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) August 3, 1998 (July 30, 1998)
CAI WIRELESS SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
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Connecticut 0-22888 06-1324691
<S> <C> <C> <C> <C>
(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
On July 30, 1998, CAI Wireless Systems, Inc., a Connecticut corporation
("CAI") and its wholly-owned subsidiary, Philadelphia Choice Television, Inc.,
a Delaware corporation ("PCT"), filed voluntary petitions for relief under
Chapter 11, Title 11 of the United States Code (the "Bankruptcy Code") with the
United States Bankruptcy Court for the District of Delaware, Wilmington,
Delaware 19801 (the "Court"). The Court agreed to consolidate the petitions and
provide for the joint administration of their respective cases. Pursuant to
Sections 1107 and 1108 of the Bankruptcy Code, CAI, as debtor and debtor-in-
possession, will continue to manage and operate its assets and businesses in
the ordinary course of business, pending the confirmation of the plan of
reorganization and subject to the supervision and orders of the Court. No
trustee, examiner or similar officer has been appointed by the Court. By
operating as debtor-in- possession under Chapter 11 of the Bankruptcy Code, the
existing directors and officers of CAI will continue to manage the operations
of CAI, subject to the supervision and orders of the Court.
On July 30, 1998, CAI entered into an Amended and Restated Note
Purchase Agreement (the "DIP Facility Agreement") with Merrill Lynch Global
Allocation Fund, Inc. (the "Purchaser"), pursuant to which, among other things,
the Purchaser agreed to purchase CAI's 13% senior secured notes due January 29,
1999 (the "DIP Notes") in an aggregate principal amount of $60 million (the
"DIP Facility"). Of the $60 million provided to CAI under the DIP Facility,
$49,105,893.58 represented the outstanding principal, interest and fees due to
the Purchaser pursuant to that certain Note Purchase Agreement dated as of
November 24, 1997 (the "Existing Note Purchase Agreement") among CAI, certain
of its subsidiaries and the Purchaser. All such amounts outstanding under the
Existing Note Purchase Agreement were converted into DIP Notes as if there had
been a purchase under the DIP Facility Agreement in the amount of
$49,105,893.58. The remaining amount, $10,894,106.42, was made available to
CAI for its use during the Chapter 11 case, in accordance with the terms of an
approved budget.
The Court approved the DIP Facility on an interim basis on July 30,
1998. A final hearing on the DIP Facility is scheduled for August 25, 1998.
The foregoing summary of the DIP Facility Agreement is qualified in its
entirety by reference to the full text of the DIP Facility Agreement, a copy of
which is filed as an Exhibit to this Current Report on Form 8-K.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
C. Exhibits
4.1 Amended and Restated Note Purchase Agreement dated as of July 30,
1998 between Registrant and Merrill Lynch Global Allocation Fund, Inc.
99.1 Interim Order Authorizing Postpetition Financing
99.2 Press Release dated July 30, 1998
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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/JAMES P. ASHMAN
James P. Ashman
Executive Vice President and CFO
Date: August 3, 1998
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Exhibit 4.1
CAI WIRELESS SYSTEMS, INC.
18 CORPORATE WOODS BOULEVARD
ALBANY, NEW YORK 12211
Senior Secured Notes due January 29, 1999
As of July 30, 1998
MERRILL LYNCH GLOBAL ALLOCATION FUND, INC.
Ladies and Gentlemen:
CAI WIRELESS SYSTEMS, INC., a Connecticut corporation, a debtor and
debtor-in-possession in a case (the ACAI CASE@) pending under Chapter 11 of the
Bankruptcy Code (the "COMPANY"), agrees with you as follows:
PRELIMINARY STATEMENTS.
The Company is a party to a Note Purchase Agreement dated as of
November 24, 1997 among the Company, you and the Subsidiary Obligors named
therein (as amended through the date hereof, the AEXISTING NOTE PURCHASE
AGREEMENT@).
Pursuant to the Existing Note Purchase Agreement, the Company and
the Subsidiary Obligors issued Notes (as defined in the Existing Note Purchase
Agreement) from time to time (the AEXISTING NOTES@).
On July 30, 1998 (the AFILING DATE@), the Company and Philadelphia
Choice Television, Inc., a Delaware corporation and wholly owned Subsidiary of
the Company, a debtor and debtor-in-possession in a case (the APHILADELPHIA
CASE@ and together with the CAI Case, the ACASES@) pending under Chapter 11 of
the Bankruptcy Code (APHILADELPHIA CHOICE@) filed voluntary petitions with the
Bankruptcy Court initiating the Cases and have continued in the possession of
their assets and in the management of their businesses pursuant to Sections
1107 and 1108 of the Bankruptcy Code.
You have indicated your willingness to amend and restate the
Existing Note Purchase Agreement and to provide additional financing pursuant
to the Orders (as herein defined) on the terms and conditions of this
Agreement.
Accordingly, the parties hereto hereby agree to amend and restate
the Existing Note Purchase Agreement as follows:
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1. AUTHORIZATION OF NOTES.
The Company will authorize (i) the issue and sale of an aggregate
principal amount equal to the difference between $60,000,000 and the aggregate
amount of the Restated Notes (as hereinafter defined) (the AADDITIONAL NOTES@)
and (ii) the amendment and restatement and conversion of the Existing Notes
into Notes under this Agreement in an aggregate principal amount equal to the
principal, accrued interest and fees outstanding under the Existing Note
Purchase Agreement (the ARESTATED NOTES@, and together with the Additional
Notes and the Notes delivered pursuant to Section 2 of this Agreement and any
such Notes issued in substitution or exchange therefor pursuant to Section 12
of this Agreement, the "NOTES"). Each of the Notes shall be in substantially
the form of Exhibit A attached hereto, 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 I 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, the Additional Notes. The Existing Notes
shall be amended and restated and converted into the Restated Notes and will
constitute Notes under this Agreement as if purchased under this Agreement.
The Notes outstanding at the Closing shall be in an aggregate principal amount
of $60,000,000.
3. CLOSING.
The sale and purchase of the Additional Notes to be purchased by you
and the amendment and restatement of the Existing Notes 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") upon the entry
of the Interim Order (as defined below) or on such other Business Day
thereafter on or after the entry of the Interim Order as may be agreed upon
among the Company and you (the "CLOSING DATE"). At the Closing, (i) the
Existing Notes will be amended and restated and converted into the Restated
Notes and will constitute Notes under this Agreement as if the Purchaser were
making a purchase under this Agreement and (ii) the Company will deliver to you
the Additional Notes to be purchased by you and the Restated Notes in the form
of a single Note (or such greater number of Notes 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 of
the Additional Notes 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 the Company 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.
The Company 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 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. An amended and restated 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 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, except for noncompliance arising from the
filings of the Cases.
(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 in the case of the Company and Philadelphia Choice, the filing
of the Cases, and of all documents evidencing other necessary
corporate or other necessary action and governmental approvals, if
any, with respect thereto,
(ii) the absence of any proceeding for the dissolution or
liquidation of the Company or such Obligor, as the case may be,
(iii) 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
(iv) 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) an amended and restated 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) an amended and restated 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(k) (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) INTERIM ORDER. A certified copy of an order of the Bankruptcy
Court dated no later than the date that is 15 days following the Filing
Date (entered on an emergency or interim basis, the "INTERIM ORDER") after
a notice and a hearing conducted in accordance with Bankruptcy Code Rule
4001(c) substantially in the form of Exhibit E.
(m) FIRST DAY ORDERS. A certified copy of all orders submitted to
the Bankruptcy Court on or about the Filing Date (the AFIRST DAY ORDERS@)
which shall be in form and substance reasonably satisfactory to the
Purchaser.
(n) VOTES APPROVING THE CAI REORGANIZATION PLAN. Evidence
satisfactory to you that a prepackaged plan of reorganization of the
Company and Philadelphia Choice, in form and substance satisfactory to you
(the AREORGANIZATION PLAN@) has been filed with the Bankruptcy Court and
that the Company has received a sufficient number and amount of properly
completed ballots to meet the voting requirements of Section 1126 of the
Bankruptcy Code accepting the Reorganization Plan and the Disclosure
Statement of the Company and Philadelphia Choice dated June 30, 1998, as
supplemented by the Disclosure Statement Supplement of the Company and
Philadelphia Choice dated July 15, 1998.
(o) AMI MERGER AGREEMENT. Evidence satisfactory to you that the
AMI Merger Agreement has been rescinded.
