
basis for any other tax, assessment, levy, fee or charge that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of federal, state, local, foreign or other
taxes for all fiscal periods through June 30, 1998 are adequate.
(c) The United States federal income tax liabilities of the Company
and its Subsidiaries have been determined by the Internal Revenue Service and
paid, or the time for audit has expired, for all fiscal years of the Company
through the fiscal year ended August 31, 1993.
(d) Neither the Company nor any of its Subsidiaries has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of taxes of the Company or any of its Subsidiaries, or is aware of
any circumstances that would cause the taxable years or other taxable periods
of the Company or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations. Neither the Company nor any of its
Subsidiaries has provided, with respect to itself or to any property held by
it, any consent under Section 341 of the Internal Revenue Code.
5.9. TITLE TO PROPERTY; LEASES.
Each Obligor and each of its Subsidiaries have good and sufficient
title to, or a valid and enforceable leasehold interest in, all of the
Collateral owned by them and all of their other respective property and assets
that, either individually or in the aggregate, are Material, in each case free
and clear of all Liens other than the Liens expressly permitted under this
Agreement. All leases (other than Channel Leases and the Tower Site Leases)
under which each Obligor or any of its Subsidiaries are a lessor or a lessee
that, either individually or in the aggregate, are Material are valid and
subsisting and are in full force and effect in all material respects.
5.10. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.10 attached hereto:
(a) the Company and each of its Subsidiaries own or possess all
licenses (other than FCC Licenses), permits, franchises, authorizations,
consents and approvals and all patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that are necessary to own
or lease and operate their respective properties and assets and to
transact their respective businesses as now conducted or as proposed to be
conducted and, either individually or in the aggregate, are Material.
Except as set forth in Schedule 5.7 attached hereto, no claim of any
Person is pending or, to the best knowledge of any Obligor, is threatened
challenging the use of any such license, permit, franchise, authorization,
consent, approval, patent, copyright, service mark, trademark, trade name
or other right, or the validity or effectiveness thereof, except for any
such claim that, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect;
(b) no product of any Obligor or any of its Subsidiaries infringes
on any license, permit, franchise, authorization, consent, approval,
patent, copyright, service mark, trademark, trade name or other right
owned by any other Person, except for any such infringement that, either
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect; and
(c) to the best knowledge of each of the Obligors, there is no
Material violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any license, permit, franchise,
authorization, consent, approval, patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any
such Subsidiary, except for any such violation that, either individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
5.11. SECURITY INTERESTS, ETC.
The Collateral Documents create a valid and perfected first priority
lien on and security interest in the Collateral in favor of the Agent for the
benefit of the Secured Parties, securing the payment of all of the Secured
Obligations, and all of the shares of capital stock of each of the Subsidiaries
of the Company that are purported to comprise part of the Collateral have been
delivered to the Agent, together with undated stock powers executed in blank,
and all filings and other actions necessary or desirable to perfect and protect
such lien and security interest have been duly made or taken and are in full
force and effect or will be duly made or taken in accordance with the terms of
the Note Documents.
5.12. COMPLIANCE WITH ERISA.
(a) Each Obligor and each ERISA Affiliate have operated and
administered each Plan in compliance with its terms and with the provisions of
ERISA and all other applicable laws, except to the extent such noncompliance,
either individually or in the aggregate, has not resulted in and could not
reasonably be expected to result in a Material Adverse Effect.
(b) During the immediately preceding five-year period: (i) no
Termination Event has occurred or could reasonably be expected to occur with
respect to any Plan that has resulted in or could reasonably be expected to
result in any Material liability of any Obligor or any ERISA Affiliate to a
Plan or to the PBGC; (ii) no "accumulated funding deficiency" (as such term is
defined in Section 302 of ERISA and Section 412 of the Internal Revenue Code),
whether or not waived, has occurred with respect to any Plan; and (iii) no Lien
in favor of the PBGC or a Plan has arisen or could reasonably be expected to
arise on account of any Plan.
(c) Neither any Obligor nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Internal Revenue Code relating to employee benefit plans (as
defined in Section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by any Obligor or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of any
Obligor or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Internal Revenue Code that, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(d) The present value of all "benefit liabilities" under all of the
Plans (other than Multiemployer Plans), determined as of the end of each such
Plan's most recently completed plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, whether or not vested, did not exceed the aggregate current
value of the assets of all such Plans allocable to such benefit liabilities by
more than $1,000,000 in the aggregate.
(e) Neither any Obligor nor any ERISA Affiliate has incurred or, to
the best knowledge of the Obligors, could reasonably be expected to incur any
Withdrawal Liability in respect of any Multiemployer Plan or any Multiple
Employer Plan. Neither any Obligor nor any ERISA Affiliate would become
subject to any Withdrawal Liability if any such Obligor or any such ERISA
Affiliate were to withdraw completely from all Multiemployer Plans and all
Multiple Employer Plans as of the most recently completed valuation date.
Neither any Obligor nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of ERISA) or is being
terminated (within the meaning of Title IV of ERISA), and no Multiemployer Plan
is, to the best knowledge of the Obligors, reasonably expected to be in
reorganization, insolvent or terminated.
(f) To the best knowledge of each Obligor and each ERISA Affiliate,
no prohibited transaction (within the meaning of Section 406 of the Internal
Revenue Code) or breach of fiduciary responsibility has occurred with respect
to any Plan which has subjected or may subject any Obligor or any ERISA
Affiliate to any liability under Section 406, 409, 502(i) or 502(l) of ERISA or
Section 4975 of the Internal Revenue Code, or under any agreement or other
instrument pursuant to which any Obligor or any ERISA Affiliate has agreed or
is required to indemnify any Person against any such liability that, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(g) None of the execution and delivery of this Agreement, the
issuance and sale of the Notes hereunder or the consummation of any aspect of
the Transaction will involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code. The
representation by the Obligors in the first sentence of this Section 5.12(g) is
made in reliance upon and is subject to (i) the accuracy of your representation
in Section 6.3 as to the sources of the funds used to pay the purchase price of
the Notes to be purchased by you and (ii) the assumption, made solely for the
purpose of making such representation, that Department of Labor Interpretive
Bulletin 75-2 with respect to prohibited transactions remains valid in the
circumstances of the transactions contemplated herein.
5.13. PRIVATE OFFERING BY THE COMPANY.
(a) Neither the Company nor any Person acting on its behalf has
directly or indirectly offered the Notes or any similar securities for sale to,
or solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than you, the Other
Purchasers and not more than [__] other Institutional Investors, each of which
has been offered the Notes at a private sale for investment. Neither the
Company nor any Person acting on its behalf has taken, or will take, any action
that would subject the issuance and sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
(b) Neither any Obligor nor any Person acting on its behalf has
directly or indirectly offered or sold the Notes by any form of general
solicitation or general advertising (including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or any broadcast over television or radio
or any seminar or meeting whose attendees have been invited by any form of
general solicitation or general advertising).
5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
(a) The proceeds received from the sale of the Notes to the
Purchasers will be used solely (i) to refinance the Existing Notes in an
aggregate amount (including principal, accrued interest and fees) equal to $
, (ii) to provide working capital for
the Company and its Subsidiaries in accordance with the Approved Budget or as
the Required Holders may otherwise agree in writing and (iii) to pay any fees
and disbursements paid to the Agent, MLGAF and their professionals in
accordance with this Agreement;
(b) No part of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" (within the meaning of Regulation U) or for the purpose of
purchasing, carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X or to involve any broker
or dealer in a violation of Regulation T. Upon your request, each Obligor will
furnish you with a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in Regulation U. No indebtedness being
reduced or retired out of the proceeds of the Notes was or will be incurred for
the purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U) or any "margin security" (within the meaning of Regulation T).
Margin stock does not constitute more than 25% of the value of the consolidated
property and assets of the Company and its Subsidiaries. None of the
transactions contemplated by this Agreement (including, without limitation, the
direct and indirect use of proceeds of the Notes) will violate or result in a
violation of the Securities Act or the Exchange Act or any of the rules and
regulations promulgated thereunder or Regulation T, Regulation U or Regulation
X.
5.15. STATUS UNDER CERTAIN STATUTES.
(a) Neither the Company nor any of its Subsidiaries is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Act of 1935, as amended, or the Federal Power Act, as amended.
(b) Neither the Company nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company" (each as defined in the Investment
Company Act of 1940, as amended). Neither the sale and purchase of the Notes
nor the application of the proceeds therefrom or repayment thereof by the
Company, nor the consummation of the Transaction or any of the other
transactions contemplated hereby, will violate any provision of such Act or any
rule, regulation or order of the Commission thereunder.
(c) Neither the Company nor any of its Subsidiaries is 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"
(each within the meaning of the Public Utility Holding Company Act of 1935, as
amended).
(d) The Company and each of its Subsidiaries are current with all
reports and documents, if any, required to be filed with any federal or state
securities commission or similar agency and are in full compliance with all
applicable rules and regulations of such commissions, except where the failure
to so comply, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, COMMUNICATIONS ACT, ETC.
(a) Neither the issue and sale of the Notes by any Obligor nor the
use of the proceeds therefrom will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
(b) Each license, permit and other authority issued, granted,
approved or otherwise authorized by the FCC for the benefit of the Company or
any of its Subsidiaries is in good standing unimpaired by any act or omission
of the Company or any of its Subsidiaries or any of their respective officers,
directors, employees or agents. None of the Company or any of its Subsidiaries
is the subject of any outstanding citation, order or investigation by the FCC
that could result in any termination or forfeiture of any FCC License or any
monetary forfeiture or could result in any other Material Adverse Effect and,
to the knowledge of any Obligor, no such citation, order or investigation is
contemplated by the FCC. The Company and its Subsidiaries have filed all
reports and applications required to be filed by the FCC or the Communications
Act, except where the failure to file could not result in any termination,
forfeiture or Material Adverse Effect, and have paid all fees required to be
paid by the FCC or the Communications Act.
5.17. ENVIRONMENTAL MATTERS.
(a) The operations and properties (whether owned or leased) of the
Company and each of its Subsidiaries comply with all Environmental Laws and
Environmental Permits, and all necessary Environmental Permits have been
obtained and are in effect for all of the operations and properties of the
Company and each such Subsidiary, except to the extent that the failure to so
comply or to obtain such Environmental Permit, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
All past noncompliance with any such Environmental Laws or Environmental
Permits has been resolved without ongoing Material obligations or costs to the
Company or any of its Subsidiaries. No circumstances exist that, either
individually or in the aggregate, could reasonably be expected to (i) form the
basis of an Environmental Action against the Company or any of its
Subsidiaries, or any of their respective properties, that, either individually
or in the aggregate, could have a Material Adverse Effect or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law.
(b) None of the properties owned or operated by the Company or any
of its Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or, to the best knowledge
of the Obligors, is adjacent to any such property; there are no and never have
been any underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or
have been treated, stored or disposed of on any property owned or operated by
the Company or any of its Subsidiaries or, to the best knowledge of the
Obligors, on any property formerly owned or operated by the Company or any of
its Subsidiaries; there is no asbestos or asbestos-containing material on any
property owned or operated by the Company or any of its Subsidiaries; and
Hazardous Materials have not been released, discharged or disposed of on any
property owned or operated by the Company or any of its Subsidiaries in any
manner that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries is undertaking,
nor has any of them completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law, excluding, however, any such release,
discharge or disposal the consequences of which, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;
and all Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property owned or operated by the Company or any of
its Subsidiaries have been disposed of in a manner that does not violate or, to
the best knowledge of the Obligors, could not reasonably be expected to give
rise to liability under, any applicable Environmental Law, except to the extent
that such generation, use, treatment, handling, storage or transportation,
either individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries has received
any notice from any Governmental Authority regarding any violation or alleged
violation of, noncompliance or alleged noncompliance with, or liability or
potential liability under or in respect of, any Environmental Law or
Environmental Permit by it or any of its Subsidiaries, nor does the Company or
any of its Subsidiaries have knowledge or reason to believe that any such
notice will be received or is being threatened, except for any such notice or
threatened notice that, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.18. NO BURDENSOME AGREEMENTS.
Neither the Company nor any of its Subsidiaries is a party to any
indenture, loan or credit agreement, lease or other agreement or instrument or
subject to any law, rule, regulation or statute or any charter or corporate or
other similar restriction that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, except as has been
disclosed to you in writing prior to the date of this Agreement.
5.19. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Schedule 5.19 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of the Closing
Date, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is in default and no waiver of default is currently
in effect in the payment of any principal or interest on any Indebtedness of
the Company or any such Subsidiary and no event or condition exists with
respect to any Indebtedness of the Company or any such Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
(b) Neither the Company nor any of its Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a contingency
or otherwise) any of its property or assets, whether now owned or hereafter
acquired, to be subject to a Lien not expressly permitted under Section 9.2.
5.20. FCC LICENSES; CHANNEL LEASES; SYSTEM AGREEMENTS; AND THE SYSTEMS.
(a) Schedule 5.20(a) sets forth a description of each of the
markets in which the Company and each of its Subsidiaries has an Operating
System as of the Closing Date.
(b) Schedule 5.20(b) lists all System Agreements other than FCC
Licenses and Channel Leases. Except as set forth in Schedule 5.20(b), (A) each
System Agreement constitutes a legal, valid, and binding obligation of the
Company or its Subsidiary that is a party thereto and is in full force and
effect and materially complies with all applicable Legal Requirements and has
been filed with the FCC to the extent required by the FCC Rules, and no other
approval, application, filing, registration, consent, or other action of any
Governmental Authority is required to enable the Company or any of its
Subsidiaries to operate under such System Agreement to recognize the benefits
thereunder, or to comply with applicable Legal Requirements; (B) none of the
Company or its Subsidiaries has assigned its rights and interests under any
System Agreement to any other Person; (C) none of the Company or any of its
Subsidiaries is in material breach or default under any such System Agreement,
which breach or default could result in the termination, impairment, or
forfeiture of any rights under or any payments being made with respect to any
such System Agreement, nor has an event occurred with respect to any System
Agreement which (whether with or without notice, the lapse of time, or the
happening or occurrence of any other event) would constitute a breach or
default under such System Agreement; (D) to the knowledge of the Company, no
third party has any rights to assert any interest in any System Agreement or
the rights and benefits granted to the Company or any of its Subsidiaries
pursuant thereto; (E) there are no contractual restrictions relating to any
such System Agreement that reasonably could be expected to materially adversely
affect or delay the Collocation of the Channels at their respective Collocation
Sites or the implementation of digital technology or Alternative Use services;
(F) there are no material provisions of any such System Agreements that are the
subject of negotiation nor has any party to any such System Agreement requested
the renegotiation of any material term thereof; (G) none of the System
Agreements contain a put or call option with respect to the subject matter
thereof; and (H) none of the System Agreements contains any restriction on the
assignment of any System Agreement or the granting of a lien or the placing of
an encumbrance on the transmission equipment by the Company or any of its
Subsidiaries that is a party thereto in accordance with the terms of the Note
Documents or any provisions granting the other party thereto the right to
terminate the System Agreement upon a change in control of the Company. The
Company has delivered to you complete and accurate copies of each of the System
Agreements and none of such have been amended in any respect.
(c) Schedule 5.20(c) lists all Channel Leases and the monthly
payment obligations thereunder. Except as set forth in Schedule 5.20(c), (A)
each Channel Lease constitutes a legal, valid, and binding obligation of the
Company or its Subsidiary that is a party thereto and is in full force and
effect and materially complies with all applicable Legal Requirements and has
been filed with the FCC, to the extent required by the FCC Rules, and no other
approval, application, filing, registration, consent or other action of any
Governmental Authority is required to enable the Company or any of its
Subsidiaries to operate under such Channel Lease to recognize the benefits
thereunder, or to comply with applicable Legal Requirements; (B) none of the
Company or any of its Subsidiaries has assigned its rights and interests under
any Channel Lease to any other Person; (C) none of the Company or its
Subsidiaries is in material breach or default under any such Channel Lease,
which breach or default could result in the termination, impairment, or
forfeiture of any rights under or any payments being made with respect to any
such Channel Lease, nor has an event occurred with respect to any Channel Lease
which (whether with or without notice, the lapse of time, or the happening or
occurrence of any other event) would constitute a breach or default under such
Channel Lease; (D) to the knowledge of the Company, no third party has any
rights to assert any interest in any Channel Lease or the rights and benefits
granted to the Company or any of its Subsidiaries pursuant thereto; (E) there
are no contractual restrictions relating to any such Channel Lease that
reasonably could be expected to materially adversely affect or delay the
Collocation of the Channels at their respective Collocation Sties or the
implementation of digital technology or Alternative Use services; (F) there are
no material provisions of any such Channel Lease that are the subject of
negotiation nor has any party to any such Channel Lease requested the
renegotiation of any material term thereof; (G) none of the Channel Leases
contain a put or call option with respect to the subject matter thereof; and
(H) none of the Channel Leases contains any restriction on the assignment of
any Channel Lease or the granting of a lien or the placing of an encumbrance on
the transmission equipment by the Company or any of its Subsidiaries that is a
party thereto in accordance with the terms of the Note Documents or any
provisions granting the other party thereto the right to terminate the Channel
Leases upon a change in control of the Company. The Company has delivered to
you complete and accurate copies of each of the Channel Leases and none of such
have been amended in any respect.
