UNITED STATES 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) September 4, 1998
WIRELESS ONE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-26836 72-1300837
(State or other (Commission file number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
1080 River Oaks Drive, Suite A150, Jackson, Mississippi 39208
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (601) 936-1515
<PAGE>
ITEM 5. OTHER EVENTS.
On September 4, 1998, Wireless One, Inc.
(the "Company") obtained a new $20,000,000 Senior
Secured Discretionary Note Facility (the "Senior
Facility"). Also on September 4, 1998, the Company
issued senior secured notes (the "Notes") pursuant to
the Senior Facility in the amount of $12,500,000.
The Notes (i) mature on April 15, 1999, (ii) pay 13%
per annum interest, (iii) require the Company to pay
a facility fee at the time of maturity of the Notes
equal to 5% of the aggregate principal amount of the
Notes issued September 4, 1998, plus up to 10% of the
aggregate principal amount of any additional Notes
issued pursuant to the Senior Facility and (iv) are
secured by substantially all of the Company's assets.
Upon the request of the Company, the purchaser of the
Notes may at its sole discretion and pursuant to
terms determined by the purchaser, purchase up to an
additional $7,500,000 of the Notes. Such additional
Notes will otherwise be subject to the same terms and
conditions as the Notes which were issued on
September 4, 1998 and will also mature on April 15,
1999. In connection with the purchase of the Notes,
the Company also issued to the purchaser of the Notes
seven year detachable warrants to purchase up to 6%
of the Company's fully-diluted common stock.
Attached as exhibits hereto are the material
agreements (the "Note Agreements") pursuant to which
the Notes have been issued.
Based upon the Company's current business
plan and management's forecast of the Company's cash
needs, management believes that the Senior Facility
will give the Company access to sufficient working
capital to proceed with its business plan through the
first quarter of 1999. The Company will need to make
additional provisions for its longer term capital
needs, including, without limitation (i) the
repayment of the Notes upon maturity thereof, (ii)
the obligation of the Company commencing in April
1999 to make semi-annual interest payments of
$9,750,000 on its $150 million aggregate principal
amount of senior notes due 2003 and (iii) additional
operating capital necessary to complete the Company's
business plan. A more detailed description of the
Company's long-term capital needs can be found in the
section entitled "Liquidity and Capital Resources" in
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998.
On September 8, 1998, the Company issued a
press release announcing that the Company has
obtained the Senior Facility which release is also
attached as an exhibit hereto. The foregoing
information in this Item 5 is qualified in its
entirety by the Note Agreements and the text of such
press release.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
10.1 Discretionary Note Purchase Agreement between the Company and the
Purchasers listed in Schedule I thereto, dated as of September 4,
1998 (see table of contents for list of omitted exhibits and
schedules)
10.2 Form of 13.00% Senior Secured Discretionary Note
10.3 Warrant Agreement between the Company and First Chicago Trust
Company of New York, as warrant agent, dated as of September 4,
1998 (see table of contents for list of omitted exhibits and
schedules)
10.4 Form of Warrant Certificate
10.5 Paying Agency Agreement between the Company, Merrill Lynch Global
Allocation Fund and PriceWaterhouseCoopers LLP, as paying agent
and collateral agent, dated as of September 4, 1998.
99.1 Press Release dated September 8, 1998 of the Registrant
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WIRELESS ONE, INC.
Date: September 11, 1998 /S/ HENRY M. BURKHALTER
Henry M. Burkhalter
Chief Executive Officer
S&S DRAFT
9/4/98
WIRELESS ONE, INC.
13.00% SENIOR SECURED DISCRETIONARY NOTES DUE APRIL 15, 1999
______________________________
DISCRETIONARY NOTE PURCHASE AGREEMENT
______________________________
Dated September _, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
1. AUTHORIZATION OF NOTES 1
2. SALE AND PURCHASE OF NOTES 1
3. CLOSINGS 2
3.1.Initial Closing 2
3.2. Subsequent Closings 3
4. CONDITIONS TO CLOSINGS 3
4.1. Representations and Warranties 3
4.2. Performance; No Default 3
4.3. Documents Required 4
4.4. Opinions of Counsel 6
4.5. Purchase Permitted by Applicable Law, Etc. 7
4.6. Consents and Approvals 7
4.7. Payment of Special Counsel Fees 7
4.8. Changes in Corporate Structure 7
4.9. Proceedings and Documents 8
4.10. No Material Adverse Change 8
4.11. Litigation 8
4.12. Capital Structure 8
4.13. Due Diligence 8
4.14. Business Plan 9
4.15. Bondholder Consent 9
4.16. Warrants 9
4.17. Subsequent Note Closings 9
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 10
5.1. Organization; Power and Authority 10
5.2. Authorization, Enforceability, Etc. 10
5.3. Disclosure 10
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates 11
5.5. Financial Statements 11
5.6. Compliance with Laws, Other Instruments, Etc. 12
5.7. Governmental Authorizations, Etc. 13
5.8. Litigation 14
5.9. Taxes 14
5.10. Title to Property; Leases 15
5.11. Licenses, Permits, Etc. 15
5.12. Security Interests, Etc. 16
5.13. Compliance with ERISA 16
5.14. Private Offering by the Company 17
5.15. Use of Proceeds; Margin Regulations 17
5.16. Status Under Certain Statutes 18
5.17. Foreign Assets Control Regulations, Etc. 18
5.18. Environmental Matters 19
5.19. No Burdensome Agreements 20
5.20. Existing Indebtedness; Future Liens 20
5.21. FCC Licenses; Channel Leases; System Agreements;
and the Systems 21
5.22. Interference 23
5.23. Line of Sight Households 23
5.24. Lease Agreements 23
5.25. Employee Contracts 24
5.26. Maintenance of Separateness 24
5.27. Material Contracts 24
5.28. Accounts 24
5.29. Year 2000 Compliance 25
6. REPRESENTATIONS OF THE PURCHASER 25
6.1. Purchase for Investment 25
6.2. Accredited Investor 25
6.3. Source of Funds 26
7. REDEMPTIONS AND REPURCHASES OF THE NOTES 26
7.1. Required Redemptions 26
7.2. Optional Redemptions 26
7.3. Notice of Redemptions 26
7.4. Allocation of Partial Redemptions 27
7.5. Maturity; Surrender, Etc. 27
7.6. Purchase of Notes 27
8. AFFIRMATIVE COVENANTS 27
8.1. Financial and Business Information 27
8.2. Compliance with Law 30
8.3. Maintenance of Insurance 30
8.4. Maintenance of Properties 30
8.5. Payment of Taxes and Claims; Performance of Material
Obligations 31
8.6. Preservation of Corporate Existence, Etc. 31
8.7. Maintenance of Books and Records; Inspection 31
8.8. Use of Proceeds 32
8.9. Furnishing of Rule 144 Information 32
8.10. Capital Stock 33
8.11. Obligations of Additional Obligors 33
8.12. Maintenance of Separateness 34
8.13. Performance of Material Contracts 34
8.14. Accounts 34
8.15. Tower Site Leases, Channel Leases and Programming Agreements 35
8.16. Key Man Life Insurance 35
8.17. Financial Statements 35
8.18. Maintenance of FCC Licenses and Channels 35
8.19. Condition Subsequent to the Initial Closing 35
9. NEGATIVE COVENANTS 35
9.1. Limitations on Transactions with Affiliates 36
9.2. Limitations on Liens 36
9.3. Limitations on Indebtedness 37
9.4. Limitations on Lease Obligations 37
9.5. Limitations on Mergers, Consolidations,
Sales of Assets, Etc. 38
9.6. Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries 39
9.7. Limitations on Prepayments of Indebtedness,
Charter Amendments, Etc. 39
9.8. Limitations on Negative Pledges 40
9.9. Limitations on Changes in Fiscal Year 41
9.10. Limitation on Investments 41
9.11. Limitation on Asset Purchases 41
9.12. Limitation on Capital Stock 41
9.13. Limitation on Licenses 41
9.14. Limitation on Line of Business 42
9.15. Limitation on Termination of Employer Plans 42
9.16. Limitation on Investment Company Act 42
9.17. Limitation on Press Releases 42
9.18. Limitation on Creation of Subsidiaries 42
9.19. Limitations on Employment Contracts 42
10. FINANCIAL COVENANTS 43
11. EVENTS OF DEFAULT 43
11.1. Events of Default 43
11.2. Acceleration 46
11.3. Other Remedies 47
11.4. Rescission 47
11.5. Restoration of Rights and Remedies 47
11.6. No Waivers or Election of Remedies, Expenses, Etc. 47
12. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 48
12.1. Registration of Notes 48
12.2. Transfer and Exchange of Notes 48
12.3. Replacement Notes 48
13. PAYMENTS ON NOTES 49
13.1. Place of Payment 49
13.2. Home Office Payment 49
14. EXPENSES, ETC. 49
14.1. Transaction Expenses 49
14.2. Indemnity 50
14.3. Survival 51
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT 52
16. AMENDMENT AND WAIVER 52
16.1. Requirements 52
16.2. Solicitation of Holders of Notes 53
16.3. Binding Effect, Etc. 53
16.4. Notes Held by Company, Etc. 53
17. NOTICES 54
18. REPRODUCTION OF DOCUMENTS 54
19. CONFIDENTIAL INFORMATION 54
20. SUBSTITUTION OF PURCHASER 55
21. MISCELLANEOUS 56
21.1. Successors and Assigns 56
21.2. Payments Due on Non-Business Days 56
21.3. Satisfaction Requirement 56
21.4. Severability 56
21.5. Construction 56
21.6. Computation of Time Periods 56
21.7. Counterparts 57
21.8. Governing Law; Submission to Jurisdiction, Etc. 57
<PAGE>
SCHEDULES
Schedule I - Information Relating to Purchasers
Schedule II - Defined Terms
Schedule 4.8 - Changes in Corporate Structure
Schedule 5.3 - Disclosure
Schedule 5.4(a) - Subsidiaries of the Company
Schedule 5.4(b) - Liens of Stock of Subsidiaries
Schedule 5.4(c) - Subsidiaries Party to Restrictive Agreements
Schedule 5.5 - Financial Statements
Schedule 5.6 - Compliance with Laws
Schedule 5.7 - Governmental Authorizations
Schedule 5.8 - Litigation
Schedule 5.9 - Taxes
Schedule 5.10 - Title to Property
Schedule 5.11 - Licenses, Permits, Etc.
Schedule 5.18 - Environmental Disclosures
Schedule 5.20 - Outstanding Indebtedness
Schedule 5.21(a) - Operating Systems
Schedule 5.21(b) - System Agreements
Schedule 5.21(c) - Channel Leases
Schedule 5.21(d) - FCC Licenses
Schedule 5.21(e) - Licenses, Status and Operations of all Systems' Channels
Schedule 5.21(g) - Assets, Permits and System Agreements
Schedule 5.21(h) - Non-Possession of System Agreements
Schedule 5.22 - Material Adverse Electrical Interference
Schedule 5.23 - Line of Sight Households
Schedule 5.24 - Leases
Schedule 5.25 - Employment Agreements
Schedule 5.27 - Material Contracts
Schedule 5.28 - Accounts
Schedule 8.10 - Capital Stock
Schedule 8.11 - Obligations of Additional Obligors
Schedule 9.1 - Transactions with Affiliates
Schedule 9.2 - Existing Liens
Schedule 9.5 - Approved Asset Sales
Schedule 9.13 - Termination of Licenses
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Notice of Discretionary Note Issuance
Exhibit C - Form of Security Agreement
Exhibit D - Form of Subsidiary Guaranty
Exhibit E - Form of Warrant Agreement
Exhibit F-1 - Form of Opinion of Counsel for the Obligors
Exhibit F-2 - Form of Opinion of General Counsel of the Company
Exhibit G - Form of FCC Cooperation Agreement
WIRELESS ONE, INC.
13.00% Senior Secured Discretionary Notes due April 15, 1999
As of September __, 1998
TO THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE I
Ladies and Gentlemen:
Wireless One, Inc., a Delaware corporation (the "COMPANY"), agrees
with you as follows:
1. AUTHORIZATION OF NOTES.
The Company may, from time to time, request that you purchase and,
subject to the provisions set forth in Section 2 and the other terms and
conditions of this Agreement, shall authorize the issue and sale of its 13.00%
Senior Secured Discretionary Notes due April 15, 1999 (together with 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 II attached hereto; and references to a "Schedule" or an "Exhibit"
are, unless otherwise specified herein, to a Schedule or an Exhibit attached to
this Agreement.
2. SALE AND PURCHASE OF NOTES.
The Company may request that you purchase and, subject to the
provisions set forth below and the other terms and conditions of this Agreement
and such other conditions as you shall specify in a Discretionary Purchase
Notice, you will (only if you determine in your sole discretion to do so)
purchase from the Company (a "NOTE ISSUANCE"), at the Closings provided for in
Section 3, Notes from time to time on any Business Day during the period from
the date hereof until the date occurring 30 days prior to the Maturity Date in
the manner set forth below; provided that, following such issuance, the
aggregate principal amount of the Notes then issued shall not exceed
$20,000,000.
(a) The Company may request that you purchase Notes by delivering to
you, by telecopier or telex, a notice of a proposed Note Issuance (a
"NOTICE OF NOTE ISSUANCE"), in substantially the form of Exhibit B hereto,
specifying therein (i) the requested date of such proposed Note Issuance,
(ii) the requested aggregate principal amount of the Notes proposed to be
issued on such date and (iii) other items (if any) to be applicable to
such Note Issuance, not later than 12:00 noon (New York City time) at
least ten Business Days prior to the date of the proposed Note Issuance.
(b) You may, if, in your sole discretion you elect to do so,
irrevocably accept to purchase one or more Notes from the Company in
connection with such proposed Note Issuance by notifying the Company
before 12:00 noon (New York City time) three Business Days before the date
of such proposed Note Issuance of the amount of each Note you would be
willing to purchase and the amount of the Facility Fee payable in
connection therewith in an amount not to exceed 10% of the principal
amount of each such Note (the "DISCRETIONARY PURCHASE NOTICE").
(c) The Company may, before 9:00 A.M. (New York City time) on the
date of such proposed Note Issuance cancel such proposed Note Issuance by
giving you notice to that effect.
(d) After receipt by the Company of the Discretionary Purchase
Notice from you that you have agreed to purchase one or more Notes
pursuant to such proposed Note Issuance as set forth in clause (b) above
and upon fulfillment of the applicable conditions set forth in Section 4
in the case of the Initial Closing (as defined below) or Section 4.18 in
the case of a Subsequent Closing (as defined below), you will purchase
such Notes at the purchase price of 100% of the aggregate principal amount
thereof at the location set forth in Section 3 or such other location as
shall be agreed upon by you and the Company. You shall have no commitment
or obligation to purchase any Notes regardless of whether the conditions
set forth in Section 4 or 4.18, as the case may be, have been satisfied
unless you shall have given the Discretionary Purchase Notice pursuant to
Section 2(b).
(e) Each Note shall be in an aggregate principal amount of not less
than $1,000,000 or an integral multiple of $100,000 in excess thereof.