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 June 29,
1998 other than the filing of a petition by the Company under Chapter 11 of the
Bankruptcy Code and 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 the date of the Commitment Letter 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, John Prisco 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
for the first fiscal month (or portion thereof) of the Cases and covering the
period from the Filing Date through the Maturity Date, which shall set forth
on a weekly 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 with your consent 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 and the Court
shall have authorized such payment.
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. ESCROW ACCOUNT.
The Company shall have delivered to you evidence satisfactory to you
that the Escrow Account is held by The Chase Manhattan Bank, N.A. in an amount
equal to $__________ on the Closing Date.
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. Subject to entry by the Bankruptcy Court of
the Interim Order (or the Final Order when applicable), 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. Subject to the entry by the Bankruptcy Court of the
Interim Order (or the Final Order, when applicable), 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. Upon the entry by the Bankruptcy Court of the Interim
Order (or the Final Order, when applicable), 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 and the
Orders.
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 June 29, 1998, other than the filing of a petition by the
Company under Chapter 11 of the Bankruptcy Code and 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, other than the
commencement of the Cases.
5.5. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
(a) Except as set forth on Schedule 4.6 and upon entry by the
Bankruptcy Court of the Interim Order (or the Final Order, where applicable),
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, mortgage, deed of trust,
lease or other instrument entered into after the Filing Date 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 or the Orders,
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 and the entry of the Orders by
the Bankruptcy Court, 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). The Interim Order has been entered and has not
been amended, stayed, vacated or rescinded.
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. 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
Purchaser will be used solely (i) to provide working capital for the Company
and its Subsidiaries in accordance with the Approved Budget or as the Purchaser
may otherwise agree in writing, (ii) to make other expenditures as may be
authorized and approved by an order of the Bankruptcy Court as reasonable,
necessary costs and expenses of preserving or disposing of the properties and
interests in the property of the Company and its Subsidiaries and (iii) to pay
those fees and disbursements which are allowed by the Bankruptcy Court and paid
by the Company to the Company=s professionals and any fees and disbursements
paid to the Agent, the Purchaser and their professionals in accordance with
this Agreement; PROVIDED that no amounts shall be paid pursuant to this Section
5.14(a) for fees and disbursements in connection with any proceeding commenced,
including, without limitation, any motion or other pleading filed to contest
(A) the attachment, perfection or priority of the Liens created by the Note
Documents or the Pre-Petition Note Documents, (B) the validity, binding effect
or enforceability of the Note Documents or the Pre-Petition Note Documents, or
(C) any other rights or interests of the Purchaser under the Note Documents or
the Pre-Petition Note Documents; other than, in each case, for reasonable fees
and expenses of professionals retained by the Unofficial Noteholders= Committee
or by an official committee, if one is appointed, and approved by the
Bankruptcy Court (without duplication), for prechallenge investigative work
regarding the prepetition Liens of the Purchaser or for contesting any
provision of the Note Documents.
(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 Securities and Exchange 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. LIENS.
There are no Liens of any nature whatsoever on any properties of the
Company or its Subsidiaries other than (i) Permitted Liens, and (ii) Liens
created pursuant to the Note Documents. The Liens granted by the Company or
its Subsidiaries to the Agent pursuant to the Collateral Documents are, or upon
the Closing Date will be, duly perfected Liens on the Collateral, subject only
to Permitted Liens. The Company is not a party to any contract, agreement,
lease or instrument the performance of which, either unconditionally or upon
the happening of an event, will result in or require the creation of a Lien on
the property or assets of the Company, other than Permitted Liens, or otherwise
result in a violation of this Agreement.
5.30. THE ORDERS.
As of the Closing Date, the Interim Order has been entered and has
not been stayed, amended, vacated, reversed, rescinded or otherwise modified in
any respect.
5.31. 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 PREPAYMENTS.
(a) The Company shall pay interest on the unpaid principal amount of
each Note from the date of issuance of such Note until the Maturity Date at the
following rates per annum on the Maturity Date:
(i) if the Company shall have delivered evidence satisfactory to
you that it has received a fully executed commitment for exit financing,
in an amount and on terms and conditions acceptable to you in your sole
discretion, in connection with the consummation of the Reorganization Plan
(the AEXIT FINANCING COMMITMENT@) before the date that is six weeks
following the Closing Date, a rate per annum equal to 12%; or
(ii) if the Company shall not have delivered an Exit Financing
Commitment before the date that is six weeks following the Closing Date, a
rate per annum equal to 13%.
(b) The Company will prepay the aggregate principal amount of all
of the Notes outstanding on such date 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 and the Purchaser shall be entitled to immediate payment of such
amount, without further application to the Bankruptcy Court. Upon and during
the continuance of an Event of Default, the Obligors shall pay interest at the
Default Rate.
7.2. OPTIONAL PREPAYMENTS.
(a) The Company may, at its option, upon notice as provided in
Section 7.2(b), prepay 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 prepaid.
(b) The Company will give each holder of Notes written notice of
each optional prepayment 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 prepayment.
Each such notice shall specify the date fixed for such prepayment, 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 prepayment
date with respect to such principal amount being prepaid and shall state that
such prepayment is to be made pursuant to this Section 7.2.
7.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated (in integral multiples of
$1,000) among all of the Notes at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment.
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
The Company hereby covenants, represents and warrants (a) that, upon
the entry of the Interim Order (and the Final Order, as applicable), the
Obligations of the Company and the Obligors hereunder and under the other Note
Documents, (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at
all times constitute allowed Super-priority Claims, (ii) pursuant to Section
364(c)(2) of the Bankruptcy Code, shall at all times be secured by a perfected
first priority Lien on all of the Collateral that is not otherwise encumbered
by a Permitted Lien or any other Lien permitted by this Agreement and (iii)
pursuant to Section 364(c)(3) of the Bankruptcy Code, shall be secured by a
perfected second priority Lien upon all Collateral that is subject to a
Permitted Lien or other Lien permitted by this Agreement, including, without
limitation, valid and perfected Liens in existence on the Filing Date (other
than property that is subject to Liens securing obligations under the Existing
Note Purchase Agreement, all of which Liens shall continue to secure the
Company=s Obligation under the Notes) or valid Liens perfected (but not
granted) thereafter to the extent such post-Filing Date perfection in respect
of a pre-Filing Date claim is expressly permitted under the Bankruptcy Code,
subject and subordinate in each case with respect to subclauses (i) through
(iii) above, only to (x) following the occurrence and during the continuance of
a Default or an Event of Default, the payment (as the same may be due and
payable) of professional fees and disbursements allowed by order of the
Bankruptcy Court and incurred by the Company or Philadelphia Choice and the
Unofficial Noteholders= Committee or any statutory committee of unsecured
creditors appointed in the Cases, without duplication, in an aggregate amount
not to exceed $1,000,000 (in addition to compensation previously specifically
awarded by order of the Bankruptcy Court whether or not paid) and (y) the
payment of unpaid fees pursuant to 28 U.S.C. ' 1930 and any fees payable to the
Clerk of the Bankruptcy Court (collectively, the ACARVE-OUT@) and (b) except
as provided in clause (a) above, that, upon the execution and delivery of the
Note Documents, the Obligations of the Obligors (other than Philadelphia
Choice) hereunder and under the Note Documents shall at all times be secured by
a perfected first priority Lien on all Collateral that is not otherwise
encumbered by a valid and perfected Lien constituting a Permitted Lien or
otherwise permitted under this Agreement. You agree that so long as no Default
or Event of Default shall have occurred and be continuing, the Company and
Philadelphia Choice shall be permitted to pay compensation and reimbursement of
expenses allowed and payable under Sections 330 and 331 of the Bankruptcy Code,
as the same may be payable, and the amounts so paid shall not reduce the Carve-
Out.
7.7. EXIT FINANCING
The Company agrees that the Purchaser shall have the right, but not
the obligation, in its sole discretion, to assume up to 35% of any commitment
by another lender or lenders for exit financing in connection with the
consummation of the Reorganization Plan. The right of the Purchaser under this
Section 7.7 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.
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 Securities and Exchange 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 other than any changes
that result solely from the Cases.
(f) LITIGATION. Promptly after the commencement thereof, notice of
all post-Filing Date 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 month
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 Purchaser.
(j) And to counsel of such holder, promptly after the same is
available, copies of all pleadings, motions, applications, judicial
information, financial information and other documents filed by or on
behalf of the Company or any of the Guarantors with the Bankruptcy Court
or the United States Trustee in the Cases, or distributed by or on behalf
of the Company to any official committee appointed in the Cases or
unofficial committee, if any.