(d) Schedule 5.20(d) lists all FCC Licenses and applications for
FCC Licenses. As of the Closing date, except as set forth in Schedule 5.20(d),
(A) each of such FCC Licenses constitutes a legal, valid, and binding
obligation of the Company or its Subsidiaries and is in full force and effect;
(B) neither the Company nor any of its Subsidiaries has assigned its rights and
interest under any of the FCC Licenses or any application for an FCC License;
(C) neither the Company, any of its Subsidiaries nor any lessor under any
Channel Lease, as the case may be, is in violation of the terms under the
corresponding FCC License, which violation could result in the termination or
forfeiture of any rights under or any payments being made with respect to such
FCC License, nor has an event occurred with respect to any of the FCC Licenses
which (whether with or without notice, the lapse of time, or the happening or
occurrence of any other event) would constitute such a violation of the terms
of such FCC License that could result in the termination or forfeiture of such
FCC License; (D) to the knowledge of the Company, except with respect to the
lessors under the Channel Leases, no third party has any rights to assert any
interest in any of the FCC Licenses or applications for FCC Licenses; and (E)
there are no contractual restrictions relating to any of the FCC Licenses which
reasonably could be expected to materially adversely affect the Collocation of
the Channels that are the subject thereof at their respective Collocation Site
or the implementation of an Alternative Use. The Company has delivered to you
complete and accurate copies of each of the FCC Licenses and none of them have
been amended in any respect.
(e) Schedule 5.20(e) accurately lists, with respect to each of the
Systems, all Channels, and accurately describes the following:
(i) the status of each FCC License, Channel License, and Booster
License, and, for the System relative to Boston, Massachusetts, any other
Related Facility License including (A) the expiration date of the license,
(B) the renewal deadline and any pending construction deadline and the
status of compliance therewith (including whether one or more extensions
of the filing deadline have been requested or obtained), (C) the status of
any pending applications (including assignment and transfer of control
applications) including whether the application has been accepted for
filing by the FCC and any pending deadline for filing timely petitions to
deny such FCC applications, (D) whether there are any threatened or
pending interference issues, petitions to deny, informal objections,
competing or conflicting applications, outstanding no-objection letters,
comments or waiver requests, and (E) the status of the request for a
protected service area or other interference protection;
(ii) the status of each Collocation Application, Booster
Application and Alternative Use Application and any amendments thereto,
including (A) the relevant Collocation Site or other transmission site and
proposed technical parameters and conditions for analog and digital
operations, (B) whether the application has been accepted for filing by
the FCC, (C) whether there are any threatened or pending interference
issues, petitions to deny, informal objections, competing or conflicting
applications, outstanding no-objection letters, outstanding consent
letters, comments or waiver requests, and (D) the status of the request
for a protected service are or other interference protection; and
(iii) the market trials and operations that the Company or any of
its Subsidiaries are conducting, or intend to conduct pursuant to the
Approved Budget, with respect to Alternative Uses of the Channels or the
Systems and identifies the relevant authorizations used, or to be used, in
conjunction with such trial and operations and the conditions contained
therein.
(f) Complete and correct copies of all of the Permits, Facilities
Location Applications and Alternative Use Applications and amendments thereto
(with the FCC file date stamped thereon), Channel Licenses, related facilities
Licenses, FCC Licenses and material related thereto, including pending
applications filed with the FCC relating to the Systems and other Permits
owned, held or possessed by the Company and any of its Subsidiaries have been
provided to you.
(g) Except as set forth on Schedule 5.20(g) and except for Channel
Licenses held by third parties, with respect to each of the Systems, all of the
assets, Permits, and System Agreements relating to each System are owned by one
or more of the Company and its Subsidiaries.
(h) Except as disclosed in Schedule 5.20(h), (i) the Company and
each of its Subsidiaries have obtained and possesses all System Agreements,
patents, copyrights, certificates of confirmation, licenses, permits,
trademarks, and trade names, or rights thereto, necessary to conduct its
business as currently conducted by the Company and each of its Subsidiaries and
none of the Company and each of its Subsidiaries are in violation of any valid
rights of others with respect to any of the foregoing; (ii) no other license,
permit or franchise is necessary to the operation by the Company or any of its
Subsidiaries of the Systems as conducted or proposed to be conducted pursuant
to the Approved Budget; and (iii) the Company and each of its Subsidiaries have
obtained and possess or applied for all licenses, and have obtained and possess
all leases, conduit use, equipment rental and microwave or satellite relay
agreements necessary for the operation of the Systems as required by the System
Agreements.
5.21. INTERFERENCE.
Except as set forth on Schedule 5.21, neither any of the Company,
any of its Subsidiaries, nor any Licensee of a Channel has accepted or will
accept any electrical interference from any source that is likely to result in
material adverse electrical interference to any of the Channels in any of the
Systems now operating or expected to be operated, including the BTA
Authorizations or any newly licensed Channel in any BTA in which any System
operates or the Company or any of its Subsidiaries expect to operate. Except
as set forth in Schedule 5.21, neither any of the Company, any of its
Subsidiaries, nor any Channel Licensee is likely to experience interference
from any source authorized by the FCC to its presently authorized facilities in
an analog or digital mode or to any facilities that it proposes to construct
pursuant to an application currently pending before the FCC.
5.22. LINE OF SITE HOUSEHOLDS.
Schedule 5.22 lists the number of line of sight households for each
of the Systems and describes any material assumptions for arriving at such
determinations.
5.23. LEASE AGREEMENTS.
(a) Schedule 5.23 accurately and completely lists and sets forth a
description (including location of premises, term and assignability) of the
Tower Site Leases and office and studio space and the same constitute the only
Tower Site Leases and other leases necessary in connection with the conduct of
business by the Company and any of its Subsidiaries as currently conducted.
Each of the Company and its Subsidiaries enjoys quiet possession under all
leases (including Tower Site Leases) to which it is a party as lessee, and all
of such leases are valid, subsisting, and in full force and effect. None of
such leases contains any provision restricting the incurrence of indebtedness
by the lessee.
(b) All of the existing towers owned by the Company or its
Subsidiaries and, to the best of each Obligor's knowledge, all of the other
existing towers, used in the operation of the Systems are obstruction-marked
and lighted to the extent required by, and in accordance with, the rules and
regulations of the FAA or FCC. To the best knowledge and good faith belief of
the Company and its Subsidiaries, appropriate notification to the FAA has been
filed for each tower where required by the rules and regulations of the FAA or
FCC.
5.24. EMPLOYEE CONTRACTS; BOARD OF DIRECTORS.
(a) There are no employment agreements or other compensation
arrangements (including the setting of targets for the payment of bonuses) with
any officer of the Company or any of its Subsidiaries except for the Employment
Agreements and as disclosed in Schedule 5.24(a) hereto.
(b) Set forth on Schedule 5.24(b) is a true and complete list of
(a) the Board of Directors of CS Wireless and (b) the Members and the members
of the Governing Board of TelQuest.
5.25. SUBSIDIARIES WITHOUT ASSETS OR LIABILITIES.
Set forth on Schedule 5.25 is a true and complete list of each
"shell" corporation formed for the benefit of the Company in connection with
certain financing arrangements between the Company and Foothill Corporation and
having no assets or liabilities and for which there are no shares of capital
stock, subscriptions or other offers to purchase shares, currently outstanding
or contemplated as of the Closing Date.
5.26. MAINTENANCE OF SEPARATENESS.
Each of the Company and each of its Subsidiaries has conducted its
dealings with each of its Subsidiaries on an independent and arm's-length basis
and has observed and maintained, its separate identity from that of each of its
Subsidiaries by (i) not allowing its funds or other assets to be commingled
with the funds or other assets of any of its Subsidiaries, (ii) maintaining
separate corporate and financial records from those of each of its Subsidiaries
and observing all corporate formalities, including corporate minute books and
acting pursuant to corporate resolutions, (iii) paying its liabilities from its
own assets, (iv) maintaining bank accounts and accounting systems separate from
those of each of its Subsidiaries and (v) conducting its dealings with third
parties in its own name and as a corporate entity separate and distinct from
each of its Subsidiaries.
5.27. MATERIAL CONTRACTS.
Set forth on Schedule 5.27 is a complete and accurate list of all
Material Contracts of each Obligor, showing as of the date hereof the parties,
subject matter and term thereof. Each such Material Contract has been duly
authorized, executed and delivered by all parties thereto, has not been amended
or otherwise modified, is in full force and effect and is binding upon and
enforceable against all parties thereto in accordance with its terms, and there
exists no default under any Material Contract by any party thereto.
5.28. ACCOUNTS.
Neither the Company nor any of its Subsidiaries has any deposit
accounts or other checking or operating accounts other than the accounts listed
on the attached Schedule 5.28.
5.29. THE CONFIRMATION ORDER.
As of the Closing Date, the Confirmation Order has been entered and
has not been stayed, amended, vacated, reversed, rescinded or otherwise
modified in any respect.
5.30. YEAR 2000 COMPLIANCE.
Any reprogramming required to permit the proper functioning in and
following the year 2000 of (i) the computer systems of the Company or any of
its Subsidiaries and (ii) the equipment containing embedded microchips
(including systems and equipment supplied by others or with which the systems
of the Company or any of its Subsidiaries interface) and the testing of all
such systems and equipment, as so reprogrammed, will be completed by July 1,
1999. The cost to the Company of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Company or any of its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in the occurrence of a
Default or Event of Default or have a Material Adverse Effect. Except for such
of the reprogramming referred to in the preceding sentence as may be necessary,
the computer and management information systems of the Company and its
Subsidiaries are, and with ordinary course upgrading and maintenance, will
continue to be, sufficient to permit the Company and its Subsidiaries to
conduct its business without the occurrence of a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of
one or more pension or trust funds and not with a view to the distribution
thereof; PROVIDED that the disposition of your or their property shall at all
times be within your or their control. You understand that the Notes have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by applicable law, and that the
Company is not required to register the Notes.
6.2. ACCREDITED INVESTOR.
You are an "accredited investor" (as defined in Rule 501 of
Regulation D under the Securities Act) and by reason of your business and
financial experience, and the business and financial experience of those
Persons retained by you to advise you with respect to your investment in the
Notes, you, together with such advisors, have such knowledge, sophistication
and experience in business and financial matters as to be capable of evaluating
the merits and risks of the prospective investment, are able to bear the
economic risk of such investment and, at the present time, are able to afford a
complete loss of such investment. You are not purchasing the Notes in reliance
upon any investigation made by any other Person.
6.3. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "FUNDS SOURCE") to be
used by you to pay the purchase price of the Notes to be purchased by you
hereunder:
(a) the Funds Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of the
QPAM Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the conditions of Parts I(c) and I(g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "CONTROL" in Section V(e) of the QPAM
Exemption) owns more than a 5% interest in the Company and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans the
assets of which are included in such investment fund have been disclosed
to the Company in writing pursuant to this Section 6.3(a); and
(b) the Funds Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
7. PREPAYMENTS AND REPURCHASES OF THE NOTES.
7.1. INTEREST; REQUIRED REDEMPTIONS.
(a) The Company shall pay interest on the unpaid principal amount
of each A Note and B Note, as the case may be, from the date of issuance of
such Note until the Maturity Date at the following rates on the Maturity Date:
(i) with respect to the A Notes, an annual rate equal to 10.50%
compounded semi-annually; and
(ii) with respect to the B Notes, a rate per annum equal to 13.00%
compounded annually.
(b) The Company will prepay the aggregate principal amount of all
of (i) the A Notes outstanding on such date and (ii) if no A Notes remain
outstanding on such date, the B Notes outstanding on such date, on a pro rata
basis, at 100% of the aggregate principal amount of the Notes so prepaid
together with all interest accrued and unpaid thereon to the date of such
prepayment upon receipt of the Net Cash Proceeds (i) from the sale of assets of
the Company (excluding such sales in the ordinary course of business and sales
permitted under Sections 9.5(b)(ii) and (iv) so long as the proceeds of such
sale are used in accordance with the Approved Budget), (ii) of Extraordinary
Receipts unless used in accordance with the Approved Budget and (iii) from all
proceeds from the issuance of additional debt (subject to Section 7.2 below) or
equity permitted under this Agreement. The aggregate outstanding principal
amount of the Notes, together with all interest accrued and unpaid thereon,
shall be due and payable by the Company on the Maturity Date. Upon and during
the continuance of an Event of Default, the Obligors shall pay interest at the
Default Rate.
7.2. OPTIONAL REDEMPTIONS.
(a) The Company may, at its option, upon notice as provided in
Section 7.2(b), redeem at any time all, or from time to time any part of, the
Notes, in an aggregate principal amount of not less than $250,000 or integral
multiples of $50,000 in excess thereof (or, if less, the remaining aggregate
principal amount of the Notes outstanding at such time), at 100% of the
aggregate principal amount of the Notes so redeemed plus accrued and unpaid
interest thereon to the date of such redemption.
(b) The Company will give each holder of Notes written notice of
each optional redemption under this Section 7.2 not less than one business day
and not more than 10 business days prior to the date fixed for such redemption.
Each such notice shall specify the date fixed for such redemption, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 7.5), and the interest to be paid on the redemption
date with respect to such principal amount being prepaid and shall state that
such redemption is to be made pursuant to this Section 7.2.
7.3. ALLOCATION OF PARTIAL REDEMPTIONS.
In the case of each partial redemption of the Notes, the principal
amount of the Notes to be redeemed shall be allocated (in integral multiples of
$1,000) (a) until repayment in full in cash of the A Note Indebtedness, among
all of the A Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for redemption and (b) thereafter, among all of the B Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for redemption.
7.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 7,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and canceled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid or
repurchased principal amount of any Note.
7.5. PURCHASE OF NOTES.
The Company will not and will not permit any of its Subsidiaries or
Affiliates to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or, prepayment
of the Notes in accordance with the terms of this Agreement and the Notes. The
Company will promptly cancel all Notes acquired by it or any of its Affiliates
pursuant to any payment, prepayment or purchase of Notes pursuant to any
provision of this Agreement, and no Notes may be issued in substitution or
exchange for any such Notes.
7.6. PRIORITY.
(a) PRIORITY OF SECURITY INTERESTS. Irrespective of (i) the time,
order, manner or method of creation, attachment, perfection or filing of the
respective security interests and liens granted to any purchaser of A Notes
(the "A PURCHASERS") or any purchasers of B Notes (the "B PURCHASERS") in or on
any or all of the Collateral or any other property or assets of the Company or
any of its Subsidiaries, (ii) the time or manner of the filing of their
respective financing statements, (iii) whether the A Purchasers or the
B Purchasers or any bailee or agent thereof holds possession of any or all of
the Collateral or any other property or assets of the Company or any of its
Subsidiaries, (iv) the dating, execution or delivery of any agreement, document
or instrument granting the A Purchasers or the B Purchasers security interests
and liens in or on any or all of the Collateral or any other property or assets
of the Company or any of its Subsidiaries, (v) the giving or failure to give
notice of the acquisition or expected acquisition of any purchase money or
other security interests and (vi) any provision of the Uniform Commercial Code
(the "UCC") or any other applicable law to the contrary, any and all security
interests, liens, rights and interests of the B Purchasers, whether now or
hereafter arising or existing, in or on any or all of the Collateral shall be
and hereby are subordinated to any and all security interests, liens, rights
and interests of the A Purchasers in and to the Collateral. For purposes of
the foregoing allocation of priorities, any claim of a right of set-off shall
be treated in all respects as a security interest and no claimed right of set-
off shall be asserted to defeat or diminish the rights or priorities provided
for herein.
(b) STANDSTILL. The B Purchasers shall have no right to take any
action with respect to the Collateral, whether by judicial or non-judicial
foreclosure, notification to any account debtor of the Company or any of its
Subsidiaries, the seeking of the appointment of a receiver for any portion of
the property or assets of the Company or any of its Subsidiaries or otherwise,
or to take possession of any of the Collateral, unless and until all the A Note
Indebtedness shall have been fully and finally paid in cash and all financing
arrangements and commitments between the Company and its Subsidiaries and the
A Purchasers have been terminated.