3. CLOSINGS.
3.1. INITIAL CLOSING.
The initial sale and purchase of any Note to be purchased by you
shall occur at the offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022, by 2:00 P.M. (New York City time), at a closing (the
"INITIAL CLOSING" and, together with the Subsequent Closings referred to in
Section 3.2, the "CLOSINGS") on the date set forth in the applicable Notice of
Issuance or on such other Business Day as may be agreed upon between the
Company and you (the "INITIAL CLOSING DATE"). At the Initial Closing, the
Company will deliver to you the initial Notes to be purchased by you pursuant
to Section 2 (the "INITIAL NOTES") in the form of a single Note (or such
greater number of Notes in denominations of at least $5,000,000 or integral
multiples of $100,000 in excess thereof as you may request) dated the Initial
Closing Date and registered in your name (or in the name of your nominee),
against delivery by you to the Company or its order of immediately available
funds in the amount of the aggregate purchase price therefor by wire transfer
of immediately available funds for the account of the Company to Deposit
Guaranty, Account No. 9090000002 or by such other means satisfactory to the
Company and you. If at the Initial Closing the Company shall fail to tender
such Initial Notes to you as provided above in this Section 3 or any of the
conditions specified in Section 4 shall not have been fulfilled pursuant to the
terms thereof, this Agreement shall terminate and you shall 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.
3.2. SUBSEQUENT CLOSINGS.
The subsequent sale and purchase of any Note (a "SUBSEQUENT NOTE")
shall occur at the offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022, at 2:00 P.M. (New York City time), at a subsequent
closing (each, a "SUBSEQUENT CLOSING") on the date set forth in the applicable
Notice of Note Issuance or on such Business Day as may be agreed upon between
the Company and you (the "SUBSEQUENT CLOSING DATE") 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 Subsequent Closing Date and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the aggregate purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
Deposit Guaranty, Account No. 9090000002 or by such other means satisfactory to
the Company and you.
4. CONDITIONS TO CLOSINGS.
After giving the Discretionary Purchase Notice, your obligation to
purchase and pay for the Initial Notes to be sold to you at the Initial Closing
is subject to the fulfillment to your satisfaction, prior to or at the Initial
Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each of the Obligors contained
in this Agreement and in each of the other Note Documents shall be complete and
correct when made and at the time of the Initial Closing, before and after
giving effect to the issue and sale of the Initial Notes and to the application
of the proceeds therefrom as contemplated by Section 5.15.
4.2. PERFORMANCE; NO DEFAULT.
Each of the Obligors shall have performed and complied with all
agreements and conditions contained in this Agreement and the other Note
Documents required to be performed or complied with by it prior to or at the
Initial Closing and, after giving effect to the issue and sale of the Initial
Notes and to the application of the proceeds therefrom as contemplated by
Section 5.15, 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 Initial Closing Date (except as otherwise specified below) and in the form
of the respective Exhibit attached hereto, if any, or otherwise in form and
substance satisfactory to you:
(a) SECURITY AGREEMENT. A security agreement, in substantially the
form of Exhibit C 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 each of the
Obligors party thereto, 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 endorsed
in blank;
(ii) proper financing statements (Form UCC-1 or a comparable
form) under the Uniform Commercial Code of all jurisdictions that
may be necessary or that you may deem desirable in order to perfect
and protect the liens and security interests created under the
Security Agreement, covering the Collateral described therein, in
each case duly executed by the applicable Obligor;
(iii) completed requests for information, dated on or before
the Initial Closing Date, listing all 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
(other than the consent of WONC which shall be delivered pursuant to
Section 8.21), in substantially the form of Exhibit B to the
Security Agreement, duly executed by each party to such Assigned
Agreements other than the applicable Obligor;
(vii) the Blocked Account Letters referred to in the Security
Agreement, duly executed by each Blocked Account Bank referred to in
the Security Agreement;
(viii) a copy of the written instructions from the Company to
DIRECTV, Inc. directing payment of all cash proceeds in excess of
$100,000 in aggregate in any calendar month into the Wireless One
Operating Account; and
(ix) 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) SUBSIDIARIES GUARANTEE. A guarantee, in substantially the form
of Exhibit D attached hereto (as amended, supplemented or otherwise
modified hereafter from time to time in accordance with its terms, the
"SUBSIDIARY GUARANTY"), duly executed by each of the Subsidiaries of the
Company set forth on the signature pages thereof.
(c) 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 Initial Closing Date) by the Secretary of State
of the jurisdiction of its 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 Initial
Closing Date, listing the charter of the Company and each of its
Subsidiaries 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 of the Secretary of State of each
jurisdiction in which the Company or any of its Subsidiaries is
qualified as a foreign corporation, dated reasonably near the
Initial Closing Date stating that the Company or such Subsidiary is
duly qualified and in good standing as a foreign corporation in such
State and has filed all annual reports required to be filed to the
date of such certificate.
(d) SECRETARY'S CERTIFICATE. A certificate from the secretary or an
assistant secretary (or a person performing similar functions) of each of
the Obligors certifying:
(i) copies of the resolutions of the board of directors (or
persons performing similar functions) of such Obligor approving this
Agreement, the Notes and each of the other Note Documents to which
it is or is to be a party, and of all documents evidencing other
necessary corporate or other necessary action and governmental
approvals, if any, with respect thereto;
(ii) the names and true signatures of the officers of such
Obligor authorized to sign this Agreement, the Notes and each of the
other Note Documents to which it is or is to be a party and the
other agreements, instruments and other documents to be delivered
hereunder and thereunder; and
(iii) such other matters relating to the existence and good
standing of such Obligor, 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.
(e) OFFICER'S CERTIFICATE. An Officer's Certificate certifying that
the conditions specified in Sections 4.1, 4.2, 4.3(f), 4.3(h), 4.3(i) and
4.10 have been fulfilled.
(f) 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.
(g) OTHER COLLATERAL DOCUMENTS. You shall have received the
following documents, each dated as of the Initial Closing Date and in the
form of the respective Exhibit attached hereto, if any, or otherwise in
form and substance satisfactory to you:
(i) a cooperation agreement in substantially the form of
Exhibit G attached hereto (as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the "FCC
COOPERATION AGREEMENT") duly executed by each of the parties
thereto; and
(ii) the Control Agreement.
(h) EMPLOYMENT AGREEMENTS. Certified copies of each written
employment agreement and other written compensation arrangement with each
officer of the Company and its Subsidiaries (the "EMPLOYMENT AGREEMENTS").
(i) MATERIAL CONTRACTS. Certified copies of all Material Contracts
of the Company and its Subsidiaries.
(j) WARRANT AGREEMENT. A warrant agreement, in substantially the
form of Exhibit E attached hereto, which shall include registration rights
(as amended, supplemented or otherwise modified hereafter from time to
time in accordance with its terms, the "WARRANT AGREEMENT"), duly executed
by each of the parties thereto.
(k) ADDITIONAL DOCUMENTATION. Such other documents, agreements or
information as you may reasonably request.
4.4. OPINIONS OF COUNSEL.
You shall have received favorable opinions, dated the Initial
Closing Date, from:
(a) Latham & Watkins, counsel for the Obligors, in substantially the
form of Exhibit F-1 attached hereto, 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);
(b) special local counsel for the Obligors in Mississippi in
substantially the form of Exhibit F-2 attached hereto, 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 each such counsel to deliver such opinion to
you);
(c) Shearman & Sterling, your counsel; and
(d) Squire Sanders & Dempsey, your special FCC counsel.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
The purchase of and any payment for the Initial Notes to be
purchased by you at the Initial 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 Initial Closing Date, dated the Initial 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.
All orders, consents, 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 or notices necessary
to perfect the security interest 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 reasonably 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 Initial Closing the reasonable fees, charges and
disbursements of your special counsel referred to in Sections 4.4(c) and (d)
and any other professional you may retain in connection with the transaction,
which fees, charges and disbursements have been invoiced in reasonable detail,
after giving effect to any retainer amounts paid to such counsel by the
Company.
4.8. CHANGES IN CORPORATE STRUCTURE.
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
5.5(a) except as set forth in Schedule 4.8.
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 reasonably 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.
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 December 31,
1997, except as otherwise disclosed to you in writing prior to the Initial
Closing Date, provided that such disclosure is reasonably acceptable to you.
4.11. LITIGATION.
There shall exist no action, suit, investigation, litigation,
proceeding or counterclaim affecting the Company or any of its Subsidiaries
pending or, to the Company's knowledge, 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 Initial 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. BUSINESS PLAN.
The Company shall have delivered an operating and financial budget
for the period from January 1, 1998 through December 31, 2002, together with
pro forma financial statements, as to the Company and its Subsidiaries that
shall be satisfactory in all respects to you (the "BUSINESS PLAN").
4.15. BONDHOLDER CONSENT.
The Company shall have delivered evidence satisfactory to you that
the Bondholders shall have approved the Consent.
4.16. WARRANTS.
You shall have received the Warrants issued pursuant to the Warrant
Agreement.
4.17. SUBSEQUENT NOTE CLOSINGS.
After giving the Discretionary Purchase Notice, your obligation to
purchase Subsequent Notes that may arise pursuant to Section 2 on the occasion
of a Subsequent Closing is subject to the conditions precedent that (a) on or
before the Subsequent Closing Date, you shall have received (i) a Note payable
to your order in a principal amount equal to the amount set forth in the
Discretionary Purchase Notice, (ii) the Warrants pursuant to the Warrant
Agreement and (iii) such other conditions, including without limitation, the
delivery of such other documents, agreements or information as you may require
as set forth in the Discretionary Purchase Notice and (b) on the date of such
Note Issuance the following statements shall be true (and each of the giving of
the applicable Notice of Note Issuance and the acceptance by the Company of the
proceeds of such Note Issuance shall constitute a representation by the Company
that on the date of such Note Issuance such statements are true):
(i) the representations and warranties of each of the Obligors
contained in this Agreement and in each of the other Note Documents shall
be complete and correct when made and at the time of such Note Issuance,
before and after giving effect to the issue and sale of such Subsequent
Notes and to the application of the proceeds therefrom as contemplated by
Section 5.15,
(ii) after giving effect to the issue and sale of any Subsequent
Notes and to the application of the proceeds therefrom as contemplated by
Section 5.15, no Default or Event of Default shall have occurred and be
continuing, and
(iii) the Company shall have complied in full with the covenant set
forth in Section 8.20.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company and each of the Guarantors are duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, and are duly qualified as a foreign corporation and are in
good standing in each other jurisdiction in which the ownership, lease or
operation of their respective property and assets or the conduct of their
respective businesses requires such qualification, other than in any such
jurisdiction in which the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company and each of its Subsidiaries have all
corporate and other necessary power and authority, and the legal right, to own
or to hold under lease the properties they purport to own or hold under lease
and to transact the business they transact and propose to transact, except to
the extent the failure to have such power and authority and legal right could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each of the Obligors 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 has been validly issued, is fully paid and non-assessable.
5.2. AUTHORIZATION, ENFORCEABILITY, ETC.
This Agreement and each of the other Note Documents have been duly
authorized by all necessary corporate action (including, without limitation,
all necessary shareholder action) on the part of each of the Obligors intended
to be a party thereto. This Agreement has been, and each of the other Note
Documents, when delivered hereunder, will have been duly executed and delivered
by each of the Obligors intended to be a party thereto. This Agreement
constitutes, and each of the other Note Documents, when delivered hereunder
will constitute, the legal, valid and binding obligation of each of the
Obligors intended to be a party thereto, enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by (a)
the effect of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(b) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
The Company, through its agent, BT Alex. Brown, has delivered to you
a copy of a Descriptive Memorandum, dated May, 1998, the Company's most
recently filed Annual Report on Form 10-K, the Company's most recently filed
Form 10Q and each of the Company's Form 8-Ks filed thereafter (collectively the
"MEMORANDUM"), relating to the Transaction and the other transactions
contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the businesses and principal properties and
assets of the Company and its Subsidiaries. Except as disclosed in Schedule
5.3 attached hereto, this Agreement, the Memorandum and the other documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the Transaction and the other transactions contemplated
hereby and the financial statements referred to in Section 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made, except that the Company
makes no representation or warranty as to future financial performance. Except
as disclosed in the Memorandum or as expressly described in Schedule 5.3
attached hereto, or in one of the documents, certificates or other writings
identified therein or in the financial statements listed in Section 5.5 hereto,
since December 31, 1997, there has been no change in the financial conditions,
operations, business or properties of the Company or any of its Subsidiaries,
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material Adverse Effect
that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of
the Company specifically for use in connection with the Transaction and the
other transactions contemplated hereby.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Part I of Schedule 5.4(a) attached hereto sets forth all of the
Subsidiaries of the Company as of the Initial Closing Date, showing, as to each
such Subsidiary, 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 outstanding as of the Initial Closing Date that are
owned by the Company and/or one or more of its Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary of the Company referred to in Part I of
Schedule 5.4(a) attached hereto as being owned by the Company and/or one or
more of its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company and/or one or more of its
Subsidiaries free and clear of all Liens, except for the Liens created under
the Collateral Documents or as set forth on Schedule 5.4(b).
(c) Except as set forth on Schedule 5.4(c), no Subsidiary of the
Company 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
to pay dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns shares of capital
stock of or similar equity interests in such Subsidiary.
(d) Part II of Schedule 5.4(a) sets forth all subsidiaries of the
Company that are "shell" corporations having no assets or liabilities and
holding no licenses or other authorizations from the FCC or any other
Governmental Authority as of the date hereof.
5.5. FINANCIAL STATEMENTS.
(a) The audited consolidated balance sheet of the Company and its
Subsidiaries as of December 31, 1997 and the audited consolidated statements of
operations and cash flows of the Company and its Subsidiaries for the fiscal
years ended December 31, 1996 and December 31, 1997, 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 condensed consolidated balance sheet of the
Company and its Subsidiaries as of June 30, 1998 and the unaudited condensed
consolidated statements of operations and cash flows of the Company and its
Subsidiaries for the three-month and six-month periods ended March 31, 1998 and
June 30, 1998, respectively, in each case including the related schedules and
notes, copies of each of which have previously been furnished to you, (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) During the period from June 30, 1998 to and including the
Initial Closing Date, 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 or otherwise disclosed on Part I of Schedule 5.5, 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) is 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 are reflected in the financial statements
referred to in this Section 5.5 or in the notes thereto or which have been
disclosed in writing to you on or prior to the date of this Agreement.