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, (i) all taxes,
assessments and governmental charges or levies imposed upon them or any of
their properties, assets, income or franchises and arising after the Filing
Date, to the extent such taxes, assessments, charges or levies have become due
and payable and before they have become delinquent and (ii) all claims for
which sums have become due and payable after the Filing Date 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 you 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 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. 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,
(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 Fee to you on the Maturity
Date.
(b) 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
Purchaser 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 Cash Collateral 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 Purchaser that have accepted the assignment of such
accounts to the Purchaser 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 Cash Collateral 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 Cash Collateral 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 Cash Collateral 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.
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 (or apply to the Bankruptcy Court for authority
to do so, except in connection with the Reorganization Plan); EXCLUDING,
HOWEVER, from the operation of the foregoing restrictions the following:
(i) Permitted Liens;
(ii) Liens created pursuant to this Agreement and the Orders;
(iii) Liens existing on the Filing 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 (or apply to the
Bankruptcy Court for authority to do so, except in connection with the
Reorganization Plan or in connection with the prosecution of the Cases) 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 Filing Date and listed on
Schedule 5.19;
(d) Indebtedness secured by Liens permitted under Section
9.2(c)(iv); and
(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.
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 (or
apply to the Bankruptcy Court for authority to do so), except as identified on
Schedule 9.4.
9.5. LIMITATIONS ON MERGERS, CONSOLIDATIONS, SALES OF ASSETS, ETC.
(a) The Company will not and will not permit any of its
Subsidiaries to (or apply to the Bankruptcy Court for authority to do so) 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 (or apply to the Bankruptcy Court for
authority to do so), 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 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 (or apply to the Bankruptcy Court for authority
to do so, except in connection with the Reorganization Plan) 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 (or
apply to the Bankruptcy Court for authority to do so, except in connection with
the Reorganization Plan), 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 (or apply to the Bankruptcy
Court for authority to do so, except in connection with the Reorganization
Plan) (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 (or apply to the Bankruptcy Court
for authority to do so, except in connection with the Reorganization Plan),
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
(or apply to the Bankruptcy Court for authority to do so, except in connection
with the Reorganization Plan) 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
(or apply to the Bankruptcy Court for authority to do so, except in connection
with the Reorganization Plan) 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 (or apply to the Bankruptcy Court for
authority to do so, except in connection with the Reorganization Plan) 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 (or apply to the Bankruptcy Court for authority to do so,
except in connection with the Reorganization Plan) 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
(or apply to the Bankruptcy Court for authority to do so, except in connection
with the Reorganization Plan)
(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 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 (or apply to the Bankruptcy Court for
authority to do so, except in connection with the Reorganization Plan) 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
(or apply to the Bankruptcy Court for authority to do so) 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
(or apply to the Bankruptcy Court for authority to do so, except in connection
with the Reorganization Plan) 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 (or
apply to the Bankruptcy Court for authority to do so) 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 (or apply to the Bankruptcy Court for authority to do so, except
in connection with the Reorganization Plan) 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
(or apply to the Bankruptcy Court for authority to do so, except in connection
with the Reorganization Plan or in connection with the prosecution of the
Cases) 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 (or
apply to the Bankruptcy Court for authority to do so, except in connection with
the Reorganization Plan) 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 (or
apply to the Bankruptcy Court for authority to do so, except in connection with
the Reorganization Plan):
(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. CHAPTER 11 CLAIMS.
The Company will not and will not permit any of its Subsidiaries to
incur, create, assume, suffer or permit any other Super-priority Claim or Lien
or encumbrance against the Company or any other Obligor which is PARI PASSU
with or senior to the claims of the Purchaser against the Company or any other
Obligor pursuant to this Agreement or the Orders, or apply to the Bankruptcy
Court for authority to do so.
9.23. ORDERS.
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 either of the Orders.
9.24. LIMITATION ON PAYMENT OF PRE-FILING DATE CLAIMS.
The Company will not and will not permit any of its Subsidiaries to make
any payments of Indebtedness relating to its pre-Filing Date Obligations other
than (i) as permitted under the Orders, (ii) pre-petition wages and benefits
and other employee-related claims which are payable with the approval of the
Bankruptcy Court and sales tax and employee withholding taxes which have been
collected by the Company but not yet paid, (iii) as otherwise permitted under
this Agreement, (iv) the pre-Filing Date Obligations that are subject to the
First Day Orders and set forth on Schedule 9.24 or (v) in connection with the
assumption of any contract or lease approved by the Bankruptcy Court.
9.25. LIMITATION ON BECOMING A GENERAL PARTNER.
The Company will not and will not permit any of its Subsidiaries (or
apply to the Bankruptcy Court for authority to do so, except in connection with
the Reorganization Plan) 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 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 after the Filing Date 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) 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 after the Filing Date 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(g) 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
(h) 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
(i) 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
(j) 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
(k) 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
(l) 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
(m) 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
(n) 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
(o) either of the Cases shall be dismissed or converted to a case
under Chapter 7 of the Bankruptcy Code; a trustee under Chapter 11 of the
Bankruptcy Code shall be appointed in either of the Cases; or an
application shall be filed by the Company or any other Obligor for the
approval of, or there shall arise, any other claim which is an
administrative expense claim having priority over any or all
administrative expenses of the kind specified in Sections 503(b) or 507(b)
of the Bankruptcy Code; or
(p) the Bankruptcy Court shall enter an order granting relief from
the automatic stay applicable under Section 362 of the Bankruptcy Code to
the holder of any security interest in any assets of the Company or any of
its Subsidiaries or approving any settlement or other stipulation with any
creditor of the Company or any of its Subsidiaries providing for payments
to such holder or creditor aggregating in excess of $50,000; or
(q) an order of the Bankruptcy Court shall be entered in either of
the Cases appointing an examiner with enlarged powers (powers beyond those
set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under
Section 1106(b) of the Bankruptcy Code; or
(r) an order of the Bankruptcy Court shall be entered amending,
supplementing, staying for a period in excess of 10 days, vacating or
otherwise modifying either of the Orders; or
(s) (i) an order of the Bankruptcy Court shall be entered granting
another Super-priority Claim or Lien PARI PASSU with or senior to that
granted to the Purchaser pursuant to this Agreement and the Orders or (ii)
an order of a court of competent jurisdiction shall be entered reversing,
staying, vacating, rescinding or otherwise modifying either of the Orders
or any of the Note Documents; or
(t) the Company shall make any payments of Indebtedness relating to
its pre-Filing Date Obligations other than (i) as permitted under the
Orders, (ii) pre-petition wages and benefits and other employee-related
claims which are payable with the approval of the Bankruptcy Court and
sales tax and employee withholding taxes which have been collected by the
Company but not yet paid, (iii) as otherwise permitted under this
Agreement or (iv) in connection with the assumption of any contract or
lease approved by the Bankruptcy Court; or
(u) the filing of any pleading by the Company seeking or otherwise
consenting to, any of the matters set forth in paragraphs (o)-(t); or
(v) the entry of the Final Order shall not have occurred within 30
days after the Filing Date; or
(w) there shall occur any event after the Filing Date which results
in a Material Adverse Change; or
(x) 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 your prior written consent; or
(y) the Reorganization Plan (i) shall be amended or modified in any
material respect without your prior written consent or (ii) shall be
withdrawn; or
(z) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act) directly or
indirectly, of Voting Stock of the Company (or other securities
convertible into such Voting Stock) representing 20% or more of the
combined voting power of all Voting Stock of the Company; or (ii)
individuals who at the Filing Date were directors of the Company shall
cease for any reason to constitute a majority of the board of directors of
the Company; or (iii) any Person or two or more Persons 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.