(c) DISTRIBUTION OF COLLATERAL. The B Purchasers agree that they
will not ask for, demand, sue for, take or receive from the Company or any of
its Subsidiaries or any successor or assign thereof, including, without
limitation, a receiver, trustee or debtor in possession, whether by set-off or
in any other manner, the whole or any part of the B Note Indebtedness from any
of the Collateral, unless and until all of the A Note Indebtedness shall have
been fully and finally paid in cash and all of the financing arrangements and
commitments between the Company and its Subsidiaries and the A Purchasers have
been terminated; PROVIDED, HOWEVER, that notwithstanding the foregoing, so long
as the Company or any of its Subsidiaries, any A Purchaser or the Agent, on
behalf of the A Purchasers, has not sent the B Purchasers written notice of the
occurrence of a Default (or in the event such notice has been sent, so long as
such Default has been cured (if capable of being cured under the terms of the
applicable Note Document) or waived in writing by the relevant holders of
Notes), the Company and its Subsidiaries may pay to the B Purchasers, and the B
Purchasers may accept and retain from the Company and its Subsidiaries,
voluntary payments of principal and interest and fees and other amounts related
thereto on the B Note Indebtedness which are made by the Company and its
Subsidiaries in the ordinary course of business, whether such payments are made
from the Collateral or otherwise.
(d) RELEASE OF COLLATERAL. The B Purchasers agree that any
collection, sale or other disposition of any or all of the Collateral by the
A Purchasers (whether pursuant to the UCC or otherwise) shall be free and clear
of any and all security interests, liens, claims and rights of the B Purchasers
in such Collateral. At the request of the Collateral Agent, on behalf of the
A Purchasers, the B Purchasers shall promptly provide the Collateral Agent, on
behalf of the A Purchasers, with any necessary or appropriate releases to
permit the collection, sale or other disposition of any or all of the
Collateral by the A Purchasers free and clear of the B Purchasers= security
interests and liens. In addition, at the request of the Collateral Agent, on
behalf of the A Purchasers, the B Purchasers shall promptly release any and all
security interests, liens, claims and rights which they may have on or in the
applicable Collateral to facilitate the collection, sale or other disposition
of such Collateral by the Company or any of its Subsidiaries.
(e) TURNOVER OF COLLATERAL. In the event any payment or
distribution to any B Purchaser is made from any of the Collateral upon or with
respect to any of the B Note Indebtedness prior to the time all of the A Note
Indebtedness shall have been fully and finally paid in cash, the B Purchasers
shall receive and hold the same in trust, as trustee, for the benefit of the A
Purchasers and shall forthwith deliver the same to the Collateral Agent, for
the benefit of the A Purchasers, in precisely the form received (except for the
endorsement or assignment of the B Purchasers where necessary) for application
against the A Note Indebtedness, whether due or not due, and, until so
delivered, the same shall be held in trust by the B Purchasers as the property
of the A Purchasers.
(f) NONAVOIDABILITY AND PERFECTION. The B Purchasers agree that
they shall not directly or indirectly take any action to contest or challenge
the validity, legality, enforceability, perfection, priority or avoidability of
any of the A Note Indebtedness, any of the Note Documents or any of the
security interests and liens of the A Purchasers in or on any of the Collateral
or the reasonableness of any action or failure to act in respect of the
Collateral, including, without limitation, the timing, method or manner of (i)
any consent to disposition by the Company or any of its Subsidiaries of any
Collateral or (ii) disposing of or liquidating any Collateral, the terms,
including the price and percentage of consideration received in cash, of any
such disposition or liquidation, or any failure to dispose of or liquidate any
Collateral, including acceptance of Collateral by the A Purchasers in full or
partial satisfaction of any A Note Indebtedness.
(g) AGREEMENTS. The B Purchasers covenant and agree with the A
Purchasers that the B Purchasers will not oppose, interfere with or otherwise
attempt to prevent the A Purchasers from enforcing their security interests in
and liens on any of the Collateral or otherwise realizing upon any of the
Collateral.
(h) WAIVER OF CERTAIN RIGHTS. The B Purchasers hereby waive any
and all rights to (i) require the A Purchasers to marshall any property or
assets of the Company or any of its Subsidiaries or to resort to any of the
property or assets of the Company or any of its Subsidiaries in any particular
order or manner, or (ii) require the A Purchasers to enforce any guaranty or
any security interest or lien given by any Person other than the Company or any
of its Subsidiaries to secure the payment of any or all of the A Note
Indebtedness as a condition precedent or concurrent to taking any action
against or with respect to the Collateral.
(i) BANKRUPTCY FINANCING ISSUES. If the Company or any of its
Subsidiaries shall become subject to a proceeding under the Bankruptcy Code,
and if the A Purchasers shall desire to permit the use of cash collateral by
the Company or any of its Subsidiaries or to provide post-petition financing
from the A Purchasers to the Company or any of its Subsidiaries, the B
Purchasers agree as follows: (i) adequate notice to the B Purchasers shall be
deemed to have been provided for such use of cash collateral or such post-
petition financing if the B Purchasers receive notice thereof at least three
(3) Business Days prior to the earlier of (x) any hearing on a request to
approve such use of cash collateral or such post-petition financing or (y) the
date of entry of an order approving the same; and (ii) no objection will be
raised by the B Purchasers to any such use of cash collateral or such post-
petition financing from the A Purchasers on the grounds of a failure to provide
adequate protection for the B Purchasers' junior lien, provided that the B
Purchasers are granted a comparable junior lien on the post-petition
collateral. No objection will be raised by the B Purchasers to the A
Purchasers' motion for relief from automatic stay in any such proceeding to
foreclose on, sell or otherwise realize upon the Collateral.
8. AFFIRMATIVE COVENANTS.
From the date of this Agreement and, thereafter, so long as any of
the Notes shall be outstanding, the Company will perform and comply with each
of the following covenants:
8.1. FINANCIAL AND BUSINESS INFORMATION.
The Company will furnish to each holder of Notes without cost to
you:
(a) REQUESTED INFORMATION. With reasonable promptness, any
information relating to the financial condition, business, operations,
assets, liabilities or properties of the Company or any of its
Subsidiaries, including but not limited to information regarding FCC
activity or relating to the ability of any Obligor to perform its
obligations under any of the Note Documents to which it is a party as from
time to time may be reasonably requested by any such holder of Notes,
including, without limitation, all monthly bank statements of the Company
and its Subsidiaries.
(b) AUDITOR'S REPORTS. Promptly upon receipt thereof, copies of
all "management letters" or other written reports submitted to the Company
or any of its Subsidiaries by any independent certified public accountants
of the Company or any such Subsidiary in connection with each annual,
interim or special audit of its financial statements made by such
accountants (including, without limitation, any comment letter submitted
by such accountants to management of the Company or any such Subsidiary in
connection with their annual audit and any reports addressing internal
accounting controls of the Company or any such Subsidiary submitted by
such accountants), and, promptly upon completion thereof, copies of any
response report from the Company or any such Subsidiary to such
accountants.
(c) SEC AND OTHER REPORTS. Promptly upon transmission or receipt
thereof, (i) copies of any filings and registrations with, and any reports
or notices to or from, the Commission, or any successor agency, and copies
of all financial statements, proxy statements, notices and reports that
the Company or any of its Subsidiaries shall send to a holder of any
Indebtedness owed by the Company or any of its Subsidiaries in its
capacity as such a holder, (ii) copies of all press releases and other
statements made available by the Company or any of its Subsidiaries to the
public concerning developments that are Material, (iii) upon your
reasonable request, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local
agency responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or local
agency responsible for health and safety matters, or any successor
agencies or authorities to any of the foregoing, concerning environmental,
health or safety matters and (iv) all reports and applications required to
be filed by the FCC or the Communications Act for which the failure to
file could have a Material Adverse Effect.
(d) NOTICE OF DEFAULT, ETC. Promptly, and in any event within five
days after a Responsible Officer obtains knowledge thereof, notice of the
occurrence of each Default or Event of Default or any event, development
or occurrence that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect continuing on the
date of such statement, setting forth in reasonable detail the nature of
such Default, Event of Default or event, development or occurrence and the
action that the Company has taken and proposes to take with respect
thereto.
(e) MATERIAL ADVERSE CHANGE. Promptly after the occurrence
thereof, notice of a Material Adverse change in the business, operations,
properties, prospects or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole, or the occurrence of a development
which might result in such Material Adverse Change.
(f) LITIGATION. Promptly after the commencement thereof, notice of
all actions, suits, investigations and proceedings in any court or before
any arbitrator or before or by any Governmental Authority binding on or
affecting the Company or any of its Subsidiaries or any of their
respective properties of the type described in Section 5.7 which would, if
adversely decided, reasonably be expected to have a Material Adverse
Effect on the business operations, properties, prospects or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a
whole.
(g) ERISA MATTERS. Promptly, and in any event within five days
after a Responsible Officer becomes aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that any Obligor or any ERISA Affiliate proposes to take with respect
thereto:
(i) Any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or could reasonably be
expected to result in, a Termination Event;
(ii) With respect to any Multiemployer Plan, the receipt of
any notice as prescribed in ERISA or otherwise of any Withdrawal
Liability assessed against any Obligor or any ERISA Affiliate, or of
a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA);
(iii) The taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by any Obligor or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan;
(iv) The failure to make full payment on or before the due
date (including extensions thereof) of all amounts that any Obligor
or any ERISA Affiliate is required to contribute to each Plan
pursuant to its terms and as required to meet the minimum funding
standard set forth in ERISA and the Internal Revenue Code with
respect thereto;
(v) Any change in the funding status of any Plan that could
reasonably be expected to have a Material Adverse Effect; or
(vi) Any event, transaction or condition not otherwise
described in this Section 8.1(g) that could result in the incurrence
of any liability by any Obligor or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of
the Internal Revenue Code relating to employee benefit plans, or in
the imposition of any Lien on any of the rights, properties or
assets of any Obligor or any ERISA Affiliate pursuant to Title I or
IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or
Liens then existing, could reasonably be expected to have a Material
Adverse Effect.
Promptly upon your reasonable request, such additional information
concerning any Plan as you may have reasonably requested, including, but
not limited to, copies of each annual report/return (Form 5500 series) and
all schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA
and the Internal Revenue Code, respectively, for each "plan year" (within
the meaning of Section 3(39) of ERISA).
(h) No later than 5 days before the end of each fiscal quarter
following the Closing Date, an amended Approved Budget for the succeeding
fiscal month.
(i) No later than 20 days after the first day of each fiscal month
following the Closing Date, a variance report for the preceding fiscal
month in a form reasonably satisfactory to the Required Holders.
8.2. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances, rules, regulations, including without limitation the
Communications Act, FCC Rules and those relating to copyright and orders to
which each of them and their properties are subject and all applicable
restrictions imposed on each of them and their properties by any Governmental
Authority (including, without limitation, all Environmental Laws), and will
obtain and maintain in effect all licenses, certificates, permits, franchises,
consents and other authorizations of any Governmental Authority or public body
or authority or any subdivision thereof or any other third party including any
radio, television or other license, Permit, certificate or approval granted or
issued by the FCC or any other Governmental Authority (including any MDS, MMDS,
ITFS, business radio, earth station or experimental licenses or permits issued
by the FCC) (except for filings to perfect security interest granted pursuant
to this Agreement or any other Note Document) necessary for the ownership or
leasing and operation of their respective properties or the conduct of their
respective businesses, in each case to the extent necessary to ensure that any
noncompliance with such laws, ordinances, rules, regulations or orders or any
failure to obtain or maintain in effect such licenses, certificates, permits,
franchises, consents and other authorizations, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
8.3. MAINTENANCE OF INSURANCE.
The Company will and will cause each of its Subsidiaries at all
times to maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if adequate reserves
are maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated or as may otherwise be required by applicable law, including, without
limitation, workers' compensation insurance, liability insurance, casualty
insurance and business interruption insurance.
8.4. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties and
assets, owned or leased, used or useful in the conduct of its business, that,
either individually or in the aggregate, are Material in good repair, working
order and condition (other than ordinary wear and tear and as a result of
casualty and condemnation), so that the business carried on in connection
therewith may be properly conducted at all times.
8.5. PAYMENT OF TAXES AND CLAIMS; PERFORMANCE OF MATERIAL OBLIGATIONS.
(a) The Company will and will cause each of its Subsidiaries to pay
and discharge, and maintain appropriate reserves in respect of, all taxes,
assessments and governmental charges or levies imposed upon them or any of
their properties, assets, income or franchises, to the extent such taxes,
assessments, charges or levies have become due and payable and before they have
become delinquent and all claims for which sums have become due and payable
that have or might by law become a Lien upon any property or assets of the
Company or any of its Subsidiaries or any part thereof; PROVIDED, HOWEVER, that
neither the Company nor any of its Subsidiaries shall be required to pay or to
discharge any such tax, assessment, charge, levy or claim that is being
contested in good faith and by appropriate proceedings and as to which adequate
reserves are being maintained in accordance with GAAP, unless and until any
Lien resulting therefrom attaches to its property and assets and becomes
enforceable against its other creditors.
(b) The Company will and will cause each of its Subsidiaries to
perform all of its obligations under the terms of each contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting it, except where the failure to so perform could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) The Company will and will cause each of its Subsidiaries to pay
when due all rents and other amounts payable under any leases and Systems
Agreements to which the Company or any of its Subsidiaries is a party or by
which any of its properties and assets are bound, except where the failure to
so pay could not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
8.6. PRESERVATION OF CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its corporate existence and its rights (charter and statutory). The
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries and all permits, licenses,
approvals, rights, privileges and franchises of the Company and its
Subsidiaries.
8.7. MAINTENANCE OF BOOKS AND RECORDS; INSPECTION.
(a) The Company will and will cause each of its Subsidiaries to
keep proper records and books of account in which full, true and correct
entries in conformity with generally accepted accounting principles in effect
from time to time in the United States of America consistently applied or as
otherwise required by applicable rules and regulations of any governmental
agency or regulatory authority having jurisdiction over the Company and its
Subsidiaries and all requirements of law shall be made of all financial
transactions and all of the assets and businesses of the Company and each such
Subsidiary (including, without limitation, the establishment and maintenance of
adequate and appropriate reserves).
(b) The Company shall and shall cause each of its Subsidiaries to
permit each holder of Notes that is an Institutional Investor and any of the
agents or representatives thereof:
(i) NO DEFAULT. If no Default or Event of Default has occurred and
is continuing, at the expense of the Company and upon reasonable prior
written notice to the Company, at any reasonable time and from time to
time (as often as may be requested), to visit and inspect any of the
offices and properties, and to examine and make copies of and abstracts
from the records and books of account, of the Company and/or any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any such Subsidiary, as the case may be, with, and be advised
as to the same by, their officers or directors and with or by their
independent certified public accountants (and by this Section 8.7(b)(i)
the Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with such Persons).
(ii) DEFAULT. If a Default or Event of Default has occurred and is
continuing, at the expense of the Company and without prior notice, at any
time and from time to time (as often as may be requested), to visit and
inspect any of the offices or properties, and to examine and make copies
of and abstracts from the records and books of account, of the Company
and/or any of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Company or any such Subsidiary, as the case may be, with,
and be advised as to the same by, their officers or directors and with or
by their independent public accountants (and by this Section 8.7(b)(ii)
the Company authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with such Persons).
8.8. USE OF PROCEEDS.
The Company will use the proceeds of the issue and sale of the Notes
solely for the purposes set forth in Section 5.14(a) and, unless the Required
Holders agree in writing, shall use such proceeds only for the items and in an
amount not to exceed 110% of such budgeted items set forth in the Approved
Budget.
8.9. CAPITAL STOCK.
The Company will at all times be the direct, legal and beneficial
owner of 100% of the outstanding capital stock of each of its directly owned
Subsidiaries as set forth in Schedule 5.3, and the indirect legal and
beneficial owner of 100% of the outstanding capital stock of each of its
indirectly owned Subsidiaries free and clear of any lien, security interest,
option or other charge or encumbrance.
8.10. FULL COOPERATION.
The Company agrees that, at all times, it will cooperate fully with
you and provide all information reasonably requested by you in connection with
the Refinancing, including information, term sheets, drafts of agreements with
strategic partners, lenders, acquirors or equity investors.