(d) Except as set forth on Part II of Schedule 5.5, since June 30,
1998, there has been (i) no change in the condition (financial or otherwise),
operations, business, assets, liabilities or properties of the Company and its
Subsidiaries, taken as a whole, and (ii) no development or event relating to or
affecting the Company or any of its Subsidiaries that, either individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
(a) The execution, delivery and performance by each of the Obligors
of each of the Note Documents to which it is or is to be a party and the
consummation of the Transaction and the other transactions contemplated hereby
do not and will not (i) contravene such Obligor's charter or bylaws (or
equivalent organizational documents), (ii) violate any law, statute, rule or
regulation, including, without limitation, the Communications Act, FCC Rules
and those relating to copyright, or any order, writ, judgment, injunction,
decree, determination or award in any manner that, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect,
(iii) conflict with or result in the breach of, or constitute a default under,
any contract, loan agreement, indenture, including, without limitation, the
Indentures, mortgage, deed of trust, lease or other instrument binding on or
affecting any Obligor, any of its Subsidiaries or any of their properties in
any manner that, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, or (iv) except for the Liens
created under the Collateral Documents, result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or
revenues of any Obligor or any of its Subsidiaries. Neither any Obligor nor
any of its Subsidiaries is in violation of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of any
such contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument referred to in the immediately preceding sentence, the
violation or breach of which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed on Schedule 5.6, all FCC Licenses issued to
the Company or its Subsidiaries listed in Schedule 5.21(d) 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 could result in the revocation, cancellation,
adverse modification or non renewal of any such FCC License issued to the
Company or its Subsidiaries or the imposition of a material fine or forfeiture
in excess of $50,000 or any other action by the FCC as to materially impair the
Company's or any of its Subsidiaries' ability to develop or operate any of the
Channels or Systems, that would result in a Material Adverse Change. The
Company's Systems and Channels are currently providing and, to the knowledge of
the Company, have been providing service to the public and are being operated
in material compliance with the respective FCC Licenses and other Permits and
with all other Legal Requirements.
(c) Except as set forth on Schedule 5.6, all Material reports and
other documents required to be filed with the FCC or other Governmental
Authority with respect to the Systems, Channels, FCC Licenses, Booster Licenses
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 5.6,
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, FCC Licenses, System Agreements or
Systems, or any of the Company or any of its Subsidiaries, or that would
reasonably be likely to result in the imposition of a fine or forfeiture in
excess of $50,000, including copyright filings, extension requests and reports
required by Sections 21.11(a), 21.911 and 21.920 of the FCC Rules.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
Except as set forth on Schedule 5.7, 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 and notices to perfect security interest
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) other than with respect to the FCC Licenses,
except for the filing of the financing statements, filings in respect of the
Intellectual Property Collateral required pursuant to the Security Agreement,
or the equivalent thereof referred to in Section 4.3(a).
5.8. LITIGATION.
(a) Except as disclosed in Schedule 5.8, 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 of its Subsidiaries 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, judgment, decree or ruling of any court,
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.
5.9. 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 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) Except as set forth on Schedule 5.9, 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
December 31, 1997 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 December 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.
5.10. TITLE TO PROPERTY; LEASES.
Except as set forth in Part I of Schedule 5.10, the Company 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 and the other Note
Documents. Except as set forth in Part II of Schedule 5.10, all leases under
which the Company or any of its Subsidiaries are a lessor or a lessee that,
either individually or in the aggregate, are Material are valid and are in full
force and effect against the Company or such Subsidiaries, as applicable, and,
to the best knowledge of the Company, the other parties thereto in all material
respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11 attached hereto:
(a) the Company and each of its Subsidiaries own or possess all
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, except where
the failure to do so, either individually or in the aggregate, would not
be Material. Except as set forth in Schedule 5.8 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) to the best knowledge of the Company, no product of the Company
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.
5.12. SECURITY INTERESTS, ETC.
Except as provided herein or in any other Note Document, the
Collateral Documents create a valid and perfected first priority lien on and
security interest in the Collateral, except as set forth as Schedule IX to the
Security Agreement, 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 Guarantors that are purported to
comprise part of the Collateral have been delivered to the Agent, together with
undated stock powers executed in blank, and except as provided herein, 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.
5.13. 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 or 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) 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.
(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(a) of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975 of the Internal Revenue Code by reason of a
transaction prohibited by Section 4975(c)(1)(A) - (D) of the Internal Revenue
Code. The representation by the Obligors in the first sentence of this Section
5.13(g) is made in reliance upon and is subject to 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.
5.14. 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. You have been
offered the Notes at a private sale for investment. Neither the Company nor
any Person acting on its behalf has taken, or will take, any action that would
subject the issuance and sale of the Notes to the registration requirements of
Section 5 of the Securities Act.
(b) Neither the Company 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).
5.15. USE OF PROCEEDS; MARGIN REGULATIONS.
(a) The proceeds received from the sale of the Notes to the
Purchaser will be used solely to pay fees and expenses incurred in connection
with the consummation of the Transaction and to fund certain approved and
budgeted corporate purposes in accordance with the Business Plan.
(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, the Company 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.
5.16. 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.
5.17. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
(a) Neither the issue and sale of the Notes by the Company 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,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect and 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 and have paid all fees required to be paid by the FCC or the Communications
Act, except where the failure to so file and pay, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
5.18. ENVIRONMENTAL MATTERS.
(a) The operations and properties (whether owned or leased) of the
Company and each of its Subsidiaries are in Material compliance 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 currently or, to the best knowledge of
the Obligors, formerly 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 knowledge of the
Obligors, is adjacent to any such property; except as provided on Schedule 5.18
attached hereto, there are no and, to the best knowledge of the Obligors, 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 currently
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 at the time the Company or any of its
Subsidiaries owned or operated such property; there is no friable asbestos-
containing material on any property currently 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 currently, or to the best knowledge
of the Obligors, formerly 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 written 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.
5.19. 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.
5.20. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Schedule 5.20 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of the date
hereof, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of any
Indebtedness of the Company or any of its Subsidiaries which exceeds $100,000,
either individually or in the aggregate. 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 or
9.9.
5.21. FCC LICENSES; CHANNEL LEASES; SYSTEM AGREEMENTS; AND THE SYSTEMS.
(a) Schedule 5.21(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 5.21(b) lists all System Agreements other than FCC
Licenses and Channel Leases. Except as set forth in Schedule 5.21(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 that (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 in the 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
contains a put or call option with respect to the subject matter thereof; and
(H) none of the System Agreements contains any restriction on 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. The Company has made available for your
review complete and accurate copies of each of the System Agreements, as
amended, and none of such have been amended subsequent to your review of such
documents in any respect.
(c) Schedule 5.21(c) lists all Channel Leases, the payment
obligations thereunder, and the FCC Licenses held by the lessors. Except as
set forth in Schedule 5.21(c), (A) to the best knowledge of the Company and to
the extent required by the FCC Rules, 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 that (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
contains a put or call option with respect to the subject matter thereof; and
(H) none of the Channel Leases contains any restriction on 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. The Company has made available for your
review complete and accurate copies of each of the Channel Leases and none of
such have been amended subsequent to your review of such documents in any
respect.
(d) Schedule 5.21(d) lists all FCC Licenses held by the Company or
any of its Subsidiaries and applications for FCC Licenses. As of the Initial
Closing Date, except as set forth in Schedule 5.21(d), (A) each of such FCC
Licenses held by the Company or any of its Subsidiaries constitutes a legal,
valid and binding authorization 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 held by the Company or any of its Subsidiaries;
(C) neither the Company, any of its Subsidiaries nor, to the best knowledge of
the Company, any lessor under any Channel Lease, as the case may be, is in
violation of the FCC Rules, orders, policies or procedures affecting any FCC
License or any application for an FCC License, which violation could result in
the termination, impairment or forfeiture in excess of $50,000 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 or applications for FCC
Licenses that (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 FCC Rules, orders, policies or procedures affecting any such FCC License
or application for FCC Licenses; (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 in the Channel
Leases or System Agreements relating to any of the FCC Licenses that 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 made available to
you complete and accurate copies of each of the FCC Licenses listed in Schedule
5.21(d) and applications for FCC Licenses and none of them have been amended in
any respect since your review.
(e) Schedule 5.21(e) accurately lists, with respect to each of the
Systems, all Channels, and accurately describes the following:
(i) the status of each FCC License and Booster 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, and (D) whether there are any threatened or pending
interference issues, petitions to deny, informal objections, comments or
waiver requests;
(f) Complete and correct copies of all of the Permits and
Alternative Use Applications and amendments thereto (with the FCC file date
stamped thereon), 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
made available for your review as requested.
(g) Except as set forth on Schedule 5.21(g), 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 5.21(h), (i) the Company and
each of its Subsidiaries have obtained and possess all System Agreements,
patents, copyrights, certificates of confirmation, licenses, permits,
trademarks and trade names, or rights thereto, necessary to conduct its
business as currently conducted by the Company and each of its Subsidiaries and
none of the Company and its Subsidiaries is 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; and (iii) the Company and each of its
Subsidiaries have obtained and possess all licenses, leases, conduit use,
equipment rental and microwave or satellite relay agreements necessary for the
operation of the Systems as required by the System Agreements.
5.22. INTERFERENCE.
Except as set forth on Schedule 5.22, neither 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 and its Subsidiaries expect to operate. Except as set forth in
Schedule 5.22, to the Company's knowledge, neither the Company, any of its
Subsidiaries, nor any Channel Licensee is likely to experience any Material
adverse electrical interference from any source to its presently authorized
facilities or to any facilities that it proposes to construct pursuant to an
application currently pending before the FCC.
5.23. LINE OF SIGHT HOUSEHOLDS.
Schedule 5.23 lists the estimated number of line of sight households
for each of the operating Systems and describes any material assumptions for
arriving at such determinations.
5.24. LEASE AGREEMENTS.
(a) Schedule 5.24 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 Material 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 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, the tower owners have
filed appropriate notification to the FAA for each tower where required by the
rules and regulations of the FAA or FCC.
5.25. EMPLOYEE CONTRACTS.
There are no written 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 5.25 hereto.
5.26. MAINTENANCE OF SEPARATENESS.
To the Company's knowledge, (i) except pursuant to a written
guaranty or other agreement, no creditor of any Obligor relies on the
availability of assets of any other Obligor in order for such creditor to
receive payment for the Obligations owed it by such first Obligor, and (ii) the
assets and liabilities of the Obligors are not so hopelessly entangled that
separation is impracticable.
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 the applicable Obligor party
thereto or, to such Obligor's knowledge, the other parties 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. YEAR 2000 COMPLIANCE.
The Company hereby represents, warrants and covenants that the
following are or will be Year 2000 Compliant (as hereinafter defined) in a
timely manner, but in no event later than June 30, 1999: (a) the premises,
property or improvements thereon of the Company or any of the Obligors, (b) the
Company itself and the Obligors themselves; and (c) any other major commercial
properties and entities in which the Company or any Obligor holds an interest.
The Company shall further make reasonable inquiries of and request reasonable
validation that each of the following are similarly Year 2000 Compliant: (x)
all Material tenants or other entities from which the Company or any Obligor
receives payments; and (y) all Material contractors, suppliers, service
providers, channel lessors, tower site lessors and vendors of the Company or
any Obligor. As used herein "Material" shall mean properties or entities the
failure of which to be Year 2000 Compliant would have a Material Adverse
Effect. The term "Year 2000 Compliant" shall mean, in regard to any property or
entity, that all software, hardware, equipment, goods or systems utilized by or
material to the physical operations, business operations, or financial
reporting of such property or entity (collectively, the "Systems") will
properly perform date sensitive functions before, during and after the year
2000 except to the extent that such non-compliance would not have a Material
Adverse Effect. The Company shall deliver to you no later than September 11,
1998, a copy of the audit previously performed to assess whether the Systems of
the Company and the Obligors are Year 2000 Compliant. The Company shall,
within thirty (30) Business Days of your written request, provide to you such
certifications or other evidence of the Company's compliance with the terms of
this paragraph and the plans for monitoring such compliance as you may from
time to time reasonably require.
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.
If you desire to sell or otherwise dispose of all or any part of the
Notes under an exemption from registration under the Securities Act, if
requested by the Company, you will deliver to the Company an opinion of your
in-house counsel in form and substance reasonably satisfactory to the Company,
that such exemption is available; provided, however, that in case of any sale
or other transfer of the Notes to any Person who is an "accredited investor"
(as such term is defined and used in Rule 501 of Regulation D), no opinion of
counsel shall be required if you obtain a representation from such Person that
it is an accredited investor and is acquiring the Notes for its own account and
with no intention of distributing or reselling said Notes or any part thereof,
or interest therein, in any state thereof, without prejudice, however, to such
Person's right at all times to sell or otherwise dispose of all or any part of
said Notes under a registration under the Securities Act or any exemption from
such registration available under such Act, and subject, nevertheless, to such
Person's disposition of its property being at all times within its control.
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act, the Notes
(and all notes issued in exchange therefor or substitution thereof) shall bear
the following legend:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND, ACCORDINGLY, THIS NOTE MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SAID LAWS OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS THEREOF."
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 either (i) no assets of an employee benefit plan
(as defined under Section 3 of ERISA), a plan (as defined under Section 4975 of
the Internal Revenue Code) or an entity which may be deemed to hold the assets
of any such plan (collectively, "ERISA PLANS") are to be used by you to pay the
purchase price of the Notes to be purchased by you hereunder or (ii) one or
more prohibited transaction statutory or administrative exemptions applies such
that the use of such ERISA Plan assets to purchase such Notes will not
constitute a non-exempt prohibited transaction.
7. REDEMPTIONS AND REPURCHASES OF THE NOTES.
7.1. REQUIRED REDEMPTIONS.
Upon the receipt of the Net Cash Proceeds (i) of Extraordinary
Receipts not to be used in accordance with the Business Plan and (ii) of the
issuance of additional debt or equity permitted under this Agreement (other
than the issuance of additional debt in an aggregate amount not to exceed
$10,000,000 on terms and conditions reasonably satisfactory to the Purchaser
and in accordance with Section 9.3(c)), the Company will apply all such
proceeds to redeem the Notes outstanding on such date at 100% of the aggregate
principal amount of the Notes so redeemed, together with all interest accrued
and unpaid on such Notes to the date of such redemption to the extent permitted
under the Indentures.
7.2. OPTIONAL REDEMPTIONS.
The Company may, at its option, upon notice as provided in Section
7.3, redeem at any time all, or from time to time prior to March 1, 1999 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 102% of
the aggregate principal amount of the Notes so redeemed plus accrued and unpaid
interest thereon to the date of such redemption.
7.3. NOTICE OF REDEMPTIONS.
The Company will give each holder of Notes written notice of each
required or optional redemption under Section 7.1 or 7.2 not less than 15 days
prior to the date fixed for such redemption. Each such notice shall specify
the date fixed for such redemption, the aggregate principal amount of the Notes
to be redeemed on such date, the principal amount of each Note held by such
holder to be redeemed (determined in accordance with Section 7.6), and the
interest to be paid on the redemption date with respect to such principal
amount being redeemed and shall state that such redemption is to be made
pursuant to Section 7.1 or 7.2.
7.4. ALLOCATION OF PARTIAL REDEMPTIONS.
In the case of each partial redemption of the Notes under Section
7.1 or 7.2 the principal amount of the Notes to be redeemed 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 redemption.
7.5. MATURITY; SURRENDER, ETC.
In the case of each redemption of Notes pursuant to this Section 7,
the principal amount of each Note to be redeemed shall mature and become due
and payable on the date fixed for such redemption, together with interest on
such principal amount accrued to such date. From and after such date, unless
the Company shall fail to redeem such principal amount when so due and payable,
together with the interest as aforesaid, interest on such principal amount
shall cease to accrue. Any Note so redeemed 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.