11.2. ACCELERATION.
(a) If any Event of Default shall occur and be continuing, any
holder or holders of more than 50% in aggregate principal amount of the Notes
at the time outstanding may at any time, at its or their option without further
order of or application to the Bankruptcy Court, by notice or notices to the
Company (with a copy to counsel for any statutory committee of unsecured
creditors appointed in the Cases and to the United States Trustee), 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 the Notes 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 new Notes (as requested by the holder thereof) 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
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 Note, 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 pre-petition retainer paid to Shearman & Sterling,
local or other counsel, financial advisors and outside accountants) incurred by
you or any holder of a Note 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 and (e) all actual and reasonable costs and expenses
of the Purchaser related to this Agreement, the other Note Documents or the
Notes in connection with the Cases (including attendance by the Purchaser and
the Purchaser's counsel at hearings or other proceedings and the ongoing
review of documents filed with the Bankruptcy Court). Without limiting the
Company=s obligations to pay the costs and expenses referred to in this Section
14.1, the Purchaser agrees to notify the Company promptly after the engagement
of any professionals referred to in this Section 14.1 The Company shall not
be entitled to assert any charges under Bankruptcy Code ' 506(c) against any
Collateral securing the Notes or any collateral securing the Pre-Petition
Obligations. 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 the Purchaser and its affiliates
and their respective directors, officers, employees, agents, investment
advisors and controlling persons (the 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, the Refinancing or
any other transaction contemplated by this Agreement and the performance by the
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 the 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 the
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 the 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 the
Purchaser, on the other hand, of the Notes or the Refinancing as contemplated
by this Agreement (whether or not the Notes or the Refinancing is 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 the 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 the Purchaser of the Notes or the Refinancing as contemplated
shall be deemed to be in the same proportion that the total amount of the Notes
or the Refinancing, as the case may be, bears to the fees paid or to be paid to
the 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 the Purchaser under this Agreement or in
connection with the Notes.
Each Obligor agrees that, without the 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 the 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 the
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 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 the Approved Budget, 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 and the other holders of Notes under the Note
Documents;
(vii) amend any of Sections 7, 11.1(a), 11.1(b), any of 11.2
through 11.6, 16 or 19; or
(viii) modify the Super-priority Claims of the Purchaser in respect
of the Notes.
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 Holders, the determination of such
satisfaction shall be made by you or the Required 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 and to the extent
applicable, the Bankruptcy Code.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Bankruptcy Court and, if the Bankruptcy Court does not have
(or abstains from) jurisdiction, to the non-exclusive general 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 the Bankruptcy Court or, if the Bankruptcy Court does not
have (or abstains from) jurisdiction, 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.
<PAGE>
(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 the Bankruptcy Court or, if the Bankruptcy Court does not have (or
abstains from) jurisdiction, 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.
21.9. NO DISCHARGE; SURVIVAL OF CLAIMS.
Each of the Company and the Obligors agrees that to the extent its
Obligations hereunder are not satisfied in full, (i) its Obligations arising
hereunder shall not be discharged by the entry of a Confirmation Order (and
each of the Company and the Obligors pursuant to Section 1141(d)(4) of the
Bankruptcy Code, hereby waives any such discharge) and (ii) the Super-priority
Claim granted to the Agent and the Purchaser pursuant to the Orders and
described in Section 7.6 and in the Security Agreement and the Liens granted to
the Agent and the Purchaser pursuant to the Orders and described in the
Security Agreement shall not be affected in any manner by the entry of a
Confirmation Order.
* * * * *
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/
George Parise
Senior Vice President - Finance
<PAGE>
The foregoing is hereby
agreed to as of the
date first above written.
MERRILL LYNCH GLOBAL
ALLOCATION FUND, INC.
By___/S/____________________________
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
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):
AADDITIONAL NOTES@ has the meaning set forth in Section 1.
"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.
"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.
<PAGE>
"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.
ACAI CASE@ has the meaning specified in the Preliminary Statements.
"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.
ACARVE-OUT@ has the meaning specified in Section 7.6(a).
"CASES" has the meaning specified in the Preliminary Statements.
"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.
"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.
"COMMITMENT LETTER" means the commitment letter dated November 24,
1997 executed by the Purchaser and accepted by the Company.
"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.
ACONFIRMATION ORDER@ means an order of the Bankruptcy Court
confirming the Reorganization Plan in either of the Cases.
"CONTROL AGREEMENT" means an amended and restated control 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 that rate of interest that is the greater of 3%
per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes.
"EMPLOYEE BENEFIT PLAN" has the meaning specified in Section 3 of
ERISA.
"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.
"ESCROW ACCOUNT" means that certain account maintained at The Chase
Manhattan Bank, N.A. pursuant to the Escrow Agreement dated as of
September 15, 1995, among CAI, Chemical Bank, as escrow agent, and
Chemical Bank, as trustee, for the deposit of $90,638,765.40 of the net
proceeds from the sale of the Senior Notes, and the proceeds from the
investment thereof.
"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.
AEXISTING NOTE PURCHASE AGREEMENT@ has the meaning specified in the
Preliminary Statements.
AEXISTING NOTES@ has the meaning set forth in the Preliminary
Statements.
AEXIT FINANCING COMMITMENT@ has the meaning specified in Section
7.1(a).
"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 FEE" means a fee of (x) 1.0% for the three months
immediately succeeding the Filing Date, (y) 4% for the immediately succeeding
three months and (z) 2% for each succeeding three month period thereafter, of
the aggregate principal amount of the Notes, which shall be due quarterly, in
advance.
"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.
"FILING DATE" has the meaning specified in the Preliminary
Statements.
AFINAL ORDER@ means an order of the Bankruptcy Court entered in the
Cases after a final hearing under Bankruptcy Rule 4001(c)(2) substantially
in the form of Exhibit F.
"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.
"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).
"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.
"INTERIM ORDER" has the meaning specified in Section 4.3(l).
"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 primarily to educational organizations to be used primarily for the
transmission of instructional, cultural, and other types of educational
material to fixed receiving stations, the excess capacity of which may be
leased for commercial operations pursuant to the terms and conditions set
forth in 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 earliest of (i) January 29, 1999, (ii)
the date the Notes have become or are declared to be immediately due and
payable pursuant to Section 11, and (iii) the occurrence of the effective
date under the Reorganization Plan.
"MDS" means the Multipoint Distribution Service, a domestic
transmission service licensed by the FCC pursuant to Part 21 of the FCC
Rules using the frequencies of 2150 to 2162 MHZ, rendered on microwave
frequencies and used primarily for the distribution of commercial visual
and audio programming.
"MMDS" means Multichannel Multipoint Distribution Service, a
domestic transmission service licensed by the FCC pursuant to Part 21 of
the FCC Rules using the frequency of 2596 to 2644 MHZ, rendered on
microwave frequencies and used primarily for the distribution of
commercial visual and audio programming.
"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, if
any, the Collateral Documents, the Control Agreement, the Guaranty 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.
"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.
"ORDERS" means the Interim Order and the Final Order.
"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.
APHILADELPHIA CASE@ has the meaning specified in the Preliminary
Statements.
APHILADELPHIA 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.
"PRE-PETITION COLLATERAL" means the "Collateral" referred to in the
Pre-Petition Note Purchase Agreement.
"PRE-PETITION NOTE DOCUMENTS" means the "Note Documents," as defined
in the Pre-Petition Note Purchase Agreement.
"PRE-PETITION NOTE PURCHASE AGREEMENT" means the Note Purchase
Agreement dated as of November 24, 1997, as amended, among the Purchaser,
the Company and the Subsidiary Obligors referred to therein.
"PRE-PETITION NOTES" means the "Notes" referred to in the
Pre-Petition Note Purchase Agreement.
APRE-PETITION OBLIGATIONS@ means the Obligations of the Company and
the Obligors arising pursuant to the Pre-Petition Note Purchase 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.
"PURCHASER" means the Merrill Lynch Global Allocation Fund, Inc.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"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(n).
"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 other
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.
ARESTATED NOTES@ has the meaning set forth in the Preliminary
Statements.
"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.
"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.
ASUPER-PRIORITY CLAIM@ means a claim against the Company and
Philadelphia Choice in either of the Cases which is an administrative
expense claim having priority over any or all administrative expenses of
the kind specified in Section 503(b) or 507(b) of the Bankruptcy Code.
"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 the entering into by the Company and the
Obligors of the Note Documents.
AUNOFFICIAL NOTEHOLDERS= COMMITTEE@ has the meaning specified in the
Reorganization Plan.
"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>
CAI WIRELESS SYSTEMS, INC.