8.11. OBLIGATIONS OF ADDITIONAL OBLIGORS.
The Company will cause (a) (i) all of the shares of capital stock of
each First Tier Subsidiary of the Company, (ii) its membership interest
in TelQuest, (iii) its shares of capital stock of CS Wireless, and (iv) all of
the shares of capital stock of each Subsidiary of an Unrestricted Subsidiary,
in each case, now or hereafter owned by the Company or any of its Unrestricted
Subsidiaries and (b) such other present and future property and assets of each
Unrestricted Subsidiary as you may request, including, without limitation,
proceeds from the liquidation of FCC licenses, FCC leases, owned real estate,
leaseholds, fixtures, accounts, license rights, patents, trademarks,
tradenames, copyrights, chattel paper, insurance proceeds, contract rights,
hedge agreements, cash bank accounts, tax refunds, documents, instruments,
general intangibles, inventory, equipment and other goods, and proceeds of each
of the foregoing to be pledged to the Agent pursuant to the terms and
conditions of the Security Agreement or a security agreement in substantially
the form of Exhibit B attached hereto and otherwise in form and substance
reasonably acceptable to you and the Agent and (c) such Person to guarantee the
obligations of the Company pursuant to the terms and conditions of the
Subsidiary Guaranty or a guaranty in substantially the form of Exhibit D
attached hereto and otherwise in form and substance reasonably acceptable to
you and the Agent. In furtherance of the foregoing provisions of this Section
8.11, the Company agrees that:
(i) at the time that any Person becomes a Subsidiary, the Company
shall so notify you and the Agent and shall cause (a) such Person to cause
100% (or, if less, the full amount owned, directly or indirectly, by the
Company or any Unrestricted Subsidiary), of the shares of capital stock of
such Person to be delivered to the Agent (together with undated stock
powers executed in blank) and (b) such other present and future property
and assets of each Unrestricted Subsidiary as you may request, including,
without limitation, proceeds from the liquidation of FCC licenses, FCC
leases, owned real estate, leaseholds, fixtures, accounts, license rights,
patents, trademarks, tradenames, copyrights, chattel paper, insurance
proceeds, contract rights, hedge agreements, cash bank accounts, tax
refunds, documents, instruments, general intangibles, inventory, equipment
and other goods and pledged to the Agent pursuant to security agreement(s)
in substantially the form of Exhibit B attached hereto and otherwise in
form and substance reasonably acceptable to you and the Agent and (c) such
Person to execute and deliver a guarantee in substantially the form of
Exhibit D attached hereto,
(ii) to cause such Person to deliver such other documentation as
you or the Agent may reasonably request in connection with the foregoing,
including, without limitation, certified resolutions, UCC Financing
Statements and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above in Section 8.11(i)),
all in form, substance and scope reasonably satisfactory to you and the
Agent, and
(iii) upon the release of the shares of capital stock of the Seller
Restricted Subsidiaries, the Company shall deliver certificates
representing such shares to you accompanied by undated stock powers
executed in blank.
8.12. PAYMENT OF FEES.
(a) The Company will pay the Facility A Fee to the A Purchasers, on
a pro rata basis, on the Closing Date.
(b) The Company will pay the Facility B Fee to the B Purchasers, on
a pro rata basis as follows: $1,500,000 on the Closing Date and $2,500,000 on
the Maturity Date.
(c) The Company will pay all fees required to be paid by the FCC
and the Communications Act.
8.13. MAINTENANCE OF SEPARATENESS.
Each of the Obligors and each of its Subsidiaries will conduct, its
dealings with each of its Subsidiaries on an independent and arm's-length basis
and will observe and maintain, its separate identity from that of each of its
Subsidiaries by (i) not allowing its funds or other assets to be commingled
with the funds or other assets of any of its Subsidiaries, (ii) maintaining
separate corporate and financial records from those of each of its Subsidiaries
and observing all corporate formalities, including corporate minute books and
acting pursuant to corporate resolutions, (iii) paying its liabilities from its
own assets, (iv) maintaining bank accounts and accounting systems separate from
those of each of its Subsidiaries and (v) conducting its dealings with third
parties in its own name and as a corporate entity separate and distinct from
each of its Subsidiaries.
8.14. PERFORMANCE OF MATERIAL CONTRACTS.
Each of the Obligors and each of its Subsidiaries will perform and
observe all of the terms and provisions of each Material Contract to be
performed or observed by it, maintain each such Material Contract in full force
and effect, enforce each such Material Contract in accordance with its terms,
take all such action to such end as may be from time to time requested by the
Required Holders and, upon request of the Purchaser, make to each other party
to each such Material Contract such demands and requests for information and
reports or for actions as such Obligor is entitled to make under such Material
Contract, and cause each of its Subsidiaries to do so except, in any case,
where the failure to do so, either individually or in the aggregate could not
have a Material Adverse Effect.
8.15. ACCOUNTS.
The Company will maintain the Account (as defined in the Pledge
Agreement and listed in Part IV of Schedule 5.28), the Operating Account (as
defined in the Security Agreement and listed in Part IV of Schedule 5.28), the
payroll account listed in Part IV of Schedule 5.28 and the Lockbox Account
listed in Part I of Schedule 5.28 into which, among other things, all proceeds
of Collateral are paid, in each case with Fleet National Bank or one or more
banks acceptable to the Required Holders that have accepted the assignment of
such accounts to the Agent pursuant to the Security Agreement. Neither the
Company nor any of its Subsidiaries will establish any deposit accounts other
than those set forth on Schedule 5.28.
Each Obligor shall instruct (i) each bank listed in Part I of
Schedule 5.28 to transfer to the Operating Account, at the end of each Business
Day, in same day funds, an amount equal to the credit balance of such account
in such bank, (ii) each bank listed in Part II of Schedule 5.28 to transfer to
the Operating Account, at the end of the next Business Day, in same day funds,
an amount equal to the credit balance of such account minus $20,000 and
(iii) each bank listed in Part III of Schedule 5.28 to transfer to the
Operating Account, in same day funds, all funds, if any, in such accounts and
immediately thereafter to close such accounts.
8.16. TOWER SITE LEASES, CHANNEL LEASES AND PROGRAMMING AGREEMENTS.
Each of the Obligors will use its commercially reasonable best
efforts to obtain the requisite consent to, and upon the receipt of such
consent, collaterally assign each of its (a) Tower Site Leases, Channel Leases
and programming agreements that are not listed on Schedule II to the Security
Agreement to the Agent in accordance with the terms of the Security Agreement
in connection with the renewal of each such Site Lease, Channel Lease and
programming agreement and (b) Tower Site Leases, Channel Leases and programming
agreements dated after the date hereof to the Agent in accordance with the
terms of the Security Agreement.
8.17. BLUE-SKY SURVEY
No later than 30 days after the Closing Date, the Company shall
cause Day, Berry and Howard to deliver a blue-sky survey to the holders of the
Senior Notes who are deemed to be "underwriters" or "affiliates" for purposes
of the Securities Act.
9. NEGATIVE COVENANTS.
From the date of this Agreement and, thereafter, so long as any of
the Notes shall be outstanding, the Company and its Subsidiaries will perform
and comply with each of the following covenants:
9.1. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
Except as otherwise permitted in this Agreement, the Company will
not and will not permit any of its Subsidiaries to directly or indirectly enter
into or engage in any transaction or series of related transactions (including,
without limitation, the purchase, lease, sale or exchange of property or assets
of any kind or the rendering of any service) with any of its Affiliates, except
in the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate thereof;
PROVIDED that the foregoing restrictions of this Section 9.1 shall not apply to
any tax sharing agreements in existence on the date of closing and approved by
the Purchaser.
9.2. LIMITATIONS ON LIENS.
The Company will not and will not permit any of its Subsidiaries to
(a) create, incur, assume or suffer to exist any Lien on or with respect to any
of its property or assets of any character (including, without limitation,
accounts), whether now owned or hereafter acquired, (b) sign or file or suffer
to exist under the Uniform Commercial Code or any similar statute of any
jurisdiction, a financing statement (or the equivalent thereof) that names the
Company or any of its Subsidiaries as debtor, (c) sign or suffer to exist any
security agreement authorizing any secured party thereunder to file such
financing statement (or the equivalent thereof), or (d) assign any accounts or
other right to receive income; EXCLUDING, HOWEVER, from the operation of the
foregoing restrictions the following:
(i) Permitted Liens;
(ii) Liens created pursuant to the Note Documents;
(iii) Liens existing on the Closing Date and described in
Schedule 9.2(iii) attached hereto;
(iv) purchase money Liens upon or in real property or equipment
acquired or held by the Company or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such real property or
equipment or to secure Indebtedness incurred solely for the purpose of
financing the acquisition, construction or improvement of such real
property or equipment to be subject to such Liens, or Liens existing on
any such real property or equipment at the time of its acquisition (other
than any such Liens created in contemplation of such acquisition that do
not secure the purchase price of such real property or equipment);
PROVIDED, HOWEVER, that no such Lien shall extend to or cover any property
other than the real property or equipment being acquired, constructed or
improved; and PROVIDED FURTHER that the aggregate principal amount of
Indebtedness secured by Liens permitted under this Section 9.2(iv) shall
not exceed $200,000; and
(v) deposits to secure the performance of leases of property
(whether real, personal or mixed) of the Company and its Subsidiaries
(excluding Capitalized Leases) in the ordinary course of business, in an
aggregate principal amount not to exceed $1,400,000.
If the Company shall create, assume or suffer to exist any Lien upon any of its
property or assets, or the property or assets of any of its Subsidiaries,
whether now owned or hereafter acquired, other than any Liens expressly
permitted under clauses (i) through (v) of this Section 9.2, the Company will
make or cause to be made effective provision whereby the Notes and all of the
other Obligations of the Obligors under the Note Documents will be secured
equally and ratably with any and all other Obligations of the Company and its
Subsidiaries secured thereby; PROVIDED that the securing of the Notes and all
of the other Obligations of the Obligors under the Note Documents equally and
ratably with such other Obligations of the Company and its Subsidiaries will in
no way be deemed to remedy or waive any Default or Event of Default resulting
from the incurrence, assumption, existence or continuation of any such Lien.
9.3. LIMITATIONS ON INDEBTEDNESS.
The Company will not and will not permit any of its Subsidiaries to
create, incur, assume or suffer to exist any Indebtedness other than:
(a) Indebtedness arising under the Note Documents;
(b) Indebtedness owed to the Company or any of its Subsidiaries by
any of their Subsidiaries so long as such indebtedness is evidenced by a
promissory note, in an amount and in form and substance satisfactory to
you, and delivered to the Collateral Agent under the Security Agreement;
(c) Indebtedness outstanding on the Closing Date and listed on
Schedule 5.19;
(d) Indebtedness secured by Liens permitted under Section
9.2(d)(iv);
(e) Indebtedness of the Company in respect of interest rate or
currency rate Hedge Agreements; PROVIDED that all such Hedge Agreements
shall be nonspeculative in nature; and
(f) Indebtedness of the Company in respect of the Senior Notes.
9.4. LIMITATIONS ON LEASE OBLIGATIONS.
The Company will not and will not permit any of its Subsidiaries at
any time to create, incur, assume or suffer to exist, any obligations as lessee
for the rental or hire of real or personal property of any kind under leases or
agreements to lease, including, but not limited to, Capitalized Leases, except
as identified on Schedule 9.4 or as set forth in the Approved Budget.
9.5. LIMITATIONS ON MERGERS, CONSOLIDATIONS, SALES OF ASSETS, ETC.
(a) The Company will not and will not permit any of its
Subsidiaries to merge or consolidate with or into, or convey, transfer, lease
or otherwise dispose (whether in one transaction or a series of transactions)
of its property and assets (whether now owned or hereafter acquired) to, any
Person, except that, so long as no Default or Event of Default shall have
occurred and be continuing or shall occur as a consequence thereof:
(i) the Company may merge or consolidate with, or convey, transfer,
lease or otherwise dispose of all or substantially all of its property and
assets to, any of its Subsidiaries so long as that the Company is the
surviving corporation;
(ii) any Subsidiary may merge or consolidate with, or convey,
transfer, lease or otherwise dispose of all or substantially all of its
property and assets to, any First Tier Subsidiary of the Company other
than the Seller Restricted Subsidiaries; and
(iii) the Company may convey, transfer, lease or otherwise dispose
of a portion of its property and assets, and any Subsidiary of the Company
may convey, transfer, lease or otherwise dispose of all or a portion of
its property and assets, if such conveyance, transfer, lease or other
disposition is otherwise expressly permitted under Section 9.5(b) or
identified on Schedule 9.5(a).
(b) The Company will not and will not permit any of its
Subsidiaries to sell, lease, transfer or otherwise dispose (whether in one
transaction or a series of transactions) of any property and assets (whether
now owned or hereafter acquired), including, without limitation, pursuant to
any sale and leaseback transaction, other than:
(i) sales of inventory in the ordinary course of business and for
fair consideration;
(ii) the sale or disposition of property and assets of the Company
and its Subsidiaries identified on Schedule 9.5(b) for fair market value
at least 75% of which is received in cash, PROVIDED that the proceeds from
such sale or disposition are used in accordance with the Approved Budget;
(iii) the sale or disposition of property and assets of the Company
and its Subsidiaries for cash and for fair consideration, PROVIDED,
HOWEVER, that the proceeds of such sale are used to prepay the Notes; and
(iv) the sale or disposition of obsolete property and assets of the
Company and its Subsidiaries no longer useful in the conduct of their
respective businesses having an aggregate book value not in excess of
$1,000,000 for all such sales and dispositions provided that the proceeds
from such sale are used in accordance with the Approved Budget;
PROVIDED, HOWEVER, notwithstanding anything to the contrary set forth in this
Section 9.5(b), the Company shall be permitted to (A) transfer to CS Wireless
the Channels and Channel Leases (or interests therein) relating to the
Charlotte, North Carolina market in fulfillment of the Company's obligations
under that certain Participation Agreement dated as of December 12, 1995 (as
amended, the "PARTICIPATION AGREEMENT") among the Company, CS Wireless and
Heartland Wireless Communications, Inc., and (B) transfer to CS Wireless the
BTA Authorizations awarded to the Company by the FCC for the Cleveland-Akron,
Ohio and Stockton, California BTAs, when and as awarded by the FCC, and to take
all actions necessary in connection therewith, all in fulfillment of the
Company's obligations under the Participation Agreement (as in effect on the
date hereof).
9.6. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
(a) The Company will not and will not permit any of its
Subsidiaries to declare or pay any dividends, purchase, redeem, retire or
otherwise acquire for value any of its capital stock or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding, return any
capital to its stockholders as such, make any distribution of assets, capital
stock, warrants, rights, options, obligations or securities to its stockholders
as such or issue or sell any capital stock or any warrants, rights or options
to acquire such capital stock other than any dividend or distribution made by a
direct or indirect wholly owned Subsidiary of the Company to its parent
corporation.
(b) The Company will not and will not permit any of its
Subsidiaries to directly or indirectly create or otherwise cause, incur,
assume, suffer or otherwise permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary (i) to
pay dividends or to make any other distribution on any shares of capital stock
of (or other ownership or profit interest in) such Subsidiary owned by the
Company or any of its Subsidiaries, (ii) to pay or to subordinate any
Indebtedness owed to the Company or any of its Subsidiaries, (iii) to make
loans or advances to the Company or any of its Subsidiaries or (iv) to transfer
any of its property or assets to the Company or any of its Subsidiaries, except
with respect to any encumbrance or restriction on the Seller Restricted
Subsidiaries as in effect on the date hereof.
9.7. LIMITATIONS ON PREPAYMENTS OF INDEBTEDNESS, ETC.
If any Default or Event of Default has occurred and is continuing or
would occur, directly or indirectly, as a consequence thereof, the Company will
not and will not permit any of its Subsidiaries to (a) after the issuance
thereof, amend, modify or otherwise change in any manner (or permit the
amendment, modification or other change in any manner of) any of the terms of
any Indebtedness of the Company or any such Subsidiary if such amendment,
modification or change would shorten the final maturity or average life to
maturity of, or require any payment to be made sooner than originally scheduled
on, such Indebtedness, increase the interest rate applicable thereto or change
any subordination provision thereof, (b) make (or give any notice with respect
thereto) any voluntary or optional payment, prepayment, redemption or
acquisition for value of any Indebtedness of the Company or any such Subsidiary
(including, without limitation, by way of depositing money or securities with
the trustee therefor before the date required for the purpose of paying when
due) of any Indebtedness of the Company or any such Subsidiary, or refund,
refinance, replace or exchange any other Indebtedness for any such Indebtedness
or (c) amend, modify or otherwise change its articles of incorporation or
bylaws (or other similar organizational documents) if such amendment,
modification or change, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
9.8. LIMITATIONS ON NEGATIVE PLEDGES.
The Company will not permit any of its Subsidiaries to enter into,
assume or suffer or permit to exist any agreement prohibiting, conditioning or
otherwise restricting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, or requiring the
grant of any assignment or security for such obligation if an assignment or
security is given for some other obligation, other than:
(a) the Note Documents;
(b) in connection with any Indebtedness described on Schedule 5.19
attached hereto to the extent such agreement is in effect on the date
hereof;
(c) any such agreement prohibiting other encumbrances on specific
property and assets of the Company or any of its Subsidiaries, which
encumbrance secures the payment of Indebtedness incurred solely to
acquire, construct or improve such property or assets or to finance the
purchase price therefor and which Indebtedness is otherwise permitted to
be incurred under the terms of this Agreement;
(d) any agreement setting forth customary restrictions on the
subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract of similar property or assets;
(e) any restriction or encumbrance with respect to any Subsidiary
of the Company imposed pursuant to an agreement that has been entered into
for the sale, transfer or other disposition of all or substantially all of
the property and assets of such Subsidiary so long as such sale or
disposition is otherwise expressly permitted under the terms of this
Agreement; and
(f) any agreement evidencing Indebtedness outstanding on the date a
Subsidiary of the Company first becomes a Subsidiary of the Company or any
of its Subsidiaries.