7.6. 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.
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
Material 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 the Trustees under the Indentures for
the benefit of the note holders thereunder, (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 Material 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 Material reports and
applications required to be filed by the FCC or the Communications Act.
(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 upon receipt of knowledge
thereof, notice of a Material Adverse Change or the occurrence of a
development which could reasonably be expected to result in such Material
Adverse Change.
(f) LITIGATION. Promptly after the Company obtains knowledge of the
commencement thereof, notice of all actions, suits, investigations and
proceedings in any court or before any arbitrator or before or by any
Governmental Authority binding on or affecting the Company or any of its
Subsidiaries or any of their respective properties of the type described
in Section 5.8 or in which the Company or any of its Subsidiaries is a
party or subject thereof which would 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) OTHER LENDERS. Promptly after the delivery thereof documents
and certificates delivered by the Company to any other lender or holder of
indebtedness of the Company.
(i) REQUESTED INFORMATION. With reasonable promptness, such other
information relating to the financial condition, business, operations,
assets, liabilities or properties of the Company or any of its
Subsidiaries (including, without limitation, the status of any competing
or conflicting applications or outstanding no-objection letters in
connection with each FCC License and Booster License and the status of
each Collocation Application, Booster Application and Alternative Use
Application and each request for a protected service area or other
interference protection), or the Transaction, or the Company's ongoing
efforts to restructure or recapitalize, including information, term
sheets, drafts of agreements with strategic partners, lenders, acquirers
or equity investors 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.
8.2. COMPLIANCE WITH LAW.
The Company will and will cause each of the Guarantors 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, the payment of all fees
required to be paid pursuant to FCC Rules and the Communications Act 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 or notices to
perfect any 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 the Guarantors 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.
Subject to Section 9.5, the Company will and will cause each of the
Guarantors 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 the Guarantors to pay
and discharge, and maintain appropriate reserves in respect of all taxes,
assessments and governmental charges or levies imposed upon them or any of
their properties, assets, income or franchises, to the extent such taxes,
assessments, charges or levies have become due and payable and before they have
become delinquent and all claims (including claims for labor, materials and
supplies) for which sums have become due and payable that have or might by law
become a Lien upon any property or assets of the Company or any of the
Guarantors or any part thereof; provided, however, that neither the Company nor
any of the Guarantors 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 the Guarantors 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 the Guarantors 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 by 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 Material rights (charter and statutory).
The Company will at all times preserve and keep in full force and effect the
legal existence of each of the Guarantors (except to the extent any Guarantor,
or all or substantially all of the assets of any Guarantor, have been disposed
of or transferred in accordance with the terms hereof) and all Material
permits, licenses, approvals, rights, privileges and franchises of the Company
and the Guarantors and qualify and remain qualified as a corporation in good
standing in each jurisdiction in which such qualification is from time to time
necessary or desirable in view of its business and operations or the ownership
of its properties, except for such jurisdiction where the failure to so qualify
would not have a material adverse effect on the business, operations,
properties, prospects or condition (financial or otherwise) of the Company.
8.7. MAINTENANCE OF BOOKS AND RECORDS; INSPECTION.
(a) The Company will and will cause each of the Guarantors to keep
proper records and books of account in which entries are 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 the Guarantors and all
requirements of law and in which noncompliance is not likely to have a Material
Adverse Effect.
(b) The Company shall and shall cause each of the Guarantors 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 reasonable expense of the Company and upon
reasonable request and prior written notice to the Company, at any
reasonable time (as often as may be reasonably 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 the Guarantors, and to discuss the affairs, finances and
accounts of the Company or any such Guarantor, 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 the Guarantors 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 the Guarantors, and to discuss the affairs, finances and
accounts of the Company or any such Guarantor, 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 the Guarantors 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 5.15(a).
8.9. FURNISHING OF RULE 144 INFORMATION.
The Company agrees that, if at any time it is not subject to Section
13 or 15(d) of the Exchange Act, it will furnish to any holder of the Notes or
to any prospective purchaser of any Note designated by such holder that is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), upon the request of such holder, on or prior to the date such Note is to
be sold to such prospective purchaser, the following information (which shall
be reasonably current in relation to the date of such sale): (a) a brief
statement of the nature of the business of the Company and the Guarantors and
the products and services they offer; (b) the Company's most recent audited
consolidated balance sheet and related consolidated statements of income,
operations and retained earnings and cash flows for the two most recently
completed fiscal years of the Company prior to such date; and (c) such other
information as may from time to time be necessary to maintain the eligibility
of the Notes for trading under Rule 144A under the Securities Act and as shall
not be materially more onerous for the Company to provide than the information
required to maintain such eligibility on the date hereof.
8.10. CAPITAL STOCK.
Except as set forth on Schedule 8.10, the Company will at all times
be the direct, legal and beneficial owner of 100% of the outstanding capital
stock or other ownership interest of each of its directly owned Subsidiaries
that are Guarantors, and the indirect legal and beneficial owner of 100% of the
outstanding capital stock or other ownership interest of each of its indirectly
owned Subsidiaries that are Guarantors free and clear of any lien, security
interest, option or other charge or encumbrance except for liens created under,
and permitted by, the Note Documents.
8.11. OBLIGATIONS OF ADDITIONAL OBLIGORS.
The Company will cause (a)(i) all of the shares of capital stock of
each Guarantor and any Person now owned or hereafter acquired which is or
hereafter becomes a Subsidiary and (ii) such other present and future Material
property and assets of each Guarantor and each 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 (other
than as set forth on Part I of Schedule 8.11) and proceeds of each of the
foregoing to be pledged to the Agent pursuant to the terms and conditions of
the Security Agreement or a security agreement in substantially the form of
Exhibit C attached hereto and otherwise in form and substance reasonably
acceptable to you and the Agent and (b) such Subsidiary to guarantee the
Obligations of the Company pursuant to the terms and conditions of the
Subsidiary Guaranty or a guaranty in substantially the form of Exhibit D
attached hereto and otherwise in form and substance reasonably acceptable to
you and the Agent. In furtherance of the foregoing provisions of this Section
8.11, the Company agrees that:
(i) at the time that any Person becomes a Subsidiary, the Company
shall so notify you and the Agent and shall cause (a) such Person to cause
100% (or, if less, the full amount owned, directly or indirectly, by the
Company or any of its Subsidiaries), 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 Material
property and assets of each 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 (other than as set forth on Part II of Schedule 8.11) and
proceeds of each of the foregoing and pledged to the Agent pursuant to
security agreement(s) in substantially the form of Exhibit C attached
hereto and otherwise in form and substance reasonably acceptable to you
and the Agent and (c) such Person to execute and deliver a guarantee in
substantially the form of Exhibit D attached hereto (or other similar
document); and
(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.
8.12. MAINTENANCE OF SEPARATENESS.
Each of the Company and each of the other Obligors will conduct its
dealings with each of its Subsidiaries so that (i) except pursuant to a
written guaranty or other agreement, no creditor of any Obligor shall rely on
the availability of assets of any other Obligor in order for such creditor to
receive payment for the Obligations owed it by such first Obligor, and (ii) the
assets and liabilities of the Obligors are not so hopelessly entangled that
separation is impracticable.
8.13. PERFORMANCE OF MATERIAL CONTRACTS.
Each of the Company and each of the Guarantors will perform and
observe all of the Material terms and provisions of each Material Contract to
be performed or observed by it, maintain each such Material Contract in full
force and effect in accordance with and to the extent required by its terms,
enforce the Material terms of each such Material Contract in accordance with
its terms, and, upon the occurrence and during the continuance of an Event of
Default take all such action to such end as may be from time to time reasonably
requested by you and, upon your request, make to each other party to each such
Material Contract such demands and requests for information and reports or for
actions as the Company or such Guarantor is entitled to make under such
Material Contract, and cause each of its Subsidiaries to do so except, in any
case above, where the failure to do so, either individually or in the aggregate
could not have a Material Adverse Effect.
8.14. ACCOUNTS.
The Company will maintain the Securities Account (as defined in the
Security Agreement and listed in Part I of Schedule 5.28), the Wireless One
Operating Account (as defined in the Security Agreement and listed in Part II
of Schedule 5.28) and the Blocked Account listed in Part III of Schedule 5.28
into which, among other things, all proceeds of Collateral are paid or
transferred into, in each case with Deposit Guaranty or one or more banks
acceptable to you that have accepted the assignment of such accounts to you
pursuant to the Security Agreement. Neither the Company nor any of the
Guarantors will establish any deposit accounts other than the Securities
Account, the Blocked Account, the Wireless One Operating Account and those set
forth in Part IV of Schedule 5.28.
Each Obligor shall instruct Deposit Guaranty to transfer to the
Wireless One Operating Account, at the end of each Business Day, in same day
funds, an amount equal to the credit balance of the Blocked Account.
Each Obligor shall maintain the accounts set forth in Part IV of
Schedule 5.28 and, with respect to each account, shall not maintain in any such
account at any time more than (i) $10,500,000 in the escrow account maintained
with Banker's Trust from the date of the Initial Closing through October 16,
1998 and $0 thereafter, and $650,000 in the mutual fund account maintained with
Banker's Trust from the date of the Initial Closing through October 30, 1998
and $0 thereafter, (ii) $600,000 in the Goldman Accounts (as defined in the
Security Agreement), (iii) $1,000,000 in the Company's payroll account
maintained with Deposit Guaranty, and (iv) $50,000 in all other such accounts,
and shall ensure that for each other such account with a credit balance in
excess of $1,500, the credit balance of such account is transferred to the
Blocked Account no less frequently than weekly, in same day funds.
8.15. TOWER SITE LEASES, CHANNEL LEASES AND PROGRAMMING AGREEMENTS.
Each of the Obligors will use its commercially reasonable efforts to
collaterally assign each of its 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 such Site Lease, Channel Lease and
programming agreement.
8.16. KEY MAN LIFE INSURANCE.
The Company will use its best efforts to obtain, on or before
September 15, 1998, a minimum $2,000,000, one year (or longer at the Company's
discretion) level term key man life insurance policy on Henry Burkhalter in an
amount, from an insurance company and on terms acceptable to you.
8.17. FINANCIAL STATEMENTS.
(a) The Company shall deliver to you, on or before September 30,
1998, the United States federal income tax statements for the fiscal year ended
December 31, 1997 for the Company and its Subsidiaries which shall include the
consolidating tax statements for each Subsidiary, such financial statements,
schedules and other information delivered to the IRS in connection therewith,
including, without limitation, the reconciliation of the tax statements to the
financial statements of the Company and its Subsidiaries that have been
prepared in accordance with GAAP, which income tax statements shall present
fairly in all material respects the consolidated financial condition of the
Company and its Subsidiaries as of such date and for such period.
(b) The Company shall deliver to you, on or before September 30,
1998, the unaudited condensed consolidated balance sheet of the Company and its
Subsidiaries as of July 31, 1998, and the unaudited condensed consolidated
statements of operations and cash flows of the Company and its Subsidiaries for
the one month period ended July 31, 1998, respectively, in each case including
the related schedules and notes, which financial statements (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.
8.18. MAINTENANCE OF FCC LICENSES AND CHANNELS.
The Company will and will cause each of its Subsidiaries to use its
best efforts to maintain all FCC Licenses and Channels for the Systems of the
Company and its Subsidiaries in full force and effect.
8.19. DIRECTV, INC. AGREEMENTS.
The Company agrees that, in connection with the Material Contracts
set forth on Schedule 5.27 between the Company and DIRECTV, Inc., (i) at all
times, any amounts payable to the Company or other cash proceeds received by
the Company thereunder shall be deposited directly into the Wireless One
Operating Account (as defined in the Security Agreement) by the Company for so
long as the cash receipts are less than $100,000 in aggregate in each calendar
month and directly by DIRECTV, Inc. by wire transfer into such account upon the
first instance that such cash proceeds equal or exceed $100,000 in aggregate in
any calendar month, and on or before the Initial Closing, the Company shall
provide written instructions to DIRECTV, Inc. so to do in accordance with
Section 4.3(a)(viii), and (ii) the Company shall not amend or otherwise modify
such Agreements in any material respect or give any material consent, waiver or
approval thereunder or waive any material default under or material breach of
any such Agreement that, in any case, would impair the value of the interest or
rights of the Company thereunder or that would impair the interests or rights
of the Collateral Agent or any of the other Secured Parties.
8.20. TRANSFER OF FCC LICENSE OWNERSHIP.
The Company agrees that it will (i) within 30 days following the
Initial Closing, file all applications with the FCC necessary to transfer the
ownership of all FCC Licenses held by the Company or any of its Subsidiaries to
a special purpose Subsidiary (the "LICENSE SUBSIDIARY"), which Subsidiary
shall at all times hold no assets or liabilities other than FCC Licenses and
the related liabilities owed to the FCC in connection with installment sales
contracts for BTA Authorizations, (ii) deliver 100% of the shares of capital
stock of the License Subsidiary to the Agent (together with undated stock
powers executed in blank), (iii) cause the License Subsidiary to execute and
deliver a security agreement in substantially the form of Exhibit C attached
hereto (or other similar document), (iv) cause the License Subsidiary to
execute and deliver a guarantee in substantially the form of Exhibit D attached
hereto (or other similar document); (v) deliver or cause the License Subsidiary
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 the License Subsidiary and favorable opinions of counsel to the
License Subsidiary (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in
this Section 8.20), all in form, substance and scope reasonably satisfactory to
you and the Agent, and (vi) will not and will not permit any Subsidiary to own
any FCC Licenses at any time other than the License Subsidiary; provided,
failure to obtain all necessary FCC approvals and to provide documentation
satisfactory to you evidencing such approvals and the consummation of such
transfer within 90 days following the Initial Closing shall constitute an Event
of Default.
8.21. CONDITIONS SUBSEQUENT TO INITIAL CLOSING.
The Company shall deliver to you (i) no later than September 11,
1998, the consent to assignment from WONC required pursuant to Section 4.3(a)
and (ii) no later than September 18, 1998, the shares of capital stock
together with stock powers executed in blank for each subsidiary of the
Obligors that is a "shell" corporation.
9. NEGATIVE 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:
9.1. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any of the Guarantors 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 Guarantor's business and upon
fair and reasonable terms no less favorable to the Company or such Guarantor
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
Initial Closing Date and approved by you or any other matters set forth on
Schedule 9.1.