$60,000,000
SENIOR SECURED NOTES DUE JANUARY 29, 1999
______________________________
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
______________________________
Dated as of July 30, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
<PAGE>
SCHEDULES
Schedule I - Defined Terms
Schedule 4.3(k) - 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 - Form of Note
Exhibit B - Form of Security Agreement
Exhibit C - Pledge Agreement
Exhibit D - Form of Subsidiary Guaranty
Exhibit E - Form of Interim Order
Exhibit F - Form of Approved Budget
Exhibit G - Form of Final Order
Exhibit 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
- - - - - - - - - - - - - - - - x
In re : Chapter 11
CAI WIRELESS SYSTEMS, INC. : Case No. 98-1765 (JJF)
and PHILADELPHIA CHOICE
TELEVISION, INC., : (Jointly Administered)
Debtors. :
- - - - - - - - - - - - - - - - x
INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO OBTAIN
SECURED POSTPETITION FINANCING AND AMEND AND RESTATE
PREPETITION FINANCING PURSUANT TO SECTIONS 364(c)(1),
364(c)(2) AND 364(c)(3) OF THE BANKRUPTCY CODE AND
FEDERAL RULE OF BANKRUPTCY PROCEDURE 4001(c) AND (II)
SCHEDULING A FINAL HEARING PURSUANT TO FEDERAL RULE OF
BANKRUPTCY PROCEDURE 4001(C)
Upon the motion dated July 30, 1998 (the "Motion"), of CAI
Wireless Systems, Inc. (ACAI@) and Philadelphia Choice Television, Inc.
(APhiladelphia Choice@ or the AGuarantor@ and together with CAI, the
ADebtors@), each a debtor and debtor-in-possession under Chapter 11 of
title 11, United States Code (the "Bankruptcy Code"):
<PAGE>
(a) seeking this Court=s authorization, pursuant to sections 364(c)(1),
364(c)(2) and 364(c)(3) of the Bankruptcy Code and Rule 4001 of the
Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") for (i)
CAI to obtain postpetition financing (the "Postpetition Financing") up to
an aggregate principal amount not to exceed $60,000,000 from Merrill
Lynch Global Allocation Fund, Inc. (AMLGAF@), (ii) CAI and Philadelphia
Choice, as applicable, to enter into, execute and perform (A) the Amended
and Restated Note Purchase Agreement (as amended, supplemented or
otherwise modified from time to time, the "Note Purchase Agreement"), (B)
the Amended and Restated Notes, substantially in the form of Exhibit A to
the Note Purchase Agreement, (the "Notes"), (C) the Amended and Restated
Security Agreement, dated as of July__, 1998; among CAI, Philadelphia
Choice, certain other grantors party thereto and Price Waterhouse, LLP
(APW@), as collateral agent (the ASecurity Agreement@), (D) the Amended
and Restated Custody Agreement, dated as of July 30, 1998, among CAI, PW,
as collateral agent, and Fleet National Bank, as custodian (the ACustody
Agreement@), (E) the Amended and Restated Pledge Agreement, made as of
July 30, 1998, among CAI, and PW, as collateral agent (the APledge
Agreement@), and (F) the Subsidiary Guaranty, dated as of July 30, 1998
(the ASubsidiary Guaranty@; the Note Purchase Agreement, the Notes,
Security Agreement, the Custody Agreement, the Pledge Agreement, the
Subsidiary Guaranty and all other documents executed by CAI or
Philadelphia Choice in connection therewith collectively are referred to
herein as the "Postpetition Note Documents");*
(b) authorizing CAI to amend and restate (i) the Note Purchase
Agreement, dated as of November 24, 1997, among CAI, each of its direct
and indirect subsidiaries (including Philadelphia Choice), and MLGAF (the
AExisting NPA@) (ii) the notes purchased by MLGAF under the Existing NPA
(the AExisting Notes@), (iii) the Security Agreement, dated November 24,
1997, among CAI, the Grantors party thereto and Price Waterhouse, LLP, as
collateral agent (the AExisting Security Agreement@), (iv) the Custody
Agreement, dated as of November 24, 1997, among CAI, PW, as collateral
agent, and Fleet National Bank, as custodian (the AExisting Custody
Agreement@), and (v) the Pledge Agreement, made as of November 24, 1997,
among CAI, and PW, as collateral agent (the AExisting Pledge Agreement@;
the Existing NPA, the Existing Notes, the Existing Security Agreement,
the existing Custody Agreement, the Existing Pledge Agreement and all
other documents executed by CAI or Philadelphia Choice in connection
therewith collectively are referred to herein as the "Existing Note
Documents"), and providing that the Debtors= obligations under the
Existing Note Documents as amended and restated, shall be treated as
obligations of the Debtors under the Postpetition Note Documents (the
Postpetition Note Documents and the Existing Note Documents as amended
and restated pursuant to decretal paragraph 3 hereof collectively are
referred to as the "Note Documents") and be secured and entitled to
priority pursuant to sections 364(c)(1), 364(c)(2) and 364(c)(3) of the
Bankruptcy Code, pari passu with the Debtors= obligations under the
Postpetition Note Documents;
(c) granting to MLGAF, to secure the Debtors= obligations under the
Note Documents, (i)pursuant to section 364(c)(1) of the Bankruptcy Code,
allowed administrative expense claims having priority over all
administrative expenses of the kind specified in Section503(b) or
Section507(b) of the Bankruptcy Code, (ii)pursuant to Section 364(c)(2)
of the Bankruptcy Code, a valid and perfected first priority lien on all
property of the Debtors= estates not otherwise subject to a lien (other
than Chapter5 avoidance actions), and (iii)pursuant to Section 364(c)(3)
of the Bankruptcy Code, a valid and perfected junior lien on property of
the Debtors' estates that is otherwise subject to a lien;
(d) seeking a preliminary hearing (the "Preliminary Hearing") on
the Motion to consider entry of an interim order pursuant to Bankruptcy
Rule 4001 (this "Order") approving the Postpetition Financing and the
amendment and restatement of the Existing Note Documents pending the
Final Hearing referred to below; and
(e) requesting that a final hearing (the "Final Hearing") be
scheduled, and that notice procedures in respect of the Final Hearing be
established, by this Court to consider entry of a final order (the "Final
Order") authorizing on a final basis, inter alia, the Postpetition
Financing and the amendment and restatement of the Existing Note
Documents; and due and sufficient notice of the Motion and the
Preliminary Hearing under the circumstances having been given; and the
Preliminary Hearing on the Motion having been held before this Court on
July 30, 1998; and upon the entire record made at the Preliminary
Hearing, and this Court having found good and sufficient cause appearing
therefor,
IT IS HEREBY FOUND THAT:
A. On July 30, 1998, (the "Filing Date"), the Debtors filed
voluntary petitions for relief with this Court under Chapter 11 of the
Bankruptcy Code (the "Chapter 11 Cases"). The Debtors are continuing in
possession of their property, and operating and managing their
businesses, as debtors in possession pursuant to Bankruptcy Code sections
1107 and 1108. On the Filing Date, the Debtors filed their Prepackaged
Joint Reorganization Plan (the "Plan").
B. This Court has jurisdiction over the Chapter 11 Cases and
the Motion pursuant to 28 U.S.C. '' 157(b) and 1334. Consideration of
the Motion constitutes a core proceeding as defined in 28 U.S.C. '
157(b)(2).
C. The Debtors do not have sufficient available sources of
working capital and financing to carry on the operation of their
businesses without the Postpetition Financing. The Debtors have an
immediate need to obtain financing for general working capital purposes
and to pursue confirmation of the Plan. The Debtors' ability to maintain
business relationships and otherwise finance their operations is
essential to the Debtors' continued viability. In addition, the Debtors'
critical need for financing is immediate. In the absence of the
Postpetition Financing, the continued operation of the Debtors'
businesses would not be possible, and serious and irreparable harm to the
Debtors and their estates would occur. The preservation, maintenance and
enhancement of the going concern value of the Debtors are critical to
their successful reorganization.
D. Given the Debtors' current financial condition, financing
arrangements and capital structure, the Debtors cannot obtain unsecured
credit allowable under Bankruptcy Code section 503(b)(1) as an
administrative expense. With respect to both the Postpetition Financing
and the Existing Note Documents, financing on a postpetition basis is not
otherwise available without the Debtors (i) granting, pursuant to
Bankruptcy Code section 364(c)(1), claims having priority over any and
all administrative expenses of the kinds specified in Bankruptcy Code
sections 503(b) and 507(b) with respect to the Note Documents, other than
as described below and (ii) securing, pursuant to Bankruptcy Code section
364(c), such indebtedness and obligations with security interests in and
liens upon the property described below.
E. Notice of the Preliminary Hearing and the relief requested
in the Motion has been given to (i) the Office of the United States
Trustee, (ii) the Unofficial Noteholders' Committee, and (iii) the
creditors holding the 20 largest unsecured claims against the Debtors.
No creditors' committee has been appointed in any of the Chapter 11
Cases. Under the circumstances, such notice of the Preliminary Hearing
and the relief requested in the Motion complies with the requirements of
Bankruptcy Code section 364(c) and Bankruptcy Rules 2002 and 4001(c).