9.9. LIMITATIONS ON CHANGES IN FISCAL YEAR.
The Company will not and will not permit any of its Subsidiaries to
change its fiscal year.
9.10. LIMITATIONS ON SPECULATIVE REAL ESTATE INVESTMENTS.
Notwithstanding anything to the contrary set forth in this
Agreement, the Company will not and will not permit any of its Subsidiaries to
acquire, lease, assume or otherwise invest in any real property solely for
investment purposes.
9.11. LIMITATION ON INVESTMENTS.
The Company will not and will not permit any of its Subsidiaries to
make or hold any Investment in any Person other than (i) purchases of assets
permitted under Section 9.12, (ii) intercompany Indebtedness permitted pursuant
to Section 9.3, (iii) Investments in Cash Equivalents, (iv) existing
Investments set forth on Schedule 9.11 and (v) Investments provided for in the
Approved Budget.
9.12. LIMITATION ON ASSET PURCHASES.
The Company will not and will not permit any of its Subsidiaries to
purchase any assets other than (i) inventory occurring in the ordinary course
of business consistent with past practice and (ii) purchases of assets provided
for in the Approved Budget.
9.13. LIMITATION ON CAPITAL STOCK.
The Company will not and will not permit any of its Subsidiaries to:
(a) purchase, redeem or otherwise acquire for value any shares of
any capital stock or any warrants, rights or options to acquire any such
shares, now or hereafter outstanding, or the voluntary prepayment,
redemption or repurchase in respect of any debt; or
(b) issue any capital stock or any warrants, rights or options to
acquire any such capital stock other than employee stock options issued
pursuant to plans, or otherwise, approved or to be approved by the
Company's shareholders and other than the issuance by the Company of
capital stock that is not Prohibited Stock.
9.14. LIMITATION ON TERMINATION OF LICENSES.
Except as disclosed on Schedule 9.14, the Company will not and will
not permit any of its Subsidiaries to lose, fail to hold, or fail to renew for
a full license term, forfeit, revoke, rescind or materially impair any
Channels, Channel Licenses or FCC Licenses.
9.15. LIMITATION ON LINE OF BUSINESS.
The Company will not and will not permit any of its Subsidiaries to
engage in any line of business other than in accordance with the Approved
Budget and in the usual and ordinary course and other than in a manner that is
consistent with past practice.
9.16. LIMITATION ON TERMINATION OF EMPLOYER PLANS.
The Company will not and will not permit any of its Subsidiaries to
create or otherwise cause to exist or become effective any consensual risk of
termination of any single employer plan or multiemployer plan by the Pension
Benefit Guaranty Corporation if the occurrence of such event could reasonably
be expected to have a material adverse effect on the business operations,
properties, prospects, or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
9.17. LIMITATION ON INVESTMENT COMPANY ACT.
The Company will not and will not permit any of its Subsidiaries to
be or become an investment company subject to the registration requirements of
the Investment Company Act of 1940, as amended.
9.18. LIMITATIONS ON AMENDMENT, ETC., OF MATERIAL CONTRACTS.
(a) The Company will not, at any time cancel or terminate any
Material Contract or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner, any term or condition of any
Material Contract or give any consent, waiver or approval thereunder, waive any
default under or any breach of any term or condition of any Material Contract,
or agree in any manner to any other amendment, modification or change of any
term or condition of any Material Contract.
(b) The Company shall not and shall not permit any of its
Subsidiaries to enter into any agreement, commitment or Material Contract
(except such Material Contracts delivered pursuant to Section 4.3(h)) which
may, upon the occurrence or non-occurrence of any subsequent event or
otherwise, require the payment by any Obligor of any amount in excess of
$1,000,000.
9.19. LIMITATION ON PRESS RELEASES.
The Company will not and will not permit any of its Subsidiaries to
issue a press release or other public disclosure containing any reference to
you or any of your Affiliates without your express written consent except as
otherwise may be required by applicable law.
9.20. LIMITATION ON CREATION OF SUBSIDIARIES.
The Company will not and will not permit its Subsidiaries to create
any Subsidiary not in existence on the date hereof.
9.21. LIMITATIONS ON EMPLOYMENT CONTRACTS.
The Company will not and will not permit any of its Subsidiaries:
(a) to waive, amend, supplement or otherwise modify any of the
Employment Agreements or other employment agreements or compensation
arrangements described in Section 5.24(a); or
(b) to directly or indirectly enter into or create, incur, assume
or suffer to exist any obligation in connection with any employment
agreement or other compensation arrangement other than the Employment
Agreements and the employment agreements and other compensation
arrangements described in Schedule 5.24(a);
(c) to set, determine or otherwise establish any target or levels
for the determination of any bonuses or additional compensation
arrangements other than as provided in the Employment Agreements; or
(d) to pay or make any other distribution of any bonus or
additional compensation other than pursuant to the Employment Agreements.
9.22. CONFIRMATION ORDER.
The Company will not permit to be made any changes, amendments or
modifications, or any application or motion for any change, amendment or
modification, to the Confirmation Order.
9.23. LIMITATION ON BECOMING A GENERAL PARTNER.
The Company will not and will not permit any of its Subsidiaries to
become a general partner in any general or limited partnership or joint
venture.
10. FINANCIAL COVENANTS.
From the date of this Agreement and, thereafter, so long as any of
the Notes shall be outstanding, the Company will perform and comply in all
material respects with the Approved Budget.
11. EVENTS OF DEFAULT.
11.1. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing (each, an "EVENT OF DEFAULT"):
(a) the Company defaults in the payment of any principal on any
Note when the same becomes due and payable, whether by scheduled maturity
or at a date fixed for prepayment or repurchase or by declaration, demand
or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note, or any Obligor defaults in the payment of any other amount owing
under any of the Note Documents, when the same becomes due and payable,
whether by scheduled maturity or at a date fixed for prepayment or
repurchase or by declaration, demand or otherwise; or
(c) the Company defaults in the performance of or compliance with
any term, covenant or agreement contained in this Agreement on its part to
be performed or complied with; or
(d) any Obligor defaults in the performance of or compliance with
any term, covenant or agreement contained in any of the Note Documents
(other than those terms, covenants and agreements set forth in clauses (a)
through (c) above) on its part to be performed or complied with and such
default shall remain unremedied for 5 days after the earlier of the first
date on which (i) a Responsible Officer obtains becomes aware of such
default and (ii) the Company receives written notice of such default from
any holder of a Note; or
(e) any representation or warranty made or deemed made by or on
behalf of any Obligor or by any officer of any Obligor under or in
connection with this Agreement or any other Note Document or in any
writing furnished in connection with the Transaction or any of the other
transactions contemplated hereby proves to have been false or incorrect in
any material respect on the date as of which it was made or deemed to have
been made; or
(f) the Company or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in
respect of, any Indebtedness that is outstanding in a principal or
notional amount of at least $1,500,000 (or the equivalent thereof in one
or more other currencies), either individually or in the aggregate (but
excluding Indebtedness outstanding hereunder), of the Company and its
Subsidiaries, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness; or
any other event shall occur or condition shall exist under any agreement
or instrument evidencing, securing or otherwise relating to any such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Indebtedness or otherwise to cause, or to permit the holder or
holders thereof (or a trustee or agent on behalf of such holders) to cause
such Indebtedness to mature; or any such Indebtedness shall be declared to
be due and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the
stated maturity thereof; or
(g) the Company or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Company or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for
any substantial part of its property and assets and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 30 days or any of the
actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial
part of its property and assets) shall occur; or the Company or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this Section 11.1(g); or
(h) one or more judgments or orders for the payment of money
aggregating $1,000,000 (or the equivalent thereof in one or more other
currencies) or more are rendered against one or more of the Company and
its Subsidiaries and remain unsatisfied and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such
judgment or order or (ii) there shall be a period of at least 30 days
after entry thereof during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; PROVIDED, HOWEVER, that any such judgment or order shall not
give rise to an Event of Default under this Section 11.1(h) if and for so
long as (A) the amount of such judgment or order is covered by a valid and
binding policy of insurance between the defendant and the insurer covering
full payment thereof and (B) such insurer has been notified, and has not
disputed the claim made for payment, of the amount of such judgment or
order; or
(i) any provision of any Note Document after delivery thereof
pursuant to Section 4 or 8.11 shall for any reason (other than pursuant to
the express terms thereof) cease to be valid and binding on or enforceable
against any Obligor intended to be a party to it or to give you or the
Agent any of the rights, powers or privileges purported to be created
thereunder, or any such Obligor shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 4 or 8.11 shall for any reason (other than pursuant to the terms
thereof) cease to create a valid and perfected first priority lien on and
security interest in the Collateral purported to be covered thereby; or
(k) any Termination Event shall have occurred with respect to a
Plan and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of such Plan and the Insufficiency
of any and all other Plans with respect to which a Termination Event shall
have occurred and be continuing (or the liabilities of the Obligors and
the ERISA Affiliates related to such Termination Event) exceeds an
aggregate amount of $2,500,000 (or the equivalent thereof in one or more
other currencies); or
(l) any Obligor or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
Obligors and the ERISA Affiliates as Withdrawal Liability (determined as
of the date of such notification), exceeds $2,500,000 (or the equivalent
thereof in one or more other currencies); or
(m) any Obligor or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization, is insolvent or is being terminated, within the meaning of
Title IV of ERISA, and, as a result of such reorganization, insolvency or
termination, the aggregate annual contributions of the Obligors and the
ERISA Affiliates to all Multiemployer Plans that are in reorganization or
being terminated at such time have been or will be increased over the
amounts contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization, insolvency or termination occurs by an amount exceeding
$2,500,000 (or the equivalent thereof in one or more other currencies); or
(n) any "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Internal Revenue Code), whether or not
waived, shall exist with respect to one or more Plans in excess of
$2,500,000 (or the equivalent thereof in one or more other currencies) in
the aggregate, or any Lien shall exist on the property and assets of any
Obligor or any ERISA Affiliate in favor of the PBGC or a Plan; or
(o) any prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Internal Revenue Code) or any breach of
fiduciary responsibility shall occur that may subject any Obligor or any
ERISA Affiliate to any liability under Section 406, 409, 502(i) or 502(l)
of ERISA or Section 4975 of the Internal Revenue Code, or under any
agreement or instrument pursuant to which any Obligor or any ERISA
Affiliate has agreed or is required to indemnify any Person against such
liability; or
(p) there shall occur any event after the Confirmation Date which
results in a Material Adverse Change; or
(q) there shall occur a material disruption in the senior
management of the Company or a material change in the composition of the
board of directors of the Company without the prior written consent of the
A Purchasers; or
(r) the Confirmation Order shall fail to be in full force and
effect; or
(s) (i) any Person (other than any holder of more than 50% of the
aggregate principal amount of Notes outstanding at such time) or two or
more Persons (other than two or more holders of more than 50% of the
aggregate principal amount of the Notes outstanding at such time) acting
in concert shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 of the Commission under the Exchange Act) directly or
indirectly, of Voting Stock of the Company (or other securities
convertible into such Voting Stock) representing 35% or more of the
combined voting power of all Voting Stock of the Company; or (ii) any
Person (other than any holder of more than 50% of the aggregate principal
amount of Notes outstanding at such time) or two or more Persons (other
than two or more holders of more than 50% of the aggregate principal
amount of the Notes outstanding at such time) acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its or their
acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Company; or
(t) there shall occur any default under the Senior Note Indenture;
or
(u) by November 15, 1998, (i) individuals presented by the Company
to the Bankruptcy Court on the Confirmation Date as proposed directors of
the Company or individuals identified by a search committee of the board
of directors of the Company comprised of such individuals (collectively,
the "Proposed Directors") shall fail to constitute, at any time after
November 15, 1998, a majority of the board of directors of the Company or
(ii) in the event such Proposed Directors fail to constitute a majority of
the board of directors by such date, the Company shall fail to give notice
to its shareholders of a special meeting of its shareholders to elect the
board of directors of the Company, which meeting shall be held no later
than December 31, 1998, or if as a result of such meeting, individuals who
were directors at the Closing Date shall continue to constitute a majority
of the board of directors of the Company.
11.2. ACCELERATION.
(a) If any Event of Default shall occur and be continuing, (i) any
holder or holders of more than 50% in aggregate principal amount of (i) the A
Notes and (ii) the B Notes, in each case, at the time outstanding may at any
time, at its or their option, by notice or notices to the Company, declare all
of the Notes then outstanding to be immediately due and payable; and
(b) If any Event of Default described in Section 11.1(a) or 11.1(b)
has occurred and is continuing, any holder or holders of Notes at the time
outstanding may at any time, at its or their option, by notice or notices to
the Company, declare all of the Notes held by it or them to be immediately due
and payable. If any holder of a Note shall exercise its rights under this
Section 11.2(b) at any time, the Company will give prompt notice thereof to the
holders of all other Notes at such time outstanding and each such holder may
(whether or not such notice is given or received), by written notice to the
Company, declare the aggregate principal amount of all Notes held by it to be,
and the same shall forthwith become, due and payable.
Upon any Notes becoming due and payable under this Section 11.2,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon, shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice of any kind, all of
which are hereby waived by the Obligors. Each Obligor acknowledges, and the
parties hereto agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by any Obligor (except as herein
specifically provided for).
11.3. OTHER REMEDIES.
If one or more Defaults or Events of Default shall occur and be
continuing and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 11.2(a), the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any other Note Document, or for an injunction against a violation
of any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
11.4. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to Section 11.2(b), as the case may be, the holders of not less than
51% in aggregate principal amount of (i) the A Notes and (ii) the B Notes, in
each case then outstanding, by written notice to the Company, may rescind and
annul any such declaration and its consequences if (a) the Obligors have paid
all overdue interest on the Notes, all principal of any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal, and (to the extent permitted by applicable
law) any overdue interest in respect of the Notes, at the Default Rate, (b) all
Defaults and Events of Default, other than nonpayment of amounts that have
become due solely by reason of such declaration, have been remedied or have
been waived pursuant to Section 16, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto, to the Notes or to
any other Note Document. No rescission and annulment under this Section 11.4
will extend to or affect any subsequent Default or Event of Default or impair
any right consequent thereon.
11.5. RESTORATION OF RIGHTS AND REMEDIES.
If any holder of any Note has instituted any proceeding to enforce
any right or remedy under this Agreement or any other Note Document and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to such holder, then, and in each such case, the Obligors
and the other holders of Notes shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder and, thereafter, all rights and remedies of the holders of Notes
shall continue as though no such proceeding had been instituted.
11.6. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any other Note Document upon
any holder thereof shall be exclusive of any other right, power or remedy
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise. Without limiting the obligations of each of the
Company and the other Obligors under Section 14, the Company will pay to the
holder of each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any enforcement or
collection under this Section 11, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
12. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
12.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor, promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
12.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Obligors
shall execute and deliver, at the Company's expense (except as provided below),
one or more (as requested by the holder thereof) new A Notes or B Notes, as the
case may be, in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall
be payable to such Person as such holder may request and shall be in
substantially the form of Exhibit A-1, in the case of one or more A Notes, or
Exhibit A-2, in the case of one or more B Notes, attached hereto. Each such
new Note shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the surrendered
Note if no interest shall have been paid thereon. The Company may require
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, PROVIDED that, if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representations set forth in
Section 6.3.