9.2. LIMITATIONS ON LIENS.
The Company will not and will not permit any of the Guarantors 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 Guarantor as debtor, (c) sign or suffer to exist any security
agreement authorizing any secured party thereunder to file such financing
statement (or the equivalent thereof), or (d) assign any accounts or other
right to receive income; excluding, however, from the operation of the
foregoing restrictions the following:
(i) Permitted Liens;
(ii) Liens existing on the date of this Agreement and described in
Schedule 9.2 attached hereto;
(iii) Liens upon or in tangible assets acquired, leased or held by
the Company or any of the Guarantors in the ordinary course of business to
secure the purchase price or rental of such tangible assets or to secure
Indebtedness incurred solely for the purpose of financing the acquisition,
leasing, construction or improvement of such tangible assets to be subject
to such Liens, or Liens existing on any such tangible assets at the time
of its acquisition or leasing (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price of
such tangible assets); provided, however, that no such Lien shall extend
to or cover any property other than the tangible assets being
acquired, constructed or improved; and provided further that the aggregate
principal amount of Indebtedness secured by Liens permitted under this
Section 9.2(iii) and (vi) shall not exceed $10,000,000;
(iv) deposits to secure the performance of leases of property
(whether real, personal or mixed) of the Company and the Guarantors
(excluding Capitalized Leases) in the ordinary course of business in an
aggregate principal amount not to exceed $2,000,000;
(v) the replacement, extension or renewal of any Lien permitted
under clause (i), (ii), (iii) or (iv) of this Section 9.2 solely upon or
in the same property and assets theretofore subject thereto; provided that
any Indebtedness secured by such Liens shall otherwise be expressly
permitted under the terms of the Note Documents; and
(vi) Liens in support of letters of credit in an aggregate amount,
together with the Liens permitted under Section 9.2(iii), not to exceed
$10,000,000.
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 the Guarantors, whether
now owned or hereafter acquired, other than any Liens expressly permitted under
clauses (i) through (vi); 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 the
Guarantors 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 the Guarantors 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 the Guarantors to
create, incur, assume or suffer to exist any Indebtedness other than:
(a) Indebtedness arising under the Note Documents;
(b) Indebtedness of the Company and the Guarantors existing
immediately before the issuance of any Initial Note or as set forth on
Schedule 9.3;
(c) Indebtedness of the Company (i) in respect of a financing for
the acquisition, leasing or construction of tangible assets (whether now
owned or hereafter acquired) including, without limitation, in connection
with sale and leaseback transactions, or (ii) secured by Liens permitted
by Section 9.2(iii) and (vi), in an aggregate amount for (i) and (ii) not
to exceed $10,000,000 outstanding at any time (without duplication), and
any refinancings thereof;
(d) Indebtedness owed to the Company or any other Obligor by any of
their Subsidiaries; provided that such Indebtedness is subordinated in
right of payment upon the occurrence and during the continuance of an
Event of Default to the Obligations of such Guarantor under the Note
Documents; provided further that if such Indebtedness is evidenced by a
promissory note, it is in form satisfactory to you, and delivered to the
Collateral Agent under the Security Agreement;
(e) any guaranty of Obligations under the Note Documents.
(f) Indebtedness owed to the Company by any employee of the Company
in an aggregate amount not to exceed $100,000 at any time outstanding.
9.4. LIMITATIONS ON LEASE OBLIGATIONS.
The Company will not and will not permit any of the Guarantors 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, other
than (i) Capitalized Leases permitted pursuant to Section 9.3, (ii) Channel
Leases, (iii) operating leases of the Company and the Guarantors in effect on
the date hereof including any replacements or refinancing thereof on
substantially similar terms, (iv) leases in connection with sale and leaseback
transactions permitted pursuant to Section 9.3(c), and (v) operating leases
entered into subsequent to the Initial Closing Date in the ordinary course of
business, consistent with past practice that would not cause direct and
contingent liabilities of the Company and the Guarantors, on a consolidated
basis, in respect of all such obligations to exceed an aggregate amount equal
to $750,000 payable in any Fiscal Year.
9.5. LIMITATIONS ON MERGERS, CONSOLIDATIONS, SALES OF ASSETS, ETC.
(a) The Company will not and will not permit any of the Guarantors
to merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose (whether in one transaction or a series of transactions) of its
property and assets (whether now owned or hereafter acquired) to, any Person,
except that, so long as no Default or Event of Default shall have occurred and
be continuing or shall occur as a consequence thereof:
(i) the Company may merge or consolidate with, or convey, transfer,
lease or otherwise dispose of all or substantially all of its property and
assets to, any of the Guarantors so long as the Company is the surviving
corporation;
(ii) any Guarantor may merge or consolidate with, or convey,
transfer, lease or otherwise dispose of all or substantially all of its
property and assets to, the Company, so long as the Company is the
surviving corporation, or any other Guarantor;
(iii) the Company or any of the Guarantors may merge or consolidate
with, or convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets to, any other Person (other
than the Company or any of the Guarantors) so long as the Company or such
Guarantor, as the case may be, is the surviving corporation; and
(iv) the Company may convey, transfer, lease or otherwise dispose of
a portion of its property and assets, and any Guarantor 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).
(b) The Company will not and will not permit any of the Guarantors
to sell, lease, transfer or otherwise dispose (whether in one transaction or a
series of transactions) of any property and assets (whether now owned or
hereafter acquired), including, without limitation, pursuant to any sale and
leaseback transaction, other than:
(i) sales of inventory in the ordinary course of business and for
fair consideration;
(ii) the sale or disposition of property and assets of the Company
and the Guarantors no longer useful in the conduct of their respective
businesses having an aggregate book value not in excess of $5,000,000 for
all such sales and dispositions; and
(iii) the sale or disposition of property and assets of the Company
and its Subsidiaries identified on Schedule 9.5, having an aggregate book
value not in excess of $5,000,000, for all such sales and dispositions for
fair market value at least 75% of which is received in cash within one
year of the date of sale or disposition, provided that the proceeds from
such sale or disposition are used in accordance with the Business Plan;
provided further that the Company may consummate the WONC Sale pursuant to
this clause (iii) (it being understood that only the aggregate amount of
the cash proceeds received in connection with such sale shall reduce the
$5,000,000 limitation specified in this clause (iii)) for fair market
value less than 75% of which is received in cash provided that all cash
proceeds received from such sale are deposited directly into the Wireless
One Operating Account (as defined in the Security Agreement);
(iv) the sale or disposition of property and assets of the Company
and the Guarantors; provided that such assets are sold for fair market
value and in an arm's-length transaction and that the proceeds from such
sale or disposition are deposited in the Securities Account; provided,
further that such proceeds are (x) invested by the Collateral Agent
pursuant to the terms of the Security Agreement or (y) used by the Company
or such Guarantor to purchase replacement assets so long as the Collateral
Agent shall have a first priority perfected security interest in such
assets and shall have received, with respect to and repurchase of assets
in an amount in excess of $500,000, individually or in aggregate, an
opinion of local counsel in the jurisdiction in which such assets shall be
held by the Company or such Guarantor substantially in the form of Exhibit
F-2; and
(v) the sale or disposition of property in connection with a sale
and leaseback transaction pursuant to Section 9.3(c).
9.6. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
(a) The Company will not and will not permit any of the Guarantors
to declare or pay any dividends, purchase, redeem, retire or otherwise acquire
for value any of its capital stock or any warrants, rights or options to
acquire such capital stock, now or hereafter outstanding, return any capital to
its stockholders as such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its stockholders as
such or issue or sell any capital stock or any warrants, rights or options to
acquire such capital stock other than (i) any dividend or distribution made by
any Guarantor to its parent corporation, (ii) the issuance of the Warrants,
(iii) the issuance of shares of capital stock in connection with the exercise
of the Warrants or other warrants specified in Part I of Schedule 9.3, (iv)
the issuance of shares of capital stock in connection with the exercise of
outstanding options issued pursuant to the stock option plans of the Company
specified in Part II of Schedule 9.3, and other issuances of capital stock
specified in Part III of Schedule 9.3. Prior to the execution of such Warrants
or such options, the Company shall seek prior approval of the FCC as required
by FCC rules, regulations and policies.
(b) The Company will not and will not permit any of the Guarantors
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 the Company or the Guarantors (i) to
pay dividends or to make any other distribution on any shares of capital stock
of (or other ownership or profit interest in) the Company or any of the
Guarantors, (ii) to pay or to subordinate any Indebtedness owed to the Company
or any of the Guarantors, (iii) to make loans or advances to the Company or any
of the Guarantors or (iv) to transfer any of its property or assets to the
Company or any of its Subsidiaries, other than any such encumbrance or
restriction (A) under this Agreement, (B) existing on the date hereof or
(C) required by law.
9.7. LIMITATIONS ON PREPAYMENTS OF INDEBTEDNESS, CHARTER AMENDMENTS, ETC.
The Company will not and will not permit any of the Guarantors (a)
after the issuance thereof, to amend, modify or otherwise change in any manner
(or permit the amendment, modification or other change in any manner of) any of
the Material terms of any Indebtedness of the Company or any such Guarantor 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, change any subordination provision thereof or amend, modify
or change any other Material term of such Indebtedness, (b) to 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 Guarantor (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 Guarantor,
or refund, refinance, replace or exchange any other Indebtedness for any such
Indebtedness or (c) to 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 and will not permit any of the Guarantors to
enter into, assume or suffer or permit to exist any agreement prohibiting,
conditioning or otherwise restricting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any assignment or security for such obligation if an
assignment or security is given for some other obligation, other than:
(a) the Note Documents;
(b) in connection with any Indebtedness permitted under Section 9.3
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 the Guarantors, 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 Obligor
imposed pursuant to an agreement that has been entered into for the sale,
transfer or other disposition of any property and assets of such Obligor
so long as such sale or disposition is otherwise expressly permitted under
the terms of this Agreement and so long as such restriction or encumbrance
covers only the assets to be sold; 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 the Guarantors.
9.9. LIMITATIONS ON CHANGES IN FISCAL YEAR.
The Company will not and will not permit any of the Guarantors to
change its fiscal year.
9.10. LIMITATION ON INVESTMENTS.
The Company will not and will not permit any of the Guarantors to
make or hold any Investment in any Person other than (i) purchases of assets
permitted under Section 9.11, (ii) acquisitions of assets in connection with
any capital expenditure permitted pursuant to Section 9.11, (iii) Investments
in Cash Equivalents, in each case, in accordance with the Business Plan,
(iv) Investments in Wireless One of North Carolina, L.L.C. ("WONC") (which
until such time as the Agent shall have been granted a first priority (except
as permitted under the Loan Documents) perfected security interest in the
Company's economic rights in WONC as set forth in Section 9 of the Limited
Liability Company Agreement of WONC dated as of October 10, 1995, such
Investments in WONC shall not exceed an aggregate amount equal to $500,000 made
after the date hereof) or in any Guarantor, in each case, pursuant to the
Business Plan, (v) Investments permitted pursuant to Section 9.3(c), (vi)
investments set forth on Schedule 9.10 hereof and (vii) Investments in 100% of
the capital stock of any Person organized under the laws of the United States
or any State thereof in an aggregate amount not to exceed $1,500,000 made after
the date hereof provided that the consideration for such acquisition may
consist of the Company's equity.
9.11. LIMITATION ON ASSET PURCHASES.
The Company will not and will not permit any of the Guarantors to
purchase any assets other than (i) inventory occurring in the ordinary course
of business consistent with past practice, (ii) purchases of assets in
connection with any capital expenditure permitted in accordance with the
Business Plan, (iii) purchases of assets set forth on Schedule 9.11 hereof and
(iv) the acquisition of Channels the consideration for which is solely the
Company's equity, in each case, in accordance with the Business Plan; provided,
however, that the Company may pay fees and expenses in connection with any such
acquisition in cash.
9.12. [INTENTIONALLY DELETED.]
9.13. LIMITATION ON LICENSES.
Except as listed on the attached Schedule 9.13, the Company will not
and will not permit any of its Subsidiaries to lose, fail to hold or fail to
renew for a full license term, forfeit, revoke, rescind, or materially impair
any FCC Licenses of the Company or any of its Subsidiaries other than with
respect to Channels or FCC Licenses that are not Material.
9.14. LIMITATION ON LINE OF BUSINESS.
The Company will not and will not permit any of the Guarantors to
engage in any line of business other than in accordance with the Business Plan
and in the usual and ordinary course and other than in a manner that is
consistent with past practice.
9.15. LIMITATION ON TERMINATION OF EMPLOYER PLANS.
The Company will not and will not permit any of the Guarantors to
create or otherwise cause to exist or become effective any consensual risk of
termination of any single employer plan or multiemployer plan by the Pension
Benefit Guaranty Corporation if the occurrence of such event could reasonably
be expected to have a Material Adverse Effect.
9.16. LIMITATION ON INVESTMENT COMPANY ACT.
The Company will not and will not permit any of the Guarantors to be
or become an investment company subject to the registration requirements of the
Investment Company Act of 1940, as amended.
9.17. LIMITATION ON PRESS RELEASES.
The Company will not and will not permit any of the Guarantors to
issue a press release or other public disclosure containing any reference to
you or any of your Affiliates without your express written consent except as
otherwise may be required by applicable law, except in connection with Section
9.11 or 9.12, in each case subject to Section 8.11.
9.18. LIMITATION ON CREATION OF SUBSIDIARIES.
The Company will not and will not permit the Guarantors to create
any Subsidiary not in existence on the date hereof.
9.19. LIMITATIONS ON EMPLOYMENT CONTRACTS.
The Company will not and will not permit any of the Guarantors:
(a) to waive, amend, supplement or otherwise modify any of the
Employment Agreements or other employment agreements or compensation
arrangements described in Section 5.25 other than any waiver, amendment,
supplement or other modification necessary to allow any loan permitted
pursuant to Section 9.3(f) to be made;
(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 5.25 other than any such obligation that would not be Material;
(c) to set, determine or otherwise establish any Material target or
levels for the determination of any bonuses or additional compensation
arrangements other than as provided in the Employment Agreements;
(d) to pay or make any other Material distribution of any bonus or
additional compensation other than pursuant to the Employment Agreements;
or
(e) to enter into any additional employment agreements other than on
terms that are not Material and are substantially similar to the
Employment Agreements in existence on the date hereof; provided that such
limitation on additional employment agreements does not have a substantial
determinative effect on the policies or operations of the Company or its
Affiliates consistent with the rules, regulations and policies of the FCC.
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 with the
Business Plan.
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 in accordance with the terms hereof; or
(b) the Company defaults in the payment of any interest on any Note
or the Facility Fee, 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 in accordance with the
terms hereof or otherwise, other than, in each case, amounts owing under
clause (c) below; or
(c) any Obligor defaults in the payment of any other fees under any
Note Document, for more than five Business Days after the same becomes due
and payable; or
(d) any Obligor defaults in the performance of or compliance with
any term, covenant or agreement contained in Sections 8.1(d), 8.5(a), 8.6,
8.8, 8.11, 8.14, 8.20 and Section 9 of this Agreement on its part to be
performed or complied with; or
(e) any Obligor defaults in the performance of or compliance with
any term, covenant or agreement contained in any of the Note Documents
(other than those terms, covenants and agreements set forth in (a) through
(d) above) on its part to be performed or complied with and such default
shall remain unremedied for 30 days after the earlier of the first date on
which (i) a Responsible Officer becomes aware of such default and (ii) the
Company receives written notice of such default from any holder of a Note;
or
(f) 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
(g) the Company or any of the Guarantors shall fail to pay any
principal of, premium or interest on or any other amount payable in
respect of, any Indebtedness that is outstanding in a principal or
notional amount of at least U.S.$1,000,000 (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 the
Guarantors, 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 or the
provision of notice thereof, 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 or the provision of notice thereof, 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
(h) the Company or any of the Guarantors shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Company or any of its Subsidiaries seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee or other similar official for it or for
any substantial part of its property and assets and, in the case of any
such proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial
part of its property and assets) shall occur; or the Company or any of its
Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this Section 11.1(h); or
(i) one or more judgments or orders for the payment of money
aggregating $250,000 (or the equivalent thereof in one or more other
currencies) or more are rendered against one or more of the Company and
its Subsidiaries and remain unsatisfied and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such
judgment or order or (ii) there shall be a period of at least 60 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(i) 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
(j) 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
(k) 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 lien on and security
interest in the Collateral purported to be covered thereby, with the
priority contemplated therein; or
(l) 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 $500,000 (or the equivalent thereof in one or more
other currencies); or
(m) any Obligor or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that 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 $500,000 (or the equivalent
thereof in one or more other currencies); or
(n) 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
$500,000 (or the equivalent thereof in one or more other currencies); or
(o) 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
$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
(p) 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 in excess of $500,000 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
(q) A Change of Control shall occur.