F. Based on the record presented to the Court by the Debtors
at the Preliminary Hearing, the Postpetition Financing and the amendment
and restatement of the Existing Note Documents have been negotiated in
good faith and at arm's length between the Debtors and MLGAF, and any
credit extended and advances made to the Debtors pursuant to the Note
Documents shall be deemed to have been extended, issued or made, as the
case may be, in good faith as required by, and within the meaning of,
Bankruptcy Code section 364(e).
G. Based on the record presented to the Court by the Debtors
at the Preliminary Hearing, the terms of the Postpetition Financing and
the Note Documents are fair and reasonable, reflect the Debtors' exercise
of prudent business judgment consistent with their fiduciary duties, and
are supported by reasonably equivalent value and fair consideration.
H. The relief requested in the Motion is necessary, essential
and appropriate for the continued operation of the Debtors= business and
the management of their assets and properties. The interim relief
requested in the Motion pending a final hearing is necessary to avoid
immediate and irreparable harm to the estate. The purchases to be made
under the Note Documents will benefit, and are in the best interests of,
the Debtors, their estates, creditors and equity security holders.
I. The Debtors have requested immediate entry of this Order
pursuant to Bankruptcy Rule 4001(c)(2). The permission granted herein to
enter into the Postpetition Financing and obtain funds thereunder, and to
amend and restate the Existing Note Documents, is necessary to avoid
immediate and irreparable harm to the Debtors. This Court concludes that
entry of this Order is in the best interest of the Debtors' respective
estates and creditors as its implementation will, among other things,
sustain the operation of the Debtors' existing businesses and enhance the
Debtors' prospects for confirmation of the Plan.
Based upon the foregoing findings and conclusions, and upon the
record made before this Court at the Preliminary Hearing, and good and
sufficient cause appearing therefor;
IT IS HEREBY ORDERED THAT:
1. The Motion is granted in all respects.
2. The Debtors are expressly authorized and empowered to
execute and deliver the Note Purchase Agreement, the Notes and any other
Postpetition Note Document to be executed and delivered in connection
therewith to perform all acts as MLGAF may reasonably require as evidence
of or to protect the Obligations or the Collateral (each as defined
below) or which otherwise may reasonably be deemed necessary by MLGAF to
effectuate the terms and conditions of this Order and the Note Documents,
and to cause their respective direct and indirect subsidiaries to do each
of the foregoing.
3. The Debtors are authorized and empowered to (a) amend and
restate the Existing NPA so that after giving effect to such amendment
and restatement the respective rights and obligations of the Debtors
thereunder shall be treated as the respective rights and obligations of
the Debtors, as debtors in possession, under the Note Purchase Agreement,
(b) amend and restate the Existing Notes so that after giving effect to
such amendment and restatement the rights and obligations of CAI
thereunder shall be treated as rights and obligations of CAI, as debtor
in possession, under the Notes, and (c) amend and restate any other
Existing Note Document to be executed and delivered in connection
therewith and perform all acts as MLGAF may reasonably require as
evidence or to protect the Obligations or the Collateral or which
otherwise may reasonably be deemed necessary by MLGAF to effectuate the
terms and conditions of this Order and the amendment and restatement of
the Existing Note Documents, and to cause their respective direct and
indirect subsidiaries to do each of the foregoing.
4. The Debtors are authorized and directed to comply with and
perform all of the terms and conditions of the Note Documents, and CAI is
directed to repay amounts borrowed, with interest, and Philadelphia
Choice is further authorized to pay amounts in accordance with its
guarantees to MLGAF in accordance with and subject to the terms and
conditions set forth in the Note Documents and this Order. Upon
execution and delivery of the Note Documents, the Note Documents shall
constitute valid and binding obligations of the Debtors party thereto,
enforceable against each Debtor party thereto in accordance with their
terms. All note purchases made under the Note Documents, including,
without limitation, the note purchases made pursuant to the Existing Note
Documents (the "Purchases"), and all fees, costs, expenses,
indebtedness, obligations and liabilities of CAI and Philadelphia Choice
to MLGAF under the Note Documents and this Order are hereinafter referred
to as the "Obligations." The Debtors are further authorized and directed
to pay all facility and other fees and expenses, including, without
limitation, all reasonable fees and expenses of professionals engaged by
MLGAF, in accordance with the terms of the Note Purchase Agreement.
5. CAI is expressly authorized to issue to MLGAF, on the
terms and subject to the conditions set forth in the Note Documents and
this Order, a total of $60,000,000 under the Note Purchase Agreement
pending the Final Hearing, and Philadelphia Choice is expressly
authorized to guarantee all Obligations in respect of such Purchases.
CAI shall use the proceeds of the Purchases consistent with the terms of
the Note Documents and this Order to pay when due expenses of the types
as are generally set forth in the Approved Budget (as defined in the Note
Purchase Agreement).
6. If an Event of Default (as defined in the Note Purchase
Agreement) occurs, subject to the requirement contained in the Note
Purchase Agreement with respect to specified remedies to provide three
Business Days' (as defined in the Note Purchase Agreement) prior written
notice to CAI, the United States trustee and the Unofficial Noteholders=
Committee or any statutory committee, if one is appointed, in the Chapter
11 Cases, MLGAF may terminate the Note Documents (the date of any such
termination, the "Termination Date"), declare the Notes and other
Obligations to be due and payable, and exercise any and all of its rights
and remedies under the Note Documents and this Order. Notwithstanding
anything herein to the contrary, no proceeds of Purchases, or any portion
of the Carve-Out (as defined below) may be used in connection with any
proceeding against MLGAF, including, without limitation, any motion or
other pleading filed to contest (A) the attachment, perfection or
priority of the Liens created by the Note Documents or the Existing Note
Documents, (B) the validity, binding effect or enforceability of the Note
Documents or the Existing Note Documents, or (C) any other rights or
interests of the MLGAF under the Note Documents or the Existing Note
Documents; other than, in each case, for reasonable fees and expenses of
professionals retained by the Unofficial Noteholders= Committee or by an
statutory committee, if one is appointed, and approved by the Bankruptcy
Court (without duplication), for prechallenge investigative work
regarding the prepetition Liens of MLGAF or for contesting any provision
of the Postpetition Note Documents and for reasonable fees and expenses
of professionals retained by MLGAF incurred in connection with the
defense of any of the foregoing other than in defense of a proceeding
commenced to contest the attachment, perfection or priority of the Liens
created by the Existing Note Documents.
7. In accordance with Bankruptcy Code section 364(c)(1),
subject to Paragraph 9 below, the Obligations shall constitute claims
(the "Superpriority Claims") with priority in payment over any and all
administrative expenses of the kinds specified or ordered pursuant to any
provision of the Bankruptcy Code, including, but not limited to,
Bankruptcy Code sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a),
507(b) and 726, and shall at all times be senior to the rights of the
Debtors, and any successor trustee or any creditor, in the Chapter 11
Cases or any subsequent proceedings under the Bankruptcy Code. No cost
or expense of administration under Bankruptcy Code sections 105,
364(c)(1), 503(b), 506(c), 507(b) or otherwise, including those resulting
from the conversion of any of the Chapter 11 Cases pursuant to Bankruptcy
Code section 1112, shall be senior to, or pari passu with, the
Superpriority Claims of MLGAF arising out of the Obligations except for
the Carve-Out.
8. As security for the Obligations, MLGAF shall have and is
hereby granted (effective upon the date of this Order and without the
necessity of the execution by the Debtors of mortgages, security
agreements, pledge agreements, financing statements or otherwise), valid
and perfected security interests in, and liens upon (the "Liens"), all
present and after-acquired property of the Debtors (including all
licenses issued by the Federal Communications Commission, and the
proceeds thereof, to the extent permitted by applicable nonbankruptcy
law) of the Debtors of any nature whatsoever, including, without
limitation, all cash contained in any account maintained by the Debtors
and the proceeds of all causes of action (other than causes of action
arising under the Bankruptcy Code) existing as of the Filing Date
(collectively with all proceeds and products of any or all of the
foregoing, the "Collateral"):
(a) pursuant to Bankruptcy Code ' 364(c)(2), a first priority,
perfected Lien upon all of the Debtors' right, title and interest in, to
and under all Collateral that is not otherwise encumbered by a validly
perfected security interest or lien on the Filing Date; and
(b) pursuant to Bankruptcy Code ' 364(c)(3), a second priority,
junior, perfected Lien upon all of the Debtors' right, title and interest
in, to and under all Collateral which is subject to a Permitted Lien,
including, without limitation, a validly perfected security interest or
lien in existence as of the Filing Date, or a valid lien perfected (but
not granted) after the Filing Date to the extent such perfection in
respect of a pre-Filing Date claim is expressly permitted under the
Bankruptcy Code, provided, that the Liens granted in favor of MLGAF shall
be senior to any Permitted Lien which is expressly stated in the Existing
NPA to be junior to the Liens in favor of MLGAF; provided, further, that
the Liens granted to MLGAF under the Existing Note Documents shall
secure, pari passu, the obligations of the Debtors under the Postpetition
Note Documents.