12.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or any other Institutional
Investor, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company, at its own expense, shall execute and deliver, in lieu thereof, a
new A Note or B Note, as the case may be, dated and bearing interest from the
date to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
13. PAYMENTS ON NOTES.
13.1. PLACE OF PAYMENT.
Subject to Section 13.2, payments of principal and interest becoming
due and payable on the Notes shall be made in New York, New York, at the
principal office of the Company in such jurisdiction. The Company may, at any
time, by notice to you, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company in
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
13.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 13.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal
and interest by the method and at the address specified for such purpose below
your name on the signature page attached hereto, or by such other method or at
such other address as you shall have from time to time specified to the Company
and the Agent in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that upon
written request of the Company made concurrently with or reasonably promptly
after payment or prepayment in full of any Note, you shall surrender such Note
for cancellation, reasonably promptly after any such request, to the Company at
its principal executive office or at the place of payment most recently
designated by the Company pursuant to Section 13.1. Prior to any sale,
transfer or other disposition of any Note held by you or your nominee, you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to
Section 12.2. The Company will afford the benefits of this Section 13.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 13.2.
14. EXPENSES, ETC.
14.1. TRANSACTION EXPENSES.
Whether or not any aspect of the Transaction or any of the other
transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys' fees of a special counsel
and the maintenance of the retainer paid to Shearman & Sterling, local or other
counsel, financial advisors and outside accountants) incurred by MLGAF in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes and the other Note Documents and in connection with any
amendments, waivers or consents under or in respect of this Agreement, the
Notes or any of the other Note Documents (whether or not such amendment, waiver
or consent becomes effective), including, without limitation: (a) the Facility
Fee, (b) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement, the Notes or any of the other Note Documents or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Notes or any of the other Note Documents,
or by reason of being a holder of any Note, (c) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any of its Subsidiaries or in connection with
any work-out, renegotiating or restructuring of the Transaction or any of the
other transactions contemplated hereby, by the Notes and by the other Note
Documents, including, without limitation, internal collateral auditing and
monitoring expenses and all reasonable fees and expenses of other outside
professionals engaged by the Purchaser, due diligence, transportation,
computer, duplication, appraisal, insurance, search, filing and recording fees.
The Company further agrees to indemnify you and each of your transferees from
and hold you and each of them harmless from and against any and all present and
future transfer, stamp, documentary or other similar taxes, assessments or
charges made by any Governmental Authority by reason of the execution, delivery
or performance of this Agreement, any Note or any other Note Document and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing or perfection of any lien, pledge or security interest
contemplated by any of the Collateral Documents or any other document referred
to therein. The Company will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those retained by you).
14.2. INDEMNITY.
Each Obligor agrees to indemnify you and each Other Purchaser and
your and their affiliates and your and their respective directors, officers,
employees, agents, investment advisors and controlling persons (you, each Other
Purchaser and each such person being an "INDEMNIFIED PARTY") from and against
any and all losses, claims, damages and liabilities, joint or several, to which
such Indemnified Party may become subject under any applicable federal or state
law, or otherwise, and related to or arising out of the Notes, the Note
Purchase Agreement, or any other transaction contemplated by this Agreement and
the performance by you and each Other Purchaser of the services contemplated by
this Agreement and will reimburse any Indemnified Party for all expenses
(including reasonable counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Party is a party and whether or not such claim, action or
proceeding is initiated or brought by or on behalf of the Company or any other
Obligor. No Obligor will be liable under the foregoing indemnification
provision to the extent that any loss, claim, damage, liability or expense is
found in a final judgment by a court to have resulted from your or any Other
Purchaser's bad faith or gross negligence. Each Obligor also agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to such Obligor or its security holders or
creditors related to or arising out of the performance by you or any Other
Purchaser of the services contemplated by, this Agreement except to the extent
that any loss, claim, damage or liability is found in a final judgment by a
court to have resulted from your or any Other Purchaser's bad faith or gross
negligence.
If the indemnification of an Indemnified Party provided for in this
Agreement is for any reason held unenforceable, each Obligor agrees to
contribute to the losses, claims, damages and liabilities for which such
indemnification is held unenforceable (i) in such proportion as is appropriate
to reflect the relative benefits to the Obligors, on the one hand, and you and
each Other Purchaser, on the other hand, of the Notes as contemplated by this
Agreement (whether or not the Notes are consummated) or (ii) if (but only if)
the allocation provided for in clause (i) is for any reason held unenforceable,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of such Obligor or
Obligors, on the one hand, and you and each Other Purchaser, on the other hand,
as well as any other relevant equitable considerations. Each Obligor agrees
that for the purposes of this paragraph the relative benefits to the Obligors
and you and each Other Purchaser of the Notes as contemplated shall be deemed
to be in the same proportion that the total amount of the Notes, as the case
may be, bears to the fees paid or to be paid to you and each Other Purchaser
under this Agreement or in connection with the Notes; PROVIDED, HOWEVER, that,
to the extent permitted by applicable law, in no event shall the Indemnified
Parties be required to contribute an aggregate amount in excess of the
aggregate fees actually paid to you and each Other Purchaser under this
Agreement or in connection with the Notes.
Each Obligor agrees that, without your or any Other Purchaser's
prior written consent, it will not settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification could be sought under the indemnification
provision of this Agreement (whether or not you or any Other Purchaser or any
other Indemnified Party is an actual or potential party to such claim, action
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Party from all liability arising out
of such claim, action or proceeding.
In the event that an Indemnified Party is requested or required to
appear as a witness in any action brought by or on behalf of or against any
Obligor or any affiliate of such Obligor in which such Indemnified Party is not
named as a defendant, the Company and the other Obligors agree to reimburse you
and each Other Purchaser for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the fees and disbursements of
its legal counsel.
14.3. SURVIVAL.
The obligations of the Obligors under this Section 14 shall survive
the payment or transfer of any Note, the enforcement, amendment or waiver of
any provision of this Agreement, the Notes or any other Note Document, and the
termination of this Agreement and, in respect of any Person who was at any time
a purchaser or in whose name or for whose benefit such Person held any Note,
the date on which such person no longer holds, or no longer holds in the name
of or for the benefit of such other Person, any Note.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein and in the other
Note Documents shall survive the execution and delivery of this Agreement and
the Notes, the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any time
by or on behalf of you or any other holder of a Note. All statements contained
in any certificate or other instrument delivered by or on behalf of any Obligor
pursuant to this Agreement or any other Note Document shall be deemed
representations and warranties of the Company and the other Obligors under this
Agreement. Subject to the immediately preceding sentence, this Agreement, the
Notes and the other Note Documents embody the entire agreement and
understanding between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.
16. AMENDMENT AND WAIVER.
16.1. REQUIREMENTS.
This Agreement, the Approved Budget and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of
the Company and the Required Holders, except that (a) no amendment or waiver of
any of the provisions of Section 1, 2, 3, 4, 5, 6 or 20 hereof, or any defined
term (as it is used therein), will be effective as to you unless consented to
by you in writing and (b) no such amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby:
(i) subject to the provisions of Section 11 relating to
acceleration or rescission, change the amount or time of any prepayment or
repurchase or payment of principal of, or reduce the rate or change the
time of payment or method of computation of interest on, the Notes;
(ii) change the percentage of the aggregate principal amount of the
Notes the holders of which are required to consent to any such amendment
or waiver;
(iii) subordinate the Notes (or any of them) to any other
obligations of the Company or any other Obligor now or hereafter existing;
(iv) reduce or limit any Obligor's liability with respect to any
Obligations owing to you or any other holder of any Note;
(v) release a material portion of the Collateral in any transaction
or any series of related transactions;
(vi) permit the creation, incurrence, assumption or existence of
any Lien on a material portion of the Collateral in any transaction or any
series of related transactions to secure any obligations other than
obligations owing to you, the Other Purchasers and the other holders of
Notes under the Note Documents; or
(vii) amend any of Sections 7, 11.1(a), 11.1(b), any of 11.2
through 11.6, 16 or 19.
16.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it at the time) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of the other Note Documents. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 16 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof or
of the other Note Documents, unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder of
Notes then outstanding even if such holder did not consent to such waiver or
amendment.
16.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 16
applies equally to all holders of Notes and is binding upon them, upon each
future holder of any Note and upon each Obligor without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Company, any other
Obligor and the holder of any Note nor any delay in exercising any right, power
or privilege hereunder or under any other Note Document shall operate as a
waiver of any right of any holder of such Note; nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided under this Agreement and the other Note Documents are
cumulative and not exclusive of any rights and remedies provided by applicable
law.
16.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or any other Note Document, or have directed the
taking of any action provided herein or in any other Note Document to be taken
upon the direction of the holders of a specified percentage of the aggregate
principal amount of Notes then outstanding, Notes directly or indirectly owned
by the Company or any of its Affiliates shall be deemed not to be outstanding.
17. NOTICES.
All notices and communications provided for hereunder shall be in
writing and delivered (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), (b) by registered or certified mail with return receipt
requested (postage prepaid) or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications on the signature page attached hereto,
or at such other address as you or it shall have specified to the Company
and the Agent in writing;
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company and the
Agent in writing; or
(iii) if to any Obligor, in care of the Company at its address set
forth on the first page of this Agreement (Telecopier No. (518) 462-3045)
to the attention of James P. Ashman, Executive Vice President and Chief
Financial Officer, or at such other address as the Company shall have
specified to the holder of each Note and the Agent in writing.
All notices and communications provided for under this Section 17 will be
deemed given and effective only when actually received.
18. REPRODUCTION OF DOCUMENTS.
This Agreement, each of the other Note Documents and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications of this Agreement or any other Note Document that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and you may destroy any original document so reproduced.
Each Obligor agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you
in the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 18 shall not prohibit any Obligor or any other holder of Notes
from contesting any such reproduction to the same extent that it could contest
the original, or from introducing evidence to demonstrate the inaccuracy of any
such reproduction.
19. CONFIDENTIAL INFORMATION.
You hereby agree to maintain the confidentiality of all Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you; PROVIDED
that you may deliver or disclose Confidential Information to (a) your
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by your Notes), (b) your counsel or your financial and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 19, (c)
any other holder of any Note or to the Agent or any Bank, (d) any Institutional
Investor to which you sell or offer to sell such Note or any part thereof or
any participation therein (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
Section 19), (e) any Person from which you offer to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 19), (f)
any federal or state regulatory authority having jurisdiction over you, or (g)
any other Person to which such delivery or disclosure may be necessary or
appropriate (i) to effect compliance with any law, rule, regulation or order
applicable to you, (ii) in response to any subpoena or other legal process,
(iii) in connection with any litigation to which you, any other holder of any
Note or the Agent are a party or (iv) if an Event of Default shall have
occurred and be continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or
for the protection of the rights and remedies under your Notes, this Agreement
and the other Note Documents. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 19 as though it were a party to this Agreement. Upon
the reasonable request of the Company in connection with the delivery to any
holder of a Note of information required to be delivered to such holder under
this Agreement or requested by such holder (other than a holder that is a party
to this Agreement or its nominee), such holder will enter into an agreement
with the Company embodying the provisions of this Section 19.
20. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than
in this Section 20), such word shall be deemed to refer to such Affiliate in
lieu of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
20), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
21. MISCELLANEOUS.
21.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
21.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on any Note that is
due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation
of the items payable on such next succeeding Business Day.
21.3. SATISFACTION REQUIREMENT.
Except as otherwise provided herein, or in any other Note Document,
if any agreement, certificate or other writing, or any action taken or to be
taken, is by the terms of this Agreement or any other Note Document required to
be satisfactory to you or to the Required A Holders, the determination of such
satisfaction shall be made by you or the Required A Holders, as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
21.4. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
21.5. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
21.6. COMPUTATION OF TIME PERIODS.
In this Agreement, in the computation of periods of time from a
specific date to a later specified date, the word "FROM" means "from and
including," the word "THROUGH" means "through and including," and the words
"TO" and "UNTIL" each mean "to but not excluding."
21.7. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
21.8. GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC.
(a) This Agreement shall be governed by, and construed and enforced
in accordance with, the law of the State of New York.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York state court or federal court of the United States
of America sitting in New York City, New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, the Notes or the other Note Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York state court or, to
the extent permitted by applicable law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable law. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or the Notes in the courts of
any jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement, the Notes or
the other Note Documents in any New York state or federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) To the extent that the Company or has or hereafter may acquire
any immunity from the jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, the Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the Notes.
(e) Each Obligor hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to any of the Note Documents, the
transactions contemplated thereby or the actions of the Agent or the Purchaser
in the negotiation, administration, performance or enforcement thereof.
<PAGE>
* * * * *
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Obligors.
Very truly yours,
CAI WIRELESS SYSTEMS, INC.
By:/s/ JAMES P. ASHMAN
Name: James P. Ashman
Title: Executive Vice President
The foregoing is hereby
agreed to as of the
date first above written.
MERRILL LYNCH GLOBAL
ALLOCATION FUND, INC.
By__/S/_BRYAN N. ISON___
Name: Bryan N. Ison
Title: Vice President
Address: Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, NJ 08536
Telecopier: (609) 282-6916
<PAGE>
SCHEDULE I
INFORMATION RELATING TO PURCHASERS
NAME OF PURCHASER: A NOTE: $________
B NOTE: $________
NAME(S) FOR REGISTRATION OF NOTES PURCHASED:
MAILING ADDRESS:
TELEPHONE NO.:
TELECOPIER NO.:
WIRE INSTRUCTIONS (INCLUDING ABA NO. AND ACCOUNT NO.)
FOR PAYMENT OF
PRINCIPAL AND INTEREST:
UNITED STATES TAX IDENTIFICATION NO. (IF ANY):
PHYSICAL DELIVERY INSTRUCTIONS:
SCHEDULE II
DEFINED TERMS
As used in this Agreement, the following terms shall have the
respective meanings set forth below (such meanings to be equally applicable to
both the singular and plural forms of the term defined):
"A NOTE INDEBTEDNESS" means all Obligations of the Company and its
Subsidiaries (including, without limitation, interest accruing after the
commencement of a bankruptcy proceeding by or against the Company or any
of its Subsidiaries) to the A Purchasers evidenced by or arising under any
one or more of the Note Documents, all whether fixed or contingent,
matured or unmatured, liquidated or unliquidated, and whether arising
under contract, in tort or otherwise.
"A NOTES" has the meaning specified in Section 1.
"A PURCHASERS" has the meaning specified in Section 7.6(a).
"AFFILIATE" means, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under
common control with such Person, or is a director or officer of such
Person. For purposes of this definition, the term "CONTROL" (including
the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH")
of a Person means the possession, direct or indirect, of the power to vote
5% or more of the Voting Stock of such Person or to direct or cause the
direction of the management and policies of such Person, whether through
the ownership of Voting Stock, by contract or otherwise.
"AGENT" means PricewaterhouseCoopers LLP in its capacity as
administrative agent and collateral agent under the Collateral Documents
for the holders of the Notes.
"ALTERNATIVE USE" means the provision of service other than Wireless
Cable Service through the use of, among others, ITFS, MDS, and MMDS
channels, including two-way transmission services and fixed or mobile
telecommunications services.
"ALTERNATIVE USE APPLICATION" means an application filed by the
Company or any of its Subsidiaries or the Licensee of a Channel to provide
an Alternative Use, including an application for developmental authority,
experimental authority, or special temporary authority or any Booster
Application requesting to provide an Alternative Use.
"AMI" means Atlantic Microsystems, Inc., a Delaware corporation.
"AMI MERGER AGREEMENT" means that certain Plan of Merger of CAI
Wireless Systems, Inc. and Atlantic Microsystems, Inc. dated as of
November 26, 1997.
"AMI SUBSIDIARIES" has the meaning set forth in Section 4.3(j).
"APPROVED BUDGET" has the meaning specified in Section 4.16.
<PAGE>
N
"B NOTE INDEBTEDNESS" means all Obligations of the Company and its
Subsidiaries (including, without limitation, interest accruing after the
commencement of a bankruptcy proceeding by or against the Company or any
of its Subsidiaries) to the B Purchasers evidenced by or arising under any
one or more of the Note Documents, all whether fixed or contingent,
matured or unmatured, liquidated or unliquidated, and whether arising
under contract, in tort or otherwise.
"B NOTES" has the meaning specified in Section 1.
"B PURCHASERS" has the meaning specified in Section 7.6(a).
"BANKRUPTCY CODE" means the Bankruptcy Code as heretofore and
hereafter amended, and as codified as 11 U.S.C. '' 101 ET SEQ.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Delaware, or any other court having jurisdiction over the
Cases from time to time.
"BENEFIT LIABILITIES" has the meaning specified in Section 3 of
ERISA.
"BOOSTER LICENSE" means a License for a booster station.
"BTA" means basic trading area, as defined by Rand McNally and used
by the FCC in licensing MDS and MMDS channels pursuant to the competitive
bidding process.