11.2. ACCELERATION.
(a) If an Event of Default with respect to the Company or any of
its Subsidiaries described in Section 11.1(h) shall occur, all of the Notes
then outstanding shall automatically become immediately due and payable.
(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.
(c) If any other 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, by
notice or notices to the Company, declare all of the Notes then outstanding to
be immediately 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 (i) all accrued and
unpaid interest thereon and (ii) the Facility Fee 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 Company.
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) or 11.2(c), as the case may be, such declaration
and its consequences shall be automatically rescinded and annulled if (a) the
Company has paid all overdue interest on the Notes, all principal of on 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 the Company 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 Company 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 $2,500,000, 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
$2,500,000. 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 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 Person who
meets the requirements of paragraph (c) of the definition of
"Institutional Investor" as set forth in Schedule II, 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. 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
reasonable costs and expenses (including reasonable attorneys' fees of a
special counsel, local or other counsel, financial advisors and outside
accountants) incurred by you or 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 of any holder of Notes 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, and (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. 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, other than excise taxes under Section 4575 of the
Internal Revenue Code to the extent such taxes arose due to actions by which
you knew or should have known after reasonable diligence to be subject to the
prohibitions of Section 4975 of the Internal Revenue Code. 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.
The Company agrees to indemnify each holder and each of its
affiliates and their respective directors, officers, employees, agents,
investment advisors and controlling persons (you and each such person being an
"INDEMNIFIED PARTY") from and against any and all losses including, without
limitation, loss of anticipated profits and any other loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by you to purchase Notes with respect to any Note Issuance, as a
result of any failure to fulfill on or before the date specified in the related
Notice of Note Issuance the applicable conditions set forth in Section 4 in the
case of the Initial Closing or Section 4.18 in the case of a Subsequent
Closing, 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 Transaction or any other transaction 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. The Company
will not be liable under the foregoing indemnification provision to the extent
that any loss, claim, damage, liability or expense is found in a final judgment
by a court to have resulted from your willful misconduct, bad faith or gross
negligence or as a result of litigation or any claim against an Indemnified
Party (other than PricewaterhouseCoopers LLP ("PWC") in its capacity as agent
or investment advisor in connection with the Note Documents or the transactions
contemplated thereby) by another Indemnified Party. The Company also agrees
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the performance by you of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final judgment by a court to have resulted
from your willful misconduct, bad faith or gross negligence.
If the indemnification of an Indemnified Party provided for in this
Agreement is for any reason held unenforceable the Company 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 Company, on the one hand, and you, on the other hand,
of the Notes or the Transaction as contemplated by this Agreement (whether or
not the Notes or the Transaction 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 the Company, on the
one hand, and you, on the other hand, as well as any other relevant equitable
considerations. The Company agrees that for the purposes of this paragraph the
relative benefits to the Company and you of the Notes or the Transaction as
contemplated shall be deemed to be in the same proportion that the total amount
of the Notes or the Transaction, as the case may be, bears to the fees paid or
to be paid to you under this Agreement or in connection with the Notes;
provided, however, that, to the extent permitted by applicable law, in no event
shall the Indemnified Parties be required to contribute an aggregate amount in
excess of the aggregate fees actually paid to you under this Agreement or in
connection with the Notes.
The Company agrees that, without your prior written consent, it will
not settle, compromise or consent to the entry of any judgment in any pending
or threatened claim, action or proceeding in respect of which indemnification
could be sought under the indemnification provision of this Agreement (whether
or not you or any other 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 the
Company or any affiliate of the Company in which such Indemnified Party is not
named as a defendant, the Company agrees to reimburse you 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 Company 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 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 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, decreasing the amount or increasing the length of time for
of any prepayment or repurchase or payment of principal of, or reduce the
rate or change the increasing the length of time for 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 now or hereafter existing;
(iv) reduce or limit the obligations of any of the Subsidiaries of
the Company party to the Subsidiary Guaranty thereunder;
(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
senior 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; or
(vii) amend any of Sections 7.1, 11.1(a), 11.1(b), any of 11.2
through 11.6, 16.1 or 19.
16.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it at the time) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision
with respect to any proposed amendment, waiver or consent in respect of any of
the provisions hereof or of the other Note Documents. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 16 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof or
of the other Note Documents, unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder of
Notes then outstanding even if such holder did not consent to such waiver or
amendment.
16.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 16
applies equally to all holders of Notes and is binding upon them, upon each
future holder of any Note and upon each Obligor without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Company 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 in Schedule I 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 the Company, to the Company at its address set forth on
the first page of this Agreement (Telecopier No. (601) 936-1517) to the
attention of Henry G. Schopfer, 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.
The Company 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 the Company 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, (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 would likely 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 or a day in which the banks in
Mississippi are required to be open shall be made on the next succeeding
Business Day or a day in which the banks in Mississippi are required to be open
without including the additional days elapsed in the computation of the items
payable on such next succeeding Business Day or 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.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York state court or federal court of the United States
of America sitting in New York City, New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, the Notes or the other Note Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York state court or, to
the extent permitted by applicable law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable law. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or the Notes in the courts of
any jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement, the Notes or
the other Note Documents in any New York state or federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) To the extent that any of the parties hereto 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, such party hereby irrevocably waives such immunity in respect
of its obligations under this Agreement and the Notes.
(e) Each of the parties hereto 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 any party
hereto or the Agent in the negotiation, administration, performance or
enforcement thereof.
* * * * *
Draft: September 4, 1998
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
WIRELESS ONE, INC.
By
Name:
Title:
Draft: September 4, 1998
<PAGE>
The foregoing is hereby
agreed to as of the
date first above written.
MERRILL LYNCH GLOBAL
ALLOCATION FUND, INC.
By_______________________________
Name: Bryan N. Ison
Title: Vice President
Address: Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, NJ 08536
Telecopier: (609) 282-6916
Draft: September 4, 1998
<PAGE>
SCHEDULE II
DEFINED TERMS
As used in this Agreement, the following terms shall have the
respective meanings set forth below (such meanings to be equally applicable to
both the singular and plural forms of the term defined):
"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 LLC in its capacity as
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 application
for a Booster License or a booster station requesting to provide an
Alternative Use.
"BENEFIT LIABILITIES" has the meaning specified in Section 3 of
ERISA.
"BONDHOLDERS" means each "Holder" as such term is defined under the
Indentures.
"BOOSTER LICENSE" means a License for a booster station.
"BTA" means basic trading area, as defined by Rand McNally and used
by the FCC in licensing MDS and MMDS channels pursuant to the competitive
bidding process.
"BTA AUTHORIZATION" means the Permit granted by the FCC to apply for
individual MDS and MMDS frequencies within 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.
"BUSINESS PLAN" has the meaning specified in Section 4.15.
"CAPITALIZED LEASE" means any lease with respect to which the lessee
is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CASH EQUIVALENTS" means, at any time, (i) any evidence of
Indebtedness with a maturity of 180 days or less issued or directly and
fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof); (ii) certificates
of deposit or acceptances with a maturity of 180 days or less of any
financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) certificates of deposit with a maturity of 180 days or
less of any financial institution that is not organized under the laws of
the United States, any state thereof or the District of Columbia that are
rated at least A-1 by S&P or at least P-1 by Moody's or at least an
equivalent rating category of another nationally recognized securities
rating agency; (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of
America or issued by any agency thereof and backed by the full faith and
credit of the United States of America, in each case maturing within 180
days from the date of acquisition; provided that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others,
as adopted by the Comptroller of the Currency on October 31, 1985.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"CHANGE OF CONTROL" has the meaning specified in the Indenture dated
as of October 24, 1995 for the 13% Senior Notes due 2003 as in effect on
the date hereof without giving effect to any amendment or other
modification thereto.
"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.
"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.
"CLOSINGS" has the meaning specified in Section 2.
"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 Control 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.
"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
Service on the System.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended, 47 U.S.C. sec. 151 et seq.
"COMPANY" has the meaning specified on page one of this Agreement.
"CONFIDENTIAL INFORMATION" means information delivered to you by or
on behalf of the Company or any of its Subsidiaries in connection with
this Agreement or the Transaction or the other transactions contemplated
hereby that is proprietary in nature and that was clearly marked, labeled
or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, but does not
include any such information that (a) is or was generally available to the
public (other than as a result of a breach of your confidentiality
obligations hereunder or a violation of any other Person's confidentiality
Obligations to or on behalf of the Company which violation is known by
you), (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 5.5 or
8.17 that are otherwise publicly available.
"CONSENT" means that certain Consent Letter in respect of the
Solicitation of Consents Relating to Its 13% Senior Notes due October 15,
2003 and 13 1/2% Senior Discount Notes due August 1, 2006 dated July 30,
1998 waiving the provisions of the applicable Company Indentures in order
to permit the Company and each Obligor to enter this Agreement and the
other Note Documents to which it is a party, in accordance with Section
10.02 of each of the Indentures.
"CONTROL AGREEMENT" means a control agreement, in form and substance
satisfactory to the Initial Purchaser, between the Company, the Agent and
the applicable securities intermediary, that provides (among other things)
that, from and after the giving of notice by the Agent to such securities
intermediary (a "NOTICE OF EXCLUSIVE CONTROL"), such securities
intermediary shall take instructions solely from the Agent with respect to
the applicable Securities Account and related Investment Property.
"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 equal to 15% per annum.
"DEPOSIT GUARANTY" means Deposit Guaranty, a division of First
American National Bank.
"DISCRETIONARY PURCHASE NOTICE" has the meaning specified in Section
2.
"EMPLOYEE BENEFIT PLAN" has the meaning specified in Section 3 of
ERISA.
"EMPLOYMENT AGREEMENTS" has the meaning specified in Section 4.3(h).
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand
letter, claim, written notice of noncompliance or violation, written
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 or decree relating to pollution or to protection of the
environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, license,
identification number or other authorization required under any
Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and the
rulings issued thereunder from time to time.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Company or any of its
Subsidiaries, or under common control with the Company or any of its
Subsidiaries, within the meaning of Section 414 of the Internal Revenue
Code.
"EVENT OF DEFAULT" has the meaning specified in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder from time to time.
"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 that may hereafter perform its functions.
"FACILITY FEE" means 5% on the principal amount of each Note issued
on the Initial Closing Date and 5% or more, but not to exceed 10%, on the
principal amount of each Note issued on any Subsequent Closing Date.
"FCC" means the Federal Communications Commission of the United
States of America or any successor thereto.
"FCC COOPERATION AGREEMENT" has the meaning specified in Section 4.
"FCC LICENSES" means the Permits, including construction permits or
authorizations 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 any Obligor 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 or any application pending before the
FCC for any such 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.
"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.
"GUARANTOR" means each Subsidiary of the Company that is listed as a
signatory to the Subsidiary Guaranty on the Closing Date and each other
Subsidiary of the Company that enters into a Guarantee Supplement (or
other similar document) after the date of this Agreement pursuant to
Section 8.11.
"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 six months);
(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 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
(k) 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 LIABILITIES" has the meaning specified in Section 14.2.
"INDEMNIFIED PARTY" has the meaning specified in Section 14.2.
"INDENTURES" means the 13% Senior Notes Indenture dated as of
October 24, 1995 of the Company and the 13 1/2 % Senior Discount Notes
Indenture dated August 12, 1996 of the Company, as amended through the
date hereof.
"INITIAL CLOSING" has the meaning specified in Section 3.
"INITIAL NOTES" has the meaning set forth in Section 3.1.
"INITIAL PURCHASER" means Merrill Lynch Global Allocation Fund, Inc.
"INSTITUTIONAL INVESTOR" means (a) the Initial Purchaser of a Note,
(b) any holder of a Note holding more than 25% of the aggregate principal
amount of the Notes outstanding on any date of determination and (c) any
bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial institution
or entity, regardless of legal form.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
of its unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder from time to time.
"INVESTMENT" means, with respect to any Person, any loan or advance
to such Person, any purchase or other acquisition of any shares of capital
stock (or other ownership or profit interest), warrants, rights, options,
obligations or other securities of such Person, any capital contribution
to such Person or any other investment in such Person, including, without
limitation, any arrangement pursuant to which the investor incurs
Indebtedness of the types referred to in clause (j) or (k) of the
definition of "Indebtedness" in respect of such Person.
"ITFS" means the Instructional Television Fixed Service, a class of
microwave frequencies licensed by the FCC pursuant to Part 74 of the FCC
Rules.
"LEGAL REQUIREMENTS" means all applicable international, foreign,
federal, state, and local laws, judgments, decrees, orders, statutes,
ordinances, rules, regulations or Permits, including the Communications
Act and all orders issued and regulations promulgated under the
Communications Act.
"LICENSEE" means an applicant, permittee, conditional licensee, or
licensee of a frequency or location 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 owned by such Person, stockholder agreements, voting
trust agreements and other similar arrangements).
"MATERIAL" means material in relation to the business, operations,
condition (financial or otherwise), assets, liabilities or properties of
the Company and its Subsidiaries, taken as a whole.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, condition (financial or otherwise), operations, performance or
properties of the Company or any of 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 or the Agent, 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 or properties of such Person.
"MATURITY DATE" means the earliest of (i) April 15, 1999, (ii) the
date the Notes have become or are declared to be immediately due and
payable pursuant to Section 11 and (iii) the date the Company delivers
written notice to you that it has redeemed the Notes in full in accordance
with Section 7.2, has paid in full all amounts due and payable under the
Note Documents and has permanently terminated this Agreement.
"MDS" means the Multipoint Distribution Service, a domestic wireless
transmission service licensed by the FCC pursuant to Part 21 of the FCC
Rules.
"MEMORANDUM" has the meaning specified in Section 5.3.
"MMDS" means Multichannel Multipoint Distribution Service, a
domestic wireless transmission service licensed by the FCC pursuant to
Part 21 of the FCC Rules.