9. Any provision of this Order or the Note Documents to the
contrary notwithstanding, the Liens and Superpriority Claims granted to
MLGAF pursuant to the Note Purchase Agreement and this Order shall be
subject and subordinate to a carve-out (the "Carve-Out") for (a)
following the occurrence and during the pendency of a Default or an Event
of Default (as each such term is defined in the Note Purchase Agreement),
the payment of allowed professional fees and disbursements incurred by
the professionals retained by the Unofficial Noteholders= Committee, and
by the professionals retained pursuant to Bankruptcy Code section 327 or
1103(a), by the Debtors and any statutory committee of unsecured
creditors appointed in the Chapter 11 Cases (without duplication) in an
aggregate amount not to exceed $1,000,000 (in addition to compensation
previously specifically awarded by order of the Court whether or not
paid) and (b) quarterly fees required to be paid pursuant to 28 U.S.C. '
1930(a)(6) and any fees payable to the Clerk of the Bankruptcy Court;
provided, however, the Carve-Out shall not include professional fees and
disbursements incurred in connection with any proceeding against MLGAF,
including, without limitation, any motion or other pleading filed to
contest (A) the attachment, perfection or priority of the Liens created
by the Note Documents or the Existing Note Documents, (B) the validity,
binding effect or enforceability of the Note Documents or the Existing
Note Documents, or (C) any other rights or interests of the MLGAF under
the Note Documents or the Existing Note Documents; other than, in each
case, for reasonable fees and expenses of professionals retained by the
Unofficial Noteholders= Committee or by an statutory committee, if one is
appointed, and approved by the Bankruptcy Court (without duplication),
for prechallenge investigative work regarding the prepetition Liens of
MLGAF or for contesting any provision of the Postpetition Note Documents.
As long as no Default or Event of Default shall have occurred and be
continuing, CAI and Philadelphia Choice shall be permitted to pay
compensation and reimbursement of expenses, allowed and payable under
Bankruptcy Code sections 330 and 331, as the same may be payable, and the
amount so paid shall not reduce the Carve-Out.
10. Except as set forth in paragraphs 7 and 8, the Liens shall
be prior and senior to all liens and encumbrances of all other secured
creditors in and to such Collateral granted, or arising, after the Filing
Date (including, without limitation, liens and security interests, if
any, granted in favor of any federal, state, municipal or other
governmental unit, commission, board or court for any liability of the
Debtors). The Debtors shall not assert a claim under Bankruptcy Code
section 506(c) for any costs and expenses incurred in connection with the
preservation, protection or enhancement of, or realization by MLGAF, the
Collateral. The Liens granted pursuant to this Order shall constitute
valid and duly perfected security interests and liens, and MLGAF shall
not be required to file or serve financing statements, notices of lien or
similar instruments which otherwise may be required under federal or
state law in any jurisdiction, or take any action, including taking
possession, to validate and perfect such security interests and liens;
and the failure by the Debtors to execute any documentation relating to
the Liens shall in no way affect the validity, perfection or priority of
such Liens. If, however, MLGAF, in its sole discretion, shall determine
to file any such financing statements, notices of lien or similar
instruments, or to otherwise confirm perfection of such Liens, the
Debtors are directed to cooperate with and assist in such process, the
stay imposed by Bankruptcy Code section 362(a) is hereby lifted to allow
the filing and recording of a certified copy of this Order or any such
financing statements, notices of lien or similar instruments, and all
such documents shall be deemed to have been filed or recorded at the time
of and on the date of this Order. MLGAF may, in its discretion, file a
certified copy of this Order in any filing or recording office in any
county or other jurisdiction in which any portion of the Collateral is
located and in such event the subject filing or recording officer is
authorized and directed to file or record such certified copy of this
Order. All filing officers shall accept for recording and record this
order and any and all Note Documents which are presented to them for
recording immediately upon presentation thereof.
11. As long as any portion of the Obligations remains unpaid,
or any Note Document remains in effect, the Debtors shall not seek, and
it shall constitute an Event of Default (and automatic occurrence of the
Termination Date), if (a) there shall be entered any order dismissing any
of the Chapter 11 Cases or converting any of the Chapter 11 Cases to
cases under chapter 7 of the Bankruptcy Code, (b) except as expressly
permitted under the Note Purchase Agreement, there shall be entered in
any of the Chapter 11 Cases or any subsequent Chapter 7 case any order
which authorizes under any section of the Bankruptcy Code, including
Bankruptcy Code section 105 or 364, (i) the granting of any lien or
security interest in any property of the Debtors in favor of any party
other than MLGAF or (ii) the obtaining of credit or the incurring of
indebtedness that is entitled to superpriority administrative status
equal or superior to that granted to MLGAF pursuant to this Order;
unless, in connection with any transaction cited in subclause (i) or (ii)
of this clause (b), such order requires that the Obligations shall first
be indefeasibly paid in full, (c) a trustee is appointed in any of the
Chapter 11 Cases, (d) an order of the Court is entered in any Chapter 11
Case appointing an examiner having powers beyond those set forth under
sections 1106(a)(3) and 1106(a)(4) of the Bankruptcy Code relating to the
operation of the business of CAI or Philadelphia Choice under section
1106(b) of the Bankruptcy Code, (e) the entry of an order modifying,
reversing, revoking, staying, rescinding, vacating or amending this Order
without the express written consent of MLGAF, or (f) an "Event of
Default" under the Note Purchase Agreement or any other Note Document
occurs.
12. Upon the occurrence and during the continuance of an Event
of Default MLGAF may exercise rights and remedies and take all or any of
the following actions without further modification of the automatic stay
pursuant to Bankruptcy Code section 362 (which is hereby deemed modified
and vacated to the extent necessary to permit such exercise of rights and
remedies and the taking of such actions) or further order of or
application to this Court: (a) declare the principal of and accrued
interest, fees and other liabilities constituting the Obligations to be
due and payable; (b) setoff amounts in the Cash Collateral Account (as
defined in the Security Agreement), or any other accounts maintained with
a lender or financial institution, or otherwise enforce rights against
any other Collateral in the possession of MLGAF; and/or (c) take any
other action or exercise any other right or remedy permitted to MLGAF
under the Note Documents, this Order or by operation of law; provided,
however, MLGAF may take the actions described in clauses (b) or (c) above
only after providing three Business Days' prior written notice to CAI,
the United States trustee and the Unofficial Noteholders= Committee or,
if appointed in the Chapter 11 cases, any statutory committees and
provided that no order prohibiting such actions is entered by this Court
during such three Business Day period. The Debtors waive any right to
seek relief under the Bankruptcy Code, including without limitation,
under Bankruptcy Code section 105, to the extent any such relief would in
any way restrict or impair the rights and remedies of MLGAF set forth in
this Order and in the Note Documents, provided that such waiver shall not
preclude the Debtors from contesting whether a Default or Event of
Default has occurred and is then continuing.
13. The Debtors are authorized and directed to perform all
acts, and execute and comply with the terms of such other documents,
instruments and agreements in addition to the Note Documents, as MLGAF
may reasonably require, as evidence of and for the protection of the
Obligations, or which otherwise may be deemed reasonably necessary by
MLGAF to effectuate the terms and conditions of this Order and the Note
Documents.
14. Having been found to be extending credit and making
Purchases from the Debtors in good faith, MLGAF shall be entitled to the
full protection of Bankruptcy Code section 364(e) with respect to the
Obligations, Liens and all other rights created or authorized by this
Order or the Note Documents in the event that this Order or any
authorization contained herein is stayed, vacated, reversed or modified
on appeal. Any stay, modification, reversal or vacation of this Order
shall not affect the validity of any obligation of the Debtors to the
Agent (as defined in the Note Purchase Agreement) or MLGAF incurred
pursuant to this Order. Notwithstanding any such stay, modification,
reversal or vacation, all Purchases made pursuant to this Order and the
Note Purchase Agreement and all Obligations incurred by the Debtors
pursuant hereto or the Note Documents prior to the effective date of such
stay, modification, reversal or vacation, shall be governed in all
respects by the original provisions hereof and MLGAF shall be entitled to
all the rights, privileges and benefits hereof, including without
limitation, the Liens and Superpriority Claims granted herein.