"BTA AUTHORIZATION" means the Permit granted by the FCC to apply for
individual MDS and MMDS channels with a certain BTA.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks in New York, New York, are required or
authorized by law to be closed.
"CAPITALIZED LEASE" means any lease with respect to which the lessee
is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CASH EQUIVALENTS" means, at any time, (i) any evidence of
Indebtedness with a maturity of 180 days or less 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); (ii) certificates
of deposit or acceptances with a maturity of 180 days or less of any
financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) certificates of deposit with a maturity of 180 days or
less of any financial institution that is not organized under the laws of
the United States, any state thereof or the District of Columbia that are
rated at least A-1 by S&P or at least P-1 by Moody's or at least an
equivalent rating category of another nationally recognized securities
rating agency; (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of
America or issued by any agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within 180
days from the date of acquisition; PROVIDED that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others,
as adopted by the Comptroller of the Currency on October 31, 1985.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"CHANNEL LEASES" means all leases to use transmission capacity held
by or for benefit of one or more of the Company or any of its Subsidiaries
of transmission capacity on ITFS, MDS, or MMDS frequencies licensed by the
FCC.
"CHANNEL LICENSE" means any Permits for a Channel granted by the FCC
to any one or more of the Company or its Subsidiaries or leased to the
Company or any of its Subsidiaries by a lessor of a Channel Lease, or any
application pending before the FCC for such Permit.
"CHANNELS" means the ITFS, MDS, or MMDS frequencies licensed, or
expected to be licensed, to one or more of the Company or any of its
Subsidiaries by the FCC pursuant to an FCC License or made available to
one or more of the Company or any of its Subsidiaries by an ITFS, MDS, or
MMDS applicant, permittee, conditional licensee or licensee pursuant to a
Channel lease, including any frequencies associated with any booster
station, repeater station, response station hub or any facility used to
provide an Alternative Use.
"CLOSING" has the meaning specified in Section 3.
"CLOSING DATE" has the meaning specified in Section 3.
"COLLATERAL" means all "Collateral" referred to in the Collateral
Documents and all other property and assets that are or are intended under
the terms of the Collateral Documents to be subject to any Lien in favor
of the Agent for the benefit of the Secured Parties.
"COLLATERAL ACCESS AGREEMENT" means a landlord waiver or consent,
mortgagee waiver or consent, bailee letter, or a similar acknowledgment
agreement of any warehouseman, processor, or other Person in possession of
Collateral, in each case, in form and substance reasonably satisfactory to
you.
"COLLATERAL DOCUMENTS" means, collectively, the Security Agreement,
the Pledge Agreement, each other security or pledge agreement entered into
pursuant to Section 8.11 and each other agreement that creates or purports
to create or perfect a Lien in favor of the Agent for the benefit of the
Secured Parties.
"COLLOCATE" means to construct, modify, or relocate a facility of an
ITFS, MDS, or MMDS application, permittee, conditional license, or
licensee, pursuant to FCC approval and in accordance with FCC Rules, at a
common transmitter site with other ITFS, MDS, and MMDS licensees in the
same market pursuant to common technical characteristics.
"COMMISSION" has the meanings specified in Section 4.21.
"COMMON STOCK" has the meaning specified in Section 4.3(m).
"COLLOCATION SITE" means the site at which the facilities for the
corresponding Channel are, or are to be, collocated at a common
transmitter site with other Channels that are used to provide Wireless
Telecommunications Service on the System.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, 47 U.S.C. sec. 151 ET SEQ.
"COMPANY" has the meaning specified on page one of this Agreement.
"CONFIDENTIAL INFORMATION" means information delivered to you by or
on behalf of the Company or any of its Subsidiaries in connection with
this Agreement or the Transaction or the other transactions contemplated
hereby that is proprietary in nature and that was clearly marked, labeled
or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, but does not
include any such information that (a) is or was generally available to the
public (other than as a result of a breach of your confidentiality
obligations hereunder), (b) becomes known or available to you on a
nonconfidential basis other than through disclosure by the Company or any
of its Subsidiaries or (c) constitutes financial statements delivered to
you under Section 5.4 or 8.1 that are otherwise publicly available.
"CONFIRMATION DATE" has the meaning set forth in the Preliminary
Statements.
"CONFIRMATION ORDER" has the meaning specified in Section 4.3(l).
"CONTROL AGREEMENT" means a custody agreement, in form and substance
satisfactory to each Purchaser, between the Company, Agent, and the
applicable securities intermediary, that provides (among other things)
that, from and after the giving of notice by Agent to such securities
intermediary (a "Notice of Exclusive Control") such securities
intermediary shall take instructions solely from Agent with respect to the
applicable Securities Account and related Investment Property.
"CS WIRELESS" means CS Wireless Systems, Inc. a Delaware
corporation.
"CURRENT VALUE" has the meaning specified in Section 3 of ERISA.
"DEFAULT" means any Event of Default or any event or condition that
would constitute an Event of Default but for the requirement that notice
be given or time elapse or both.
"DEFAULT RATE" means (i) with respect to the A Notes, a semi-annual
rate of interest equal to 14.50%, and (ii) with respect to the B Notes, a
rate of interest per annum equal to 17.00%.
"EMPLOYEE BENEFIT PLAN" has the meaning specified in Section 3 of
ERISA.
"EMPLOYMENT AGREEMENTS" has the meaning specified in Section 4.3(g)
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand
letter, claim, notice of noncompliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or
consent agreement relating in any way to any Environmental Law, any
Environmental Permit or any Hazardous Materials or arising from alleged
injury or threat to health, safety or the environment, including, without
limitation, (a) by any Governmental Authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
Governmental Authority or other third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial, ministerial or agency interpretation,
policy or guidance relating to pollution or to protection of the
environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, license,
identification number or other authorization required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the
rulings issued thereunder from time to time.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Company or any of its
Subsidiaries, or under common control with the Company or any of its
Subsidiaries, within the meaning of Section 414 of the Internal Revenue
Code.
"EVENT OF DEFAULT" has the meaning specified in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder from time to time.
"EXISTING NOTE PURCHASE AGREEMENT" has the meaning specified in the
Preliminary Statements.
"EXISTING NOTES" has the meaning set forth in the Preliminary
Statements.
"EXTRAORDINARY RECEIPT" means any cash received by or paid to or for
the account of any Person not in the ordinary course of business,
including, without limitation, tax refunds, pension plan reversions,
judgment awards, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute compensation
for lost earnings), condemnation awards (and payments in lieu thereof) and
indemnity payments.
"FAA" means the Federal Aviation Administration or any other federal
governmental agency which may hereafter perform its functions.
"FACILITY A FEE" means a fee of 1.0% of the aggregate principal
amount of the A Notes.
"FACILITY B FEE" means a fee of 8.0% of the aggregate principal
amount of the B Notes.
"FACILITY FEE" means, collectively, the Facility A Fee and the
Facility B Fee.
"FCC COOPERATION AGREEMENT" has the meaning specified in Section 4.
"FCC LICENSES" means the Permits, including construction permits,
issued by the FCC to the Company or any of its Subsidiaries or any lessor
under a Channel Lease, or that are the subject of an application filed
with the FCC by the Company or any Subsidiary or any such lessor under a
Channel Lease, to operate one or more of the Channels, including any BTA
Authorization, individual Permit to construct or operate Channels within a
BTA, and any Alternative Use Permit.
"FCC RULES" means Title 47 of the Code of Federal Regulations, as
amended at any time and from time to time, and FCC decisions issued
pursuant to the adoption of such regulations.
"FIRST TIER SUBSIDIARY" means any Subsidiary directly and wholly-
owned by the Company.
"FUNDED INDEBTEDNESS" means, with respect to any Person (without
duplication), (a) all Indebtedness of such Person of the character
described in clauses (a), (b), (c), (e) and (f) of the definition of
"INDEBTEDNESS" set forth in this Schedule I and (b) all Indebtedness of
such Person of the character described in clauses (k) and (l) of the
definition of "INDEBTEDNESS" set forth in this Schedule I to the extent
such Indebtedness guarantees or in effect guarantees or secures or in
effect secures Indebtedness of another Person of the type described in
clause (a) above. The Funded Indebtedness of any Person (i) shall include
all Indebtedness of the character described in clause (a) or (b) of the
immediately preceding sentence of any partnership or joint venture in
which such Person is a general partner or joint venturer and (ii) shall
not include any Indebtedness of any Person and one or more of its
Subsidiaries.
"FUNDS SOURCE" has the meaning specified in Section 6.3.
"GAAP" means generally accepted accounting principles as in effect
in the United States of America and as are applied in the financial
statements of a Person on a consistent basis.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
province or other political subdivision thereof, and any governmental,
executive, legislative, judicial, administrative or regulatory agency,
department, authority, instrumentality, commission, board or similar body,
whether federal, state, provincial, territorial, local or foreign.
"GOVERNMENTAL PLAN" has the meaning specified in Section 3 of ERISA.
"GUARANTY" has the meaning set forth in Section 4.3(k).
"HAIG INTERESTS" means the economic rights associated with the
membership interest held by Jared E. Abbruzzese in Haig Capital L.L.C., a
Delaware limited liability company.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-
containing materials, polychlorinated biphenyls and radon gas and (b) any
other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, commodity future or
option contracts, currency swap agreements, currency future or option
contracts and other similar agreements.
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant
to Section 12.1.
"INDEBTEDNESS" means, with respect to any Person (without
duplication):
(a) all indebtedness of such Person for borrowed money;
(b) all Obligations of such Person for the deferred purchase
price of property and assets or services (other than trade payables
that are incurred in the ordinary course of such Person's business
and are not overdue by more than 60 days);
(c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, or upon which interest
payments are customarily made;
(d) all Obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect
to property or assets acquired by such Person, even though the
rights and remedies of the seller or the lender under such agreement
in the event of default are limited to repossession or sale of such
property or assets;
(e) all Obligations of such Person as lessee under
Capitalized Leases;
(f) all Obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities;
(g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any
shares of capital stock of (or other ownership or profit interest
in) such Person or in any other Person, or any warrants, rights or
options to acquire such shares (or such other ownership or profit
interest), other than any such Obligations for accrued and unpaid
dividends thereon;
(h) all Obligations of such Person in respect of Hedge
Agreements, commodities agreements or take-or-pay or other similar
arrangements;
(i) all Obligations of such Person under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing if the transaction giving rise to such
Obligation is considered indebtedness for borrowed money for tax
purposes but is classified as an operating lease in accordance with
GAAP;
(j) all Obligations of such Person for production payments
from property operated by or on behalf of such Person and other
similar arrangements with respect to natural resources;
(k) all Indebtedness of other Persons referred to in
clauses (a) through (j) above or clause (l) below guaranteed
directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness,
(ii) to purchase, sell or lease (as lessee or lessor) property or
assets, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss, (iii) to supply
funds to or in any other manner to invest in the debtor (including
any agreement to pay for property, assets or services irrespective
of whether such property or assets are received or such services are
rendered) or (iv) otherwise to assure a creditor against loss; and
(l) all Indebtedness referred to in clauses (a) through (k)
above of another Person secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property or assets (including, without
limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment
of such Indebtedness.
The Indebtedness of any Person shall include (i) all obligations of any
partnership or joint venture of the character described in clauses (a)
through (l) above in which such person is a general partner or a joint
venturer and (ii) all obligations of such Person of the character
described in clauses (a) through (l) above to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"INDEMNIFIED PARTY" has the meaning specified in Section 14.2.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 25% of the aggregate principal
amount of the Notes outstanding on any date of determination and (c) any
bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial institution
or entity, regardless of legal form.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder from time to time.
"INVESTMENT" means, with respect to any Person, any loan or advance
to such Person, any purchase or other acquisition of any shares of capital
stock (or other ownership or profit interest), warrants, rights, options,
obligations or other securities of such Person, any capital contribution
to such Person or any other investment in such Person, including, without
limitation, any arrangement pursuant to which the investor incurs
Indebtedness of the types referred to in clause (k) or (l) of the
definition of "INDEBTEDNESS" in respect of such Person.
"ITFS" means the Instructional Television Fixed Service, a class of
microwave frequencies licensed by the FCC pursuant to Part 74 of the FCC
Rules.
"LEGAL REQUIREMENTS" means all applicable international, foreign,
federal, state, and local laws, judgments, decrees, orders, statutes,
ordinances, rules, regulations, or Permits including the Communications
Act and all orders issued and regulations promulgated under the
Communications Act.
"LICENSEE" means an applicant, permittee, conditional licensee, or
licensee of a facility regulated by the FCC.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, hypothecation, assignment, deposit arrangement, security
interest, encumbrance priority, charge or other preference of any kind
(including, without limitation, any agreement to give any of the
foregoing), or any interest or title of any vendor, lessor, lender or
other secured party to or of such Person under any conditional sale or
other title retention agreement or Capitalized Lease, upon or with respect
to any property or asset of such Person (including, in the case of shares
of capital stock, stockholder agreements, voting trust agreements and
other similar arrangements).
"MARCH 1997 NOTE" means that certain promissory note dated March 31,
1997 made by Jared E. Abbruzzese, payable to CAI Wireless Systems, Inc.,
in the principal amount of $780,054.33.
"MATERIAL" means material in relation to the business, operations,
condition (financial or otherwise), assets, liabilities or properties of
the Company or any of its Subsidiaries, taken as a whole.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a
whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, condition (financial or otherwise), assets,
liabilities or properties of the Company and its Subsidiaries, taken as a
whole, (b) the ability of any of the Obligors to perform its obligations
under this Agreement or any other Note Document to which it is or is to be
a party or (c) other than solely as a result of an action or inaction by
you, the rights and remedies afforded to you and the Agent under this
Agreement or any other Note Document.
"MATERIAL CONTRACT" means, with respect to any Person, the Assigned
Agreements (as defined in the Security Agreement) and each contract to
which such Person is a party involving aggregate consideration payable to
or by such Person of $1,000,000 or more in any year or otherwise material
to the business, condition (financial or otherwise), operations,
performance, properties or prospects of such Person.
"MATURITY DATE" means the earlier of (i) October 14, 2000 and (ii)
the date the Notes have become or are declared to be immediately due and
payable pursuant to Section 11.
"MDS" means the Multipoint Distribution Service, a domestic
transmission service licensed by the FCC pursuant to Part 21 of the FCC
Rules.
"MLGAF" means Merrill Lynch Global Allocation Fund, Inc.
"MMDS" means Multichannel Multipoint Distribution Service, a
domestic transmission service licensed by the FCC pursuant to Part 21 of
the FCC Rules.
"MULTIEMPLOYER PLAN" means a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) to which any Obligor or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an obligation to make
contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and at least one Person other than the
Obligors and the ERISA Affiliates or (b) was so maintained and in respect
of which any Obligor or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any
Indebtedness or capital stock or other ownership interest, any securities
convertible into or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person
or any Extraordinary Receipt received by or paid to or for the account of
any Person, the aggregate amount of cash received from time to time
(whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with
such transaction after deducting therefrom only (without duplication) (a)
reasonable and customary brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees and
commissions, (b) the amount of taxes payable in connection with or as a
result of such transaction and (c) the amount of any Indebtedness secured
by a Lien on such asset that, by the terms of such transaction, is
required to be repaid upon such disposition, in each case to the extent,
but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid to a Person that is not an Affiliate
of such Person or the Company or any of its Subsidiaries or any Affiliate
of any of the Company or any of its Subsidiaries and are properly
attributable to such transaction or the asset that is the subject thereof.
"NOTE DOCUMENTS" means, collectively, this Agreement, the Notes, the
Collateral Documents, the Control Agreement, the Guaranty, the Guaranty
Supplements, if any, and each other agreement evidencing any Obligation of
the Obligors secured by the Collateral Documents, in each case as amended,
supplemented or otherwise modified hereafter from time to time in
accordance with the terms hereof and thereof.
"NOTES" has the meaning defined in Section 1.
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 11.1(g).
"OBLIGORS" means, collectively, the Company and each Subsidiary of
the Company that is a party to the Security Agreement or a security
agreement (or other similar document) after the date of this Agreement
pursuant to Section 8.11.
"OTHER AGREEMENTS" has the meaning set forth in Section 2.
"OTHER PURCHASERS" has the meaning set forth in Section 2.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"PARTICIPATION AGREEMENT" has the meaning set forth in Section 9.5.
"PARTY IN INTEREST" has the meaning specified in Section 3 of
ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERMITS" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of approval or authorizations,
including licenses and other authorizations issuable by a Governmental
Authority, which pursuant to applicable Legal Requirements are necessary
to permit such Person lawfully to conduct and operate its business as
currently conducted and to own and use its assets.