"MULTIEMPLOYER PLAN" means a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) to which any Obligor or any ERISA Affiliate
is making or accruing an obligation to make contributions, or has within
any of the preceding five plan years made or accrued an obligation to make
contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan (as defined in
Section 4001(a)(15) of ERISA) that (a) is maintained for employees of any
Obligor or any ERISA Affiliate and at least one Person other than the
Obligors and the ERISA Affiliates or (b) was so maintained and in respect
of which any Obligor or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to
be terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance of any
Indebtedness or capital stock or other ownership interest, any securities
convertible into or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person
or any Extraordinary Receipt received by or paid to or for the account of
any Person, the aggregate amount of cash received from time to time
(whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with
such transaction after deducting therefrom only (without duplication) (a)
reasonable and customary brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees and
commissions, (b) the amount of taxes payable in connection with or as a
result of such transaction and (c) the amount of any Indebtedness secured
by a Lien on such asset that, by the terms of such transaction, is
required to be repaid upon such disposition, in each case to the extent,
but only to the extent, that the amounts so deducted are, at the time of
receipt of such cash, actually paid to a Person that is not an Affiliate
of such Person or the Company or any of its Subsidiaries or any Affiliate
of any of the Company or any of its Subsidiaries and are properly
attributable to such transaction or the asset that is the subject thereof.
"NOTE DOCUMENTS" means, collectively, this Agreement, the Notes, the
Subsidiary Guaranty, the Guarantee Supplements, if any, the Collateral
Documents, the Control Agreement, 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(h).
"OBLIGORS" means, collectively, the Company, each Guarantor, each
other Subsidiary of the Company that is party to the Security Agreement or
to a pledge 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.
"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.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PRESENT VALUE" has the meaning specified in Section 3 of ERISA.
"PROPERTY" or "PROPERTIES" means, unless otherwise expressly stated
in this Agreement, real or personal property of any kind, tangible or
intangible, choate or inchoate.
"PROPOSAL LETTER" means the Proposal Letter dated July 27, 1998
executed by the Purchaser and accepted by the Company.
"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).
"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, .21, .22, .24, or .28 of PBGC
Reg. <section>4043.
"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.
"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.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, the
principal accounting officer, the treasurer or the comptroller 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.
"SUBSEQUENT CLOSING" has the meaning set forth in Section 3.1.
"SUBSEQUENT NOTE" has the meaning set forth in Section 3.1.
"SUBSIDIARY GUARANTY" has the meaning specified in Section 4.3.
"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 with
respect to the Company and each Obligor, the term "Subsidiary" shall
exclude any Person that is a "shell" entity having no assets or
liabilities (direct or contingent) and holding no licenses or other
authorizations from the FCC or any other Governmental Authority; provided
further that upon the incurrence of any such liability or upon obtaining
any asset, license or such governmental authorization such Person shall
become a Subsidiary in accordance with Section 8.11.
"SYSTEM AGREEMENTS" means, collectively, all 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 of each of the
Company and each of its Subsidiaries now existing or hereafter acquired or
obtained, relative to the Channels or the construction and operation of
the Systems.
"SYSTEMS" means (a) the wireless systems operated by the Company and
its Subsidiaries as of the Closing Date for the provision of Wireless
Cable Services and other Wireless Services and (b) the wireless systems
operated by the Company and its Subsidiaries from and after the Closing
Date for the provision of Wireless Cable Services and other Wireless
Services.
"TERMINATION EVENT" means:
(a) the occurrence of a Reportable Event;
(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;
(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 resulting in liability of any Obligor or any ERISA
Affiliate to any Plan or the PBGC;
(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
resulting in liability of any Obligor or any ERISA Affiliate to any
Plan or the PBGC;
(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.
"TOWER SITE LESSOR CONSENT" has the meaning set forth within the
definition of "Assignment Agreements."
"TRANSACTION" means the entering into by the Obligors of the Note
Documents, the issuance of the Notes under the Note Purchase Agreement and
the use of proceeds contemplated hereby.
"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.
"WARRANT AGREEMENT" has the meaning set forth in Section 4.3(j).
"WARRANTS" means the 7 year detachable warrants issued pursuant to
the Warrant Agreement to purchase common stock of the Company equal to a
"pro rata portion" of 6% of the Company's common stock on a fully diluted
basis exercisable at 110% of the market price per share at the time of
issuance of the initial Note. "Pro rata portion" means a fraction, the
numerator of which is equal to the face amount of the Notes issued on each
issuance date and the denominator of which is equal to $20,000,000.
"WIRELESS CABLE SERVICE" means the provision of subscription, voice,
video or data or any other service that is permitted under FCC Rules and
regulations or authorized by the FCC and services ancillary thereto
through the use of, among other, ITFS, MDS, and MMDS channels.
"WIRELESS SERVICE" means any service that is permitted under FCC
Rules and regulations 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, or by means of the transmission
capacity of any other frequency or service using radio authorized by the
FCC.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"WONC" has the meaning specified in Section 9.10.
"WONC SALE" means the transfer of certain wireless cable assets,
including without limitation, certain Channels and related FCC Licenses
from the Company to Wireless One of North Carolina, L.L.C. pursuant to the
two letter agreements dated as of August 5, 1997 and April 27, 1998 from
Barry R Rubens to the Company.
EXHIBIT A TO THE DISCRETIONARY NOTE PURCHASE AGREEMENT
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE AND, ACCORDINGLY, THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SAID
LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
FORM OF PROMISSORY NOTE
WIRELESS ONE, INC.
13.00% Senior Secured Discretionary Notes due April 15, 1999
$[ ] Dated: ______________
FOR VALUE RECEIVED, the undersigned, WIRELESS ONE, INC, a
Delaware corporation (the "COMPANY"), HEREBY PROMISES TO PAY to MERRILL
LYNCH GLOBAL ALLOCATION FUND, INC. (the"PURCHASER") or its registered
assigns, the principal amount of ______________ on April 15, 1999, with
interest (computed on the basis of a 360-day year of twelve 30-day months)
(a) on the unpaid principal amount thereof at the rate of 13.00% per annum
from the date hereof, payable on the Maturity Date as defined in the Note
Purchase Agreement referred to below and (b) to the extent permitted by
applicable law on any overdue payment (including any overdue redemption) of
principal, any overdue payment of interest and any overdue payment of any
other amount, at the rate of 15.00% per annum until such amount is paid in
full. In addition, a Facility Fee of $_________ is payable on the Maturity
Date.
Payments of principal and interest upon maturity with respect to
this Note are payable in lawful money of the United States of America at
the Purchaser's office as provided in the Note Purchase Agreement referred
to below.
This Note is for the 13.00% Senior Secured Discretionary Notes
due April 15, 1999 (collectively, the "NOTES") issued for an aggregate
principal amount not to exceed $20,000,000 pursuant to the Discretionary
Note Purchase Agreement dated as of September 4, 1998 (as amended,
supplemented or otherwise modified from time to time, the "NOTE PURCHASE
AGREEMENT") between the Company and the Purchaser therein. The holder of
this Note is entitled to the benefits of the Note Purchase Agreement and
may enforce the agreements of the Company therein and in the other Note
Documents (as defined in the Note Purchase Agreement) in accordance with
the respective terms thereof, and may enforce the rights and remedies
provided for thereby or otherwise available in respect thereof in
accordance with the respective terms thereof. The holder of this Note will
be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 19 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6
of the Note Purchase Agreement.
This Note is a registered Note and, as provided in and subject to
the terms of the Note Purchase Agreement, is transferable only upon
surrender of this Note for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder hereof or its attorney duly authorized in writing, at
which time a new Note for a like principal amount will be issued to, and
registered in the name of, the permitted transferee. Reference in this
Note to a "holder" shall mean the person or entity in whose name this Note
is at the time registered in the register kept by the Company as provided
in Section 12.1 of the Note Purchase Agreement and, prior to due
presentment for registration of transfer, the Company may treat such person
or entity as the owner of this Note for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any
notice to the contrary.
The Company will make required redemptions of principal on the
dates and in the amounts specified in Section 7.1 of the Note Purchase
Agreement. This Note is also subject to optional redemption, in whole or
from time to time in part, at the times and on the terms specified in
Section 7.2 of the Note Purchase Agreement.
If an Event of Default (as defined in the Note Purchase
Agreement) shall occur and be continuing, the unpaid balance of the
principal of this Note may be declared or otherwise become due and payable
in the manner, at the price and with the effect provided in Section 11 of
the Note Purchase Agreement.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
WIRELESS ONE, INC.
By:
Name:
Title:
__________________________________________________________
WARRANT AGREEMENT
Dated as of September 4, 1998
By and Between
WIRELESS ONE, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Warrant Agent
____________________
Warrants to Purchase Shares of Common Stock
(Par Value $0.01 Per Share)
__________________________________________________________
<PAGE>
<PAGE>
PAGE
TABLE OF CONTENTS
PAGE
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY
AND REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS.............................1
SECTION 1.02. FORM OF WARRANT CERTIFICATES.....................3
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES................3
SECTION 1.04. AUTHENTICATION AND DELIVERY......................3
SECTION 1.05. SEPARATION OF WARRANTS AND NOTES.................4
SECTION 1.06. REGISTRATION.....................................4
SECTION 1.07. REGISTRATION OF TRANSFERS OR EXCHANGES...........5
SECTION 1.08. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED
WARRANT CERTIFICATES............................7
SECTION 1.09. OFFICES FOR EXERCISE, ETC........................8
ARTICLE II DURATION, EXERCISE OF WARRANTS;
EXERCISE PRICE AND REPURCHASE OF WARRANTS
SECTION 2.01. DURATION OF WARRANTS.............................9
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND
DELIVERY .......................................9
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES............12
SECTION 2.04. DELIBERATELY OMITTED............................12
ARTICLE III OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS...........................12
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS...............13
ARTICLE IV CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES................................13
SECTION 4.02. RULES 144 AND 144A..............................14
SECTION 4.03. SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS...........................................14
SECTION 4.04. RESOLUTION OF PREEMPTIVE RIGHTS, IF ANY.........14
ARTICLE V ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES............14
SECTION 5.02. FRACTIONAL WARRANT SHARES.......................23
ARTICLE VI CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT...................................24
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS.......24
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR........29
ARTICLE VII MISCELLANEOUS
SECTION 7.01. AMENDMENT.......................................30
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND
WARRANT AGENT .................................31
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR
TRANSMISSION OF DOCUMENTS......................31
SECTION 7.04. NOTICES TO HOLDERS..............................32
SECTION 7.05. APPLICABLE LAW..................................32
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT...........32
SECTION 7.07. HEADINGS........................................33
SECTION 7.08. COUNTERPARTS....................................33
SECTION 7.09. INSPECTION OF AGREEMENT.........................33
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES..............33
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS.............33
<PAGE>
PAGE
EXHIBIT A - Form of Warrant Certificate....................A-1
EXHIBIT B - Certificate to Be Delivered upon Exchange or
Registration of Transfer of Warrants..........C-1
EXHIBIT C - Form of Certificate to Be Delivered in
Connection with Transfers to Accredited
Investors.....................................D-1
EXHIBIT D - Warrant Registration Rights Agreement..........E-1
<PAGE>
PAGE
INDEX OF DEFINED TERMS
DEFINED TERM PAGE
Accredited Investor ............................................6
Adjustment Fraction ............................................2
Affiliate .....................................................21
Agreement ......................................................1
Anticipated Option Adjustment ..................................3
Business Day ...................................................9
Capital Stock .................................................22
Cashless Exercise .............................................10
Cashless Exercise Ratio .......................................10
Common Stock ...................................................2
Company ......................................................1
Current Market Value ..........................................22
Definitive Warrants ............................................3
Election to Exercise ..........................................10
Exercise Date .................................................11
Exercise Price .................................................9
Exercise Rate ..................................................9
Expiration Date ................................................9
fully diluted basis ............................................2
Global Shares .................................................12
Independent Financial Expert ..................................23
Issue Date ....................................................18
Officers' Certificate .........................................26
Person .....................................................10
Private Placement Legend .......................................6
Purchase Agreement .............................................1
Purchasers .....................................................1
QIB.............................................................6
Registrar ......................................................4
Related Parties ...............................................25
Requisite Warrant Holders .....................................31
Resale Restriction Termination Date ............................5
Securities Act .................................................5
Surviving Person ..............................................19
Warrant Agent ..................................................1
Warrant Agent Office ...........................................8
Warrant Certificates ...........................................1
Warrant Exercise Office ........................................8
Warrant Register ...............................................4
Warrant Registration Rights Agreement ..........................1
Warrant Shares .................................................2
Warrants ......................................................1
WARRANT AGREEMENT
WARRANT AGREEMENT ("AGREEMENT"), dated as of September 4, 1998 by
and between WIRELESS ONE, INC. (the "COMPANY"), a Delaware corporation, and
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as warrant agent (with any
successor Warrant Agent, the "WARRANT AGENT").
WHEREAS, the Company has entered into a discretionary note
purchase agreement (the "PURCHASE AGREEMENT") dated September 4, 1998 with
the purchasers listed in Schedule I thereto (the "PURCHASERS") in which the
Company may request that the Purchasers purchase from time to time up to
$20,000,000 of Notes (as defined in the Purchase Agreement) and, upon each
such issuance of Notes, the Company shall issue warrants (the "WARRANTS")
entitling the holders to purchase shares of Common Stock (as defined
herein), in an amount equal to the product of: (i) 6% of the outstanding
shares of Common Stock on a fully diluted basis on the date of such
issuance and (ii) the face amount of Notes issued on such issue date
divided by $20,000,000, to be issued pro rata to each such Purchaser in
proportion to the principal amount of Notes purchased by such Purchaser
divided by the aggregate principal amount of Notes issued on such date.
The certificates evidencing the Warrants are herein referred to
collectively as the "WARRANT CERTIFICATES"; and
WHEREAS, the holders of the Warrants are entitled to the benefits
of a Warrant Registration Rights Agreement dated as of September 4, 1998
between the Company and the Initial Purchasers (the "WARRANT REGISTRATION
RIGHTS AGREEMENT") attached hereto as EXHIBIT E; and
WHEREAS, the Company desires the Warrant Agent as warrant agent
to assist the Company in connection with the issuance, exchange,
cancellation, replacement and exercise of the Warrants, and in this
Agreement wishes to set forth, among other things, the terms and conditions
on which the Warrants may be issued, exchanged, canceled, replaced and
exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. ISSUANCE OF WARRANTS. Warrants shall be
originally issued in connection with the issuance of the Notes. At such
time as the Company issues any Notes, the Company shall also issue to the
Purchaser thereof a number of Warrants equal to (i) the face amount of the
Notes issued to such Purchaser, divided by (ii) $100,000. Such Warrants
shall be separately transferable from the Notes.
Each Warrant Certificate shall evidence the number of Warrants
specified therein. Each Warrant evidenced by a Warrant Certificate shall
represent the right, subject to the provisions contained herein and
therein, to purchase from the Company (and the Company shall issue and sell
to the holder of such Warrant) an amount of fully paid, registered and non-
assessable shares of Common Stock equal to the product of: (i) 6% of the
outstanding shares of Common Stock on a fully diluted basis on the date of
initial issuance of such Warrants and (ii) 0.005, at an exercise price
determined in accordance with Section 2.02 hereof. The number of shares of
the Company's common stock, par value $0.01 per share (the "COMMON STOCK")
issuable upon exercise of a Warrant is subject to adjustment as provided
herein and in the Warrant. The shares of Common Stock issuable upon
exercise of a Warrant are hereinafter referred to as the "WARRANT SHARES"
and, unless the context otherwise requires, such term shall also include
any other securities or property issuable and deliverable upon exercise of
a Warrant as provided in Article V, subject to adjustment as provided
herein and in the Warrant. As used in this Agreement, the term "FULLY
DILUTED BASIS" means, on any specified date, giving effect to exercise of
the Warrants to be issued on such date, all outstanding Warrants, and all
other options, warrants or other securities convertible into or
exchangeable for shares of Common Stock. For the purposes of determining
the number of shares of Common Stock outstanding on a fully diluted basis
on any specified date prior to the earlier of (i) October 3, 1998 and
(ii) the cancellation and exchange of certain employee options pursuant to
the Anticipated Option Adjustment (as defined below), the number of shares
of Common Stock issuable upon the exercise of all outstanding options shall
be deemed to be 813,105, whether or not such Anticipated Option Adjustment
is completed as of the date thereof; provided, however, in the event that
as a result of the failure to consummate, or any adjustment to, the
Anticipated Option Adjustment the number of shares of Common Stock issuable
upon exercise of options actually outstanding as of October 3, 1998 is
greater than or less than 813,105, then the number of shares of Common
Stock issuable upon the exercise of each Warrant shall be increased or
decreased (as the case may be) to a number determined by multiplying the
number of shares of Common Stock theretofore issuable upon exercise of each
Warrant by a fraction (the "ADJUSTMENT FRACTION"), the numerator of which
shall be the number of shares of Common Stock outstanding on the date of
issuance of such Warrant assuming that the number of shares of Common Stock
issuable upon exercise of options outstanding as of such date is the number
of shares of Common Stock issuable upon exercise of options outstanding as
of October 3, 1998 and the denominator of which shall be the number of
shares of Common Stock outstanding on the date of issuance of such Warrant
assuming that the number of shares of Common Stock issuable upon exercise
of options outstanding as of such date is 813,105, in each case as
determined on a fully diluted basis. In the event that any Warrant Shares
shall have been issued upon exercise of any Warrants on or prior to
October 3, 1998, the Company shall issue additional Warrant Shares to each
holder of outstanding Warrant Shares, or shall cancel Warrants Shares of
such holder, as the case may be, in an amount equal to (x) the number of
Warrant Shares held by such holder on October 3, 1998 prior to any such
issuance or cancellation, multiplied by (y) the Adjustment Fraction minus
1. As used herein, the term "ANTICIPATED OPTION ADJUSTMENT" shall mean a
proposed adjustment to the Company's 1995 Long-Term Performance Incentive
Plan occurring prior to October 3, 1998 whereby the holders of certain
options to acquire Common Stock outstanding on the date hereof will
exchange their existing options for a number of options less than the
number held by them as of the date hereof, which options shall have an
exercise price equal to or greater than the average of the NASDAQ reported
high and low bid prices on shares of Common Stock on September 4, 1998.
SECTION 1.02. FORM OF WARRANT CERTIFICATES. The Warrant
Certificates will be issued in registered form as definitive Warrant
Certificates (the "DEFINITIVE WARRANTS"), substantially in the form of
EXHIBIT A attached hereto.
SECTION 1.03. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by the chairman of
its board of directors, its president, its chief financial officer or any
vice president and attested by its secretary or assistant secretary. Such
signatures may be the manual or facsimile signatures of the present or any
future such officers. The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates. Typographical and other minor
errors or defects in any such reproduction of any such signature shall not
affect the validity or enforceability of any Warrant Certificate that has
been duly countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificate so signed shall be authenticated and delivered by the Warrant
Agent or disposed of by the Company, such Warrant Certificate nevertheless
may be authenticated and delivered or disposed of as though the person who
signed such Warrant Certificate had not ceased to be such officer of the
Company. Any Warrant Certificate may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although at the
date of the execution and delivery of this Agreement any such person was
not such an officer.
SECTION 1.04. AUTHENTICATION AND DELIVERY. Subject to the
immediately following paragraph, Warrant Certificates shall be
authenticated by manual signature and dated the date of authentication by
the Warrant Agent and shall not be valid for any purpose unless so
authenticated and dated. The Warrant Certificates shall be numbered and
shall be registered in the Warrant Register (as defined in Section 1.06
hereof).
Upon the receipt by the Warrant Agent of a written order of the
Company, which order shall be signed by the chairman of its board of
directors, its president, its chief financial officer or any vice president
and attested by its secretary or assistant secretary, and shall specify the
amount of Warrants to be authenticated, the date of such Warrants and such
other information as the Warrant Agent may reasonably request, without any
further action by the Company, the Warrant Agent is authorized, upon
receipt from the Company at any time and from time to time of the Warrant
Certificates, duly executed as provided in Section 1.03 hereof, to
authenticate the Warrant Certificates and upon the holder's request deliver
them. Such authentication shall be by a duly authorized signatory of the
Warrant Agent (although it shall not be necessary for the same signatory to
sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall
have authenticated any of the Warrant Certificates shall cease to be such
authorized signatory before the Warrant Certificate shall be disposed of by
the Company or the Warrant Agent, such Warrant Certificate nevertheless may
be delivered or disposed of as though the person who authenticated such
Warrant Certificate had not ceased to be such authorized signatory of the
Warrant Agent; and any Warrant Certificate may be authenticated on behalf
of the Warrant Agent by such persons as, at the actual time of
authentication of such Warrant Certificates, shall be the duly authorized
signatories of the Warrant Agent, although at the time of the execution and
delivery of this Agreement any such person is not such an authorized
signatory.
The Warrant Agent's authentication on all Warrant Certificates
shall be in substantially the form set forth in EXHIBIT A hereto.
SECTION 1.05. SEPARATION OF WARRANTS AND NOTES. The Notes and
the Warrants will be separately transferable upon the issuance thereof.
SECTION 1.06. REGISTRATION. The Company will keep, at the
office or agency maintained by the Company for such purpose, a register or
registers in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of, and
registration of transfer and exchange of, Warrants as provided in this
Article. Each Person designated by the Company from time to time as a
Person authorized to register the transfer and exchange of the Warrants is
hereinafter called, individually and collectively, the "REGISTRAR." The
Company hereby initially appoints the Warrant Agent as Registrar. Upon
written notice to the Warrant Agent and any acting Registrar, the Company
may appoint a successor Registrar for such purposes.
The Company will at all times designate one Person (who may be
the Company and who need not be a Registrar) to act as repository of a
master list of names and addresses of the holders of Warrants (the "WARRANT
REGISTER"). The Warrant Agent will act as such repository unless and until
some other Person is, by written notice from the Company to the Warrant
Agent and the Registrar, designated by the Company to act as such. The
Company shall cause each Registrar to furnish to such repository, on a
current basis, such information as to all registrations of transfer and
exchanges effected by such Registrar, as may be necessary to enable such
repository to maintain the Warrant Register on as current a basis as is
practicable.
SECTION 1.07. REGISTRATION OF TRANSFERS OR EXCHANGES.
(a) TRANSFER OR EXCHANGE OF DEFINITIVE WARRANTS. When
Definitive Warrants are presented to the Warrant Agent with a request from
the holder:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as
requested if the requirements under this Warrant Agreement as set forth in
this Section 1.07 hereof for such transactions are met; provided, however,
that the Definitive Warrants presented or surrendered by a holder for
registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer or exchange in form satisfactory to the Company and the
Warrant Agent, duly executed by such holder or by his attorney,
duly authorized in writing and accompanied by the address for
notices of each transferee of such Warrant; and
(y) in the case of Warrants the offer and sale of which have not been
registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT") and are presented for transfer or exchange
prior to (X) the date which is two years (or such shorter period
as may be prescribed by Rule 144(k) (or any successor provision
thereto)) after the later of the date of original issuance of the
Warrants and the last date on which the Company or any affiliate
of the Company was the owner of such Warrants, or any predecessor
thereto, and (Y) such later date, if any, as may be required by
any subsequent change in applicable law (the "RESALE RESTRICTION
TERMINATION DATE"), such Warrants shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Warrants are being delivered to the Warrant Agent by
a holder for registration in the name of such holder,
without transfer, a certification from such holder to that
effect (in substantially the form of EXHIBIT B hereto); or
(B) if such Warrants are being transferred to an "accredited
investor" within the meaning of Rule 501 under the
Securities Act (an "ACCREDITED INVESTOR"), delivery by the
transferor of a certification to that effect (in
substantially the form of EXHIBIT B hereto), and delivery by
the proposed transferee of a Transferee Certificate for
Accredited Investors (in substantially the form of EXHIBIT C
hereto); or
(C) if such Warrants are being transferred to a qualified
institutional buyer as such term is defined in Rule 144A
under the Securities Act (a "QIB") in accordance with Rule
144A under the Securities Act, a certification from the
transferor to that effect (in substantially the form of
EXHIBIT B hereto); or
(D) if such Warrants are being transferred in reliance on Rule
144 under the Securities Act, delivery by the transferor of
(i) a certification from the transferor to that effect (in
substantially the form of EXHIBIT B hereto), and (ii) an
opinion of counsel reasonably satisfactory to the Company
and the Warrant Agent to the effect that such transfer is in
compliance with the Securities Act and all applicable state
securities laws; or
(E) if such Warrants are being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification from the transferor to that
effect (in substantially the form of EXHIBIT B hereto) and
an opinion of counsel reasonably satisfactory to the Company
and the Warrant Agent to the effect that such transfer is in
compliance with the Securities Act and all applicable state
securities laws; provided that the Company may, based upon
the views of its own counsel, instruct the Warrant Agent not
to register such transfer in any case where the proposed
transferee is not a QIB or an Accredited Investor.
(b) PRIVATE PLACEMENT LEGEND. Upon the transfer or exchange of
Warrant Certificates not bearing the legend set forth in the first
paragraph of EXHIBIT A attached hereto (the "PRIVATE PLACEMENT LEGEND"),
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of
Warrant Certificates bearing the Private Placement Legend, the Warrant
Agent shall deliver Warrant Certificates that bear the Private Placement
Legend unless, and the Warrant Agent is hereby authorized to deliver
Warrant Certificates without the Private Placement Legend if, (i) there is
delivered to the Warrant Agent an opinion of counsel reasonably
satisfactory to the Company and the Warrant Agent to the effect that
neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act
or (ii) the Warrants to be transferred or exchanged represented by such
Warrant Certificates are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act.
(c) OBLIGATIONS WITH RESPECT TO TRANSFERS OR EXCHANGES OF
DEFINITIVE WARRANTS.
(i) To permit registrations of transfers or exchanges in accordance
with this Agreement, the Company shall execute, at the Warrant
Agent's request, and the Warrant Agent shall authenticate,
Definitive Warrants.
(ii) All Definitive Warrants issued upon any registration, transfer or
exchange of Definitive Warrants shall be the valid obligations of
the Company, entitled to the same benefits under this Warrant
Agreement as the Definitive Warrants surrendered upon the
registration of transfer or exchange.
(iii)Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute
owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
SECTION 1.08. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED
WARRANT CERTIFICATES. Upon receipt by the Company and the Warrant Agent
(or any agent of the Company or the Warrant Agent, if requested by the
Company) of evidence satisfactory to them of the loss, theft, destruction,
defacement, or mutilation of any Warrant Certificate and of indemnity
satisfactory to them and, in the case of mutilation or defacement, upon
surrender thereof to the Warrant Agent for cancellation, then, in the
absence of notice to the Company or the Warrant Agent that such Warrant
Certificate has been acquired by a bona fide purchaser or holder in due
course, the Company shall execute, and an authorized signatory of the
Warrant Agent shall manually authenticate and deliver, in exchange for or
in lieu of the lost, stolen, destroyed, defaced or mutilated Warrant
Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not
contemporaneously outstanding. Upon the issuance of any new Warrant
Certificate under this Section in a name other than the prior registered
holder of the lost, stolen, destroyed, defaced or mutilated Warrant
Certificate, the Company may require the payment from the holder of such
Warrant Certificate of a sum sufficient to cover any tax, stamp tax or
other governmental charge that may be imposed in relation thereto. Every
substitute Warrant Certificate executed and delivered pursuant to this
Section in lieu of any lost, stolen or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or
not the lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of (but shall
be subject to all the limitations of rights set forth in) this Agreement
equally and proportionately with any and all other Warrant Certificates
duly executed and delivered hereunder. The provisions of this Section 1.08
are exclusive with respect to the replacement of lost, stolen, destroyed,
defaced or mutilated Warrant Certificates and shall preclude (to the extent
lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to authenticate in
accordance with the provisions of this Agreement and deliver the new
Warrant Certificates required pursuant to the provisions of this Section.
SECTION 1.09. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (a) an office or agency where
the Warrant Certificates may be presented for exercise (each a "WARRANT
EXERCISE OFFICE"), (b) an office or agency where the Warrant Certificates
may be presented for registration of transfer and for exchange, and (c) an
office or agency where notices and demands to or upon the Company in
respect of the Warrants or of this Agreement may be served. The Company
may from time to time change or rescind such designation, as it may deem
desirable or expedient; provided, however, that so long as any Warrants
remain outstanding an office or agency shall at all times be maintained in
the Borough of Manhattan, The City of New York, as provided in the first
sentence of this Section. In addition to such office or offices or agency
or agencies, the Company may from time to time designate and maintain one
or more additional offices or agencies within or outside The City of New
York, where Warrant Certificates may be presented for exercise or for
registration of transfer or for exchange, and the Company may from time to
time change or rescind such designation, as it may deem desirable or
expedient. The Company will give to the Warrant Agent written notice of
the location of any such office or agency and of any change of location
thereof. The Company hereby designates the Warrant Agent at its principal
corporate trust office identified in Section 7.03 in the Borough of
Manhattan, The City of New York (the "WARRANT AGENT OFFICE"), as the
initial agency maintained for each such purpose. In case the Company shall
fail to maintain any such office or agency or shall fail to give such
notice of the location or of any change in the location thereof,
presentations and demands may be made and notice may be served at the
Warrant Agent Office and the Company appoints the Warrant Agent as its
agent to receive all such presentations, surrenders, notices and demands.
ARTICLE II
DURATION, EXERCISE OF WARRANTS; EXERCISE PRICE
AND REPURCHASE OF WARRANTS
SECTION 2.01. DURATION OF WARRANTS. Subject to the terms and
conditions established herein, the Warrants shall expire at 5:00 p.m., New
York City time, on the date seven years following the date of the initial
issuance of such Warrant. The applicable date of expiration of a
particular Warrant is referred to herein as the "EXPIRATION DATE" of such
Warrant. Each Warrant may be exercised on any Business Day (as defined
below) on or after the Issue Date (as defined in Section 5.01(d)) and on or
prior to the close of business on the Expiration Date.
Any Warrant not exercised before the close of business on the
Expiration Date thereof shall become void, and all rights of the holder