15. The provisions of this Order and any actions taken
pursuant hereto shall survive entry of any order which may be entered (a)
confirming any plan of reorganization in either of the Chapter 11 Cases
(and the Obligations shall not be discharged by the entry of any such
order or pursuant to Bankruptcy Code section 1141(d)(4), the Debtors
having hereby waived such discharge); (b) converting either of the
Chapter 11 Cases to a Chapter 7 case; or (c) dismissing either of the
Chapter 11 Cases, and the terms and provisions of this Order as well as
the Superpriority Claims and Liens granted pursuant to this Order and the
Note Documents shall continue in full force and effect notwithstanding
the entry of such order, and such Superpriority Claims and Liens shall
maintain their priority as provided by this Order until all of the
Obligations are indefeasibly paid in full and discharged.
16. The provisions of this Order shall be binding upon and
inure to the benefit of MLGAF and its successors and assigns, including
any trustee or other fiduciary hereafter appointed in the Chapter 11
Cases as a legal representative of the Debtors or the Debtors' estates.
17. The terms and conditions of the Note Documents are
approved, incorporated herein by reference and made fully enforceable
against the Debtors without further order of this Court. To the extent
the terms and conditions of the Note Documents are in conflict with the
terms and conditions of this Order, the terms and conditions of this
Order shall control.
18. MLGAF and the Debtors may amend, modify, supplement or
waive any provision of the Note Documents if such amendment is provided
for in the Note Documents to the extent such amendment, modification,
supplement or waiver does not materially alter the terms and provisions
contained in the Note Documents or adversely affect economically any of
the Debtors and their estates without any need to apply to or receive
further approval from this Court.
19. This Court shall retain jurisdiction over all matters
arising from or related to the entry of this Order.
20. The Debtors shall, on or before August 4, 1998, mail
copies of a notice of the entry of this Order, together with a copy of
this Order and a copy of the Motion, to the parties having been given
notice of the Preliminary Hearing, to any party which has filed prior to
such date a request for notices with this Court and to counsel for the
Unofficial Noteholders= Committee or any statutory committee of unsecured
creditors if appointed pursuant to Bankruptcy Code section 1102. The
notice of entry of this Order shall state that any party in interest
objecting to the Postpetition Financing shall file written objections
with the United States Bankruptcy Court Clerk for the District of
Delaware no later than 4:00 p.m. on August 18, 1998, which objections
shall be served so that the same are received on or before such date by:
(a) Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022,
Attention: Douglas P. Bartner, Esq. and Constance A. Fratianni, Esq, (b)
Skadden Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, Attention: Greg Milmoe, Esq., and Skadden Arps, Slate, Meagher &
Flom, 1 Rodney Square, Wilmington, Delaware 19899, Attention: Gregg
Galardi, Esq., Attorneys for the Debtors, and (c) the Office of the
United States Trustee. Such notice shall be deemed good and sufficient
for purposes of entry of a final order on the motion. Each of the
Debtors irrevocably waives any right to seek any modifications or
extensions of this Order other than on prior written notice to MLGAF.
21. Any statutory committee of unsecured creditors if one is
appointed in these cases or the Unofficial Noteholders= Committee
(without duplication) shall have 30 days from the Filing Date to take all
reasonable steps to analyze and seek to challenge, modify or avoid any of
MLGAF=s interest in the Collateral securing obligations under the
Existing NPA as of the Filing Date. Notwithstanding the foregoing, after
the date of this order MLGAF shall have the protections of sections
364(c) and 364(e) of the Bankruptcy Code with respect to any Purchases
made by and security granted to MLGAF under the Note Documents and this
Order. Notwithstanding anything herein to the contrary, no proceeds of
Purchases, or any portion of the Carve-Out may be used in connection with
any proceeding against MLGAF, including, without limitation, any motion
or other pleading filed to contest (A) the attachment, perfection or
priority of the Liens created by the Note Documents or the Existing Note
Documents, (B) the validity, binding effect or enforceability of the Note
Documents or the Existing Note Documents, or (C) any other rights or
interests of the MLGAF under the Note Documents or the Existing Note
Documents; other than, in each case, for reasonable fees and expenses of
professionals retained by the Unofficial Noteholders= Committee or by an
statutory committee, if one is appointed, and approved by the Bankruptcy
Court (without duplication), for prechallenge investigative work
regarding the prepetition Liens of MLGAF or for contesting any provision
of the Postpetition Note Documents and for reasonable fees and expenses
of professionals retained by MLGAF incurred in connection with the
defense of any of the foregoing other than in defense of a proceeding
commenced to contest the attachment, perfection or priority of the Liens
created by the Existing Note Documents.
<PAGE>
22. The Final Hearing will be held on August 25, 1998 at 11:00 a.m. If
no written objections are filed by a party in interest as provided in the
foregoing paragraph20, this Order shall be deemed to be a Final Order for
all purposes.
Dated: Wilmington, Delaware
July 30, 1998
/s/ Joseph J. Farnan, Jr.
UNITED STATES DISTRICT JUDGE
Exhibit 99.2
FOR IMMEDIATE RELEASE
Investor Relations Contact: Company Contact:
John G. Nesbett/Scott Henry James P. Ashman
Lippert/Heilshorn & Associates CFO, CAI Wireless Systems, Inc.
212-838-3777 518-462-2632
CAI WIRELESS COMMENCES PREPACKAGED BANKRUPTCY
WITH OVERWHELMING BONDHOLDER SUPPORT
Albany, NY (July 30, 1998) -- CAI Wireless Systems, Inc. (the
"Company") announced today that it had commenced a prepackaged bankruptcy
with the overwhelming support of its creditors by filing a petition for
relief under Chapter 11 in the Federal Bankruptcy Court in Wilmington,
Delaware. The Company said that of the creditors who voted in its
prepetition solicitation of consents, which expired at midnight on
Tuesday, 99.9% of its 12 1/4 % Senior Notes due 2002 ("Senior Notes") and
92.3% of its Subordinated Notes voted in favor of the Plan of
Reorganization. Pursuant to the Plan, in cancellation of their existing
securities, holders of the Senior Notes would receive, in the aggregate,
new six-year Senior Notes in the aggregate initial principal amount of
$100 million and approximately 91% of the common equity of the
reorganized company, and holders of the Subordinated Notes would receive
the remaining approximately 9% of the common equity. Holders of the
Company's senior secured debt have been repaid in full with approximately
$48 million of a new debtor-in-possession financing facility and
virtually all of the Company's other creditors, including vendors,
licensors and employees will be paid in full in the ordinary course.
However, under the Plan, existing shareholders of CAI will not receive
any distribution and their shares will be extinguished.
A debtor-in-possession financing facility of $60 million provided by
the Company's present senior lender was approved by the Bankruptcy Court,
which also established September 9, 1998 as the date for a confirmation
hearing on the Company's Plan. The Company would expect to emerge from
bankruptcy shortly thereafter, subject to certain approvals of the
Federal Communications Commission, the obtaining of a new senior secured
credit facility and various other customary conditions.
"We are gratified by the strong support of the Company's creditors
in endorsing CAI's plan to achieve financial stability. We look forward
to emerging from the bankruptcy expeditiously," said Jared E. Abbruzzese,
CAI's Chairman and Chief Executive Officer.
The Company said that none of its operating subsidiaries had filed
for bankruptcy protection except for Philadelphia Choice Television, Inc.
("PCT"), which is included in the Company's Plan of Reorganization. In
connection with the Plan, PCT and the Company will seek to sell and
assign an aggregate of 64 contracts to provide cable television services
to various multi-dwelling units in the Philadelphia market for
approximately $6 million in cash.
STATEMENTS CONTAINED IN THIS PRESS RELEASE RELATING TO CAI'S FUTURE
OPERATIONS MAY CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
ACTUAL RESULTS OF THE COMPANY MAY DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AND MAY BE
AFFECTED BY A NUMBER
OF FACTORS, INCLUDING THE ABILITY OF CAI TO EMERGE FROM THE CHAPTER 11
CASE COMMENCED TODAY IN A PROMPT AND EXPEDITIOUS MANNER, AS WELL AS OTHER
FACTORS CONTAINED HEREIN AND IN CAI'S SECURITIES FILINGS.
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