"PERMITTED LIENS" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced:
(a) Liens for taxes, assessments and governmental charges or
levies to the extent not otherwise required to be paid under
Section 8.5(a);
(b) Liens imposed by law, such as materialmen's, mechanics',
carriers', workmen's, storage and repairmen's Liens and other
similar Liens arising in the ordinary course of business and
securing obligations (other than Indebtedness for borrowed money)
that (i) are not overdue for a period of more than 60 days or (ii)
are being contested in good faith and by proper proceedings and as
to which appropriate reserves are being maintained in accordance
with GAAP;
(c) pledges or deposits to secure obligations incurred in the
ordinary course of business under workers' compensation laws,
unemployment insurance or other similar legislation (other than in
respect of employee benefit plans subject to ERISA) or to secure
public or statutory obligations;
(d) Liens securing the performance of, or payment in respect
of, bids, tenders, government contracts (other than for the
repayment of borrowed money), surety and appeal bonds and other
obligations of a similar nature incurred in the ordinary course of
business;
(e) any interest or title of a lessor or sublessor and any
restriction or encumbrance to which the interest or title of such
lessor or sublessor may be subject that is incurred in the ordinary
course of business and, either individually or when aggregated with
all other Permitted Liens in effect on any date of determination,
could not be reasonably expected to have a Material Adverse Effect;
(f) Liens in favor of customs and revenue authorities arising
as a matter of law or pursuant to a bond to secure payment of
customs duties in connection with the importation of goods;
(g) customary rights of setoff upon deposits of cash in favor
of banks or other depository institutions; and
(h) easements, rights of way, zoning restrictions and other
encumbrances on title to real property that do not, either
individually or in the aggregate, render title to the property
encumbered thereby unmarketable or materially and adversely affect
either the use of such property for its present purposes or the
conduct of the business of the Company or any of its Subsidiaries in
the ordinary course.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"PHILADELPHIA CHOICE" has the meaning specified in the Preliminary
Statements.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLEDGE AGREEMENT" has the meaning specified in Section 4.3.
"PLEDGED DEBT" has the meaning specified in the Security Agreement.
"PLEDGED SHARES" has the meaning specified in the Security
Agreement.
"PRESENT VALUE" has the meaning specified in Section 3 of ERISA.
"PROHIBITED STOCK" means any class or series of equity securities of
the Company or any Subsidiary that by its terms is, on or before
January 1, 2003, (a) mandatorily redeemable or subject to any other
payment obligation (including any obligation to pay dividends other than
in capital stock that is not Prohibited Stock), or (b) redeemable at the
option of the holder thereof for cash, other assets or distributions of
Prohibited Stock and in respect of which no required cash dividend is
payable.
"PROPERTY" or "PROPERTIES" means, unless otherwise expressly stated
in this Agreement, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"PURCHASERS" means the A Purchasers and the B Purchasers.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REGISTRATION RIGHTS AGREEMENT" has the meaning specified in Section
4.3(n).
"REGULATION T" shall mean 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).
"REGULATION U" shall mean Regulation U 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).
"REGULATION X" shall mean 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).
"REORGANIZATION PLAN" has the meaning specified in Section 4.3(l).
"REPORTABLE EVENT" means any of the events set forth in Section
4043(c) of ERISA other than those events as to which the post-event notice
requirement is waived under subsections .13, .14, .18, .19, or .20 of PBGC
Reg. '2615.
"REQUIRED HOLDERS" means, at any time, the holders of at least a
majority in interest of the aggregate principal amount of all of the Notes
outstanding at such time (excluding from any calculation thereof any Notes
then owned or held by the Company or any of its Subsidiaries or
Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company or any of its Subsidiaries responsible for
overseeing the administration of or reviewing compliance with all or any
portion of this Agreement or any other Note Document.
"SECURED OBLIGATIONS" has the meaning specified in Section 2 of the
Security Agreement.
"SECURED PARTIES" means the Agent, the holders of the Notes and the
other Persons, if any, the Obligations owing to which are or are purported
to be secured by the Collateral under the terms of the Collateral
Documents.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY AGREEMENT" has the meaning specified in Section 4.3
"SELLER RESTRICTED SUBSIDIARIES" means, collectively, Chenango,
Niskayuna, Onteo, Housatonic, Springfield License, Inc. and AMI License.
"SENIOR FINANCIAL OFFICER" means the Senior Vice President -
Finance, chief financial officer, the principal accounting officer, the
treasurer or the controller of the Company.
"SENIOR NOTE INDENTURE" means the Indenture dated as of October 14,
1998 between the Company, as Issuer and State Street Bank and Trust
Company, as Trustee.
"SENIOR NOTES" means the 13% Senior Notes due 2004 of the Company in
an aggregate principal amount of $212,909,624, including any notes issued
in exchange therefor pursuant to the terms of the Registration Rights
Agreement.
"SEPARATE ACCOUNT" has the meaning specified in Section 3 of ERISA.
"SINGLE EMPLOYER PLAN" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and no Person other than the Obligors and
the ERISA Affiliates or (b) was so maintained and in respect of which any
Obligor or any ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company, trust or estate of
which (or in which) more than 50% of:
(a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether at the time shares of
capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any
contingency);
(b) the interest in the capital or profits of such
partnership, joint venture or limited liability company; or
(c) the beneficial interest in such trust or estate,
is at the time, directly or indirectly, owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one
or more of such Person's other Subsidiaries; PROVIDED, HOWEVER, that
notwithstanding this definition, CS Wireless shall not be a Subsidiary of
the Company.
"SYSTEM AGREEMENTS" means, collectively, all FCC Licenses for
Channels and booster stations, Channel Leases, Tower Site Leases,
programming agreements, retransmission agreements, non-interference or
cooperation agreements (excluding no-objection letters issued in the
ordinary course of business), equipment agreements or instruments,
licenses, permits, and other material agreements pertaining to the
transmission of video, voice, or data signals through wireless cable
transmission facilities, of each of the Company and each of its
Subsidiaries now existing or hereafter acquired or obtained, relative to
the Channels or the construction an operation of the Systems.
"SYSTEMS" means (a) the wireless telecommunications system
constructed and operated by one or more of the Company and each of its
Subsidiaries as of the Closing Date for the provision of Wireless
Telecommunications service and (b) the wireless telecommunications systems
constructed and operated by one or more of the Company and each of its
Subsidiaries from and after the Closing Date for the provision of Wireless
Telecommunications Service.
"TELQUEST" means TelQuest Satellite Services, LLC, a limited
liability company whose initial members shall consist of the Company, CS
Wireless, and TelQuest Communications, Inc., a Delaware corporation.
"TERMINATION EVENT" means:
(a) (i) the occurrence of a reportable event, within the
meaning of Section 4043(c) of ERISA, with respect to any Plan unless
the 30-day notice requirement with respect to such event has been
waived by the PBGC or (ii) the requirements of paragraph (1) of
Section 4043(b) of ERISA (without regard to paragraph (2) of such
Section) are met with a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
would reasonably be expected to occur with respect to such Plan
within the following 30 days;
(b) the application for a minimum funding waiver with respect
to a Plan;
(c) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect
to a plan amendment referred to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of any Obligor
or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA;
(e) the withdrawal by any Obligor or any ERISA Affiliate from
a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA;
(f) the conditions for the imposition of a lien under
Section 302(f) of ERISA shall have been met with respect to any
Plan;
(g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA;
or
(h) the institution by the PBGC of proceedings to terminate a
Plan pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition described in Section 4042 of ERISA, that
constitutes grounds for the termination of, or the appointment of a
trustee to administer, a Plan.
"TOWER SITE LEASE" means each agreement between each of the Company
and each of its Subsidiaries and any Person relating to the location of
towers and transmitters.
"TRANSACTION" means, collectively, (a) the entering into by the
Company and the Obligors of the Note Documents and (b) the repayment of
all amounts owing under the Existing Notes.
"UCC" has the meaning set forth in Section 7.6(a).
"UNRESTRICTED SUBSIDIARY" has the meaning specified in the Senior
Note Indenture.
"VOTING STOCK" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote
for the election of directors (or persons performing similar functions) of
such Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"WIRELESS CABLE SERVICE" means the provision of subscription video
or entertainment and additional programming services and services
ancillary thereto through the use of, among other, ITFS, MDS, and MMDS
channels.
"WIRELESS TELECOMMUNICATIONS SERVICE" means any service that is
permitted under FCC rules and regulations or authorized by the FCC to be
provided on or by means of the transmission capacity on an ITFS, MDS, or
MMDS channel, including Wireless Cable Services and Alternative Use
services.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
<PAGE>
SCHEDULES
Schedule I - Investor Information
Schedule II - Defined Terms
Schedule 4.3(j) - AMI Subsidiaries
Schedule 4.6 - Consents and Approvals
Schedule 4.8 - Changes in Corporate Structure
Schedule 5.3 - Subsidiaries of the Company
Schedule 5.7 - Disclosed Litigation
Schedule 5.10 - Licenses, Permits, etc.
Schedule 5.19 - Outstanding Indebtedness at Closing Date
Schedule 5.20(a) - Markets
Schedule 5.20(b) - System Agreements
Schedule 5.20(c) - Channel Leases
Schedule 5.20(d) - FCC Licenses
Schedule 5.20(e) - Licenses, Status and Operations of all Systems' Channels
Schedule 5.20(g) - Assets, Permits and System Agreements
Schedule 5.20(h) - Non-Possession of System Agreements
Schedule 5.21 - Material Adverse Electrical Interference
Schedule 5.22 - Line of Sight Households
Schedule 5.23 - Leases
Schedule 5.24(a) - Employment Agreements
Schedule 5.24(b) - Board of Directors of CS Wireless and TelQuest
Schedule 5.25 - Shell Corporations
Schedule 5.27 - Material Contracts
Schedule 5.28 - Accounts
Schedule 9.2(iii) - Existing Liens
Schedule 9.4 - Obligations as Lessee
Schedule 9.5(a) - Obligations as Lessor
Schedule 9.5(b) - Approved Asset Sales
Schedule 9.11 - Existing Investments
Schedule 9.14 - Termination of Licenses
Schedule 9.24 - Pre-Filing Date Claims
EXHIBITS
Exhibit A-1 - Form of A Note
Exhibit A-2 - Form of B Note
Exhibit B - Form of Security Agreement
Exhibit C - Pledge Agreement
Exhibit D - Form of Subsidiary Guaranty
Exhibit E - Form of Confirmation Order
Exhibit F - Form of Approved Budget
Exhibit G - Form of Registration Rights Agreement
A NOTE
CAI WIRELESS SYSTEMS, INC.
10.50% Senior Secured A Notes due October 14, 2000
$30,000,000 Dated: October 14, 1998
FOR VALUE RECEIVED, the undersigned, CAI WIRELESS SYSTEMS, INC, a
Connecticut corporation (the "COMPANY"), HEREBY PROMISES TO PAY to Merrill
Lynch Global Allocation Fund, Inc., (the"PURCHASER") or its registered assigns,
the principal amount of THIRTY MILLION DOLLARS AND NO CENTS on October 14,
2000, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid principal amount thereof at the rate of 10.50% per
annum from the date hereof compounded semi-annually, payable on the Maturity
Date as defined in the Note Purchase Agreement referred to below and (b) to the
extent permitted by applicable law on any overdue payment (including any
overdue payment) of principal, any overdue payment of interest and any overdue
payment of any other amount, at the rate of 14.5% per annum until such amount
is paid in full.
Payments of principal and interest upon maturity with respect to
this Note are payable in lawful money of the United States of America at the
Purchaser's office as provided in the Note Purchase Agreement referred to
below.
This Note is for the 10.50% Senior Secured A Notes due October 14,
2000 (collectively, the "A NOTES") issued for an aggregate principal amount of
$30,000,000 pursuant to the Note Purchase Agreement dated as of October 14,
1998 (as amended, supplemented or otherwise modified from time to time, the
"NOTE PURCHASE AGREEMENT") among the Company, the Purchaser and the other
Purchasers referred to on Schedule I thereto. The holder of this Note is
entitled to the benefits of the Note Purchase Agreement and may enforce the
agreements of the Company therein and in the other Note Documents (as defined
in the Note Purchase Agreement) in accordance with the respective terms
thereof, and may enforce the rights and remedies provided for thereby or
otherwise available in respect thereof in accordance with the respective terms
thereof. The holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 19 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.3 of the Note Purchase Agreement.
<PAGE>
This Note is a registered Note and, as provided in and subject to the terms of
the Note Purchase Agreement, is transferable only upon surrender of this Note
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder hereof or its
attorney duly authorized in writing, at which time a new Note for a like
principal amount will be issued to, and registered in the name of, the
permitted transferee. Reference in this Note to a "HOLDER" shall mean the
person or entity in whose name this Note is at the time registered in the
register kept by the Company as provided in Section 12.1 of the Note Purchase
Agreement and, prior to due presentment for registration of transfer, the
Company may treat such person or entity as the owner of this Note for the
purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
The Company will make required redemptions of principal on the dates
and in the amounts specified in Section 7.1 of the Note Purchase Agreement.
This Note is also subject to optional redemption, in whole or from time to time
in part, at the times and on the terms specified in Section 7.2 of the Note
Purchase Agreement.
If an Event of Default (as defined in the Note Purchase Agreement)
shall occur and be continuing, the unpaid balance of the principal of this Note
may be declared or otherwise become due and payable in the manner, at the price
and with the effect provided in Section 11 of the Note Purchase Agreement.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
CAI WIRELESS SYSTEMS, INC.
By: /S/ JAMES P. ASHMAN
Name: James P. Ashman
Title: Executive Vice President
<PAGE>
B NOTE
CAI WIRELESS SYSTEMS, INC.
13.00% Senior Secured B Notes due October 14, 2000
$50,000,000 Dated: October 14, 1998
FOR VALUE RECEIVED, the undersigned, CAI WIRELESS SYSTEMS, INC, a
Connecticut corporation (the "COMPANY"), HEREBY PROMISES TO PAY to Merrill
Lynch Global Allocation Fund, Inc., (the"PURCHASER") or its registered assigns,
the principal amount of FIFTY MILLION DOLLARS AND NO CENTS on October 14, 2000,
with interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid principal amount thereof at the rate of 13.00% per annum from
the date hereof, payable on the Maturity Date as defined in the Note Purchase
Agreement referred to below and (b) to the extent permitted by applicable law
on any overdue payment (including any overdue payment) of principal, any
overdue payment of interest and any overdue payment of any other amount, at the
rate of 17% per annum until such amount is paid in full.
Payments of principal and interest upon maturity with respect to
this Note are payable in lawful money of the United States of America at the
Purchaser's office as provided in the Note Purchase Agreement referred to
below.
This Note is for the 13.00% Senior Secured B Notes due October 14,
2000 (collectively, the "B NOTES") issued for an aggregate principal amount of
$50,000,000 pursuant to the Note Purchase Agreement dated as of October 14,
1998 (as amended, supplemented or otherwise modified from time to time, the
"NOTE PURCHASE AGREEMENT") among the Company, the Purchaser and the other
Purchasers referred to on Schedule I thereto. The holder of this Note is
entitled to the benefits of the Note Purchase Agreement and may enforce the
agreements of the Company therein and in the other Note Documents (as defined
in the Note Purchase Agreement) in accordance with the respective terms
thereof, and may enforce the rights and remedies provided for thereby or
otherwise available in respect thereof in accordance with the respective terms
thereof. The holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 19 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.3 of the Note Purchase Agreement.
<PAGE>
This Note is a registered Note and, as provided in and subject to the terms of
the Note Purchase Agreement, is transferable only upon surrender of this Note
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder hereof or its
attorney duly authorized in writing, at which time a new Note for a like
principal amount will be issued to, and registered in the name of, the
permitted transferee. Reference in this Note to a "HOLDER" shall mean the
person or entity in whose name this Note is at the time registered in the
register kept by the Company as provided in Section 12.1 of the Note Purchase
Agreement and, prior to due presentment for registration of transfer, the
Company may treat such person or entity as the owner of this Note for the
purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
The Company will make required redemptions of principal on the dates
and in the amounts specified in Section 7.1 of the Note Purchase Agreement.
This Note is also subject to optional redemption, in whole or from time to time
in part, at the times and on the terms specified in Section 7.2 of the Note
Purchase Agreement.
If an Event of Default (as defined in the Note Purchase Agreement)
shall occur and be continuing, the unpaid balance of the principal of this Note
may be declared or otherwise become due and payable in the manner, at the price
and with the effect provided in Section 11 of the Note Purchase Agreement.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
CAI WIRELESS SYSTEMS, INC.
By: /S/ JAMES P. ASHMAN
Name: James P. Ashman
Title: Executive Vice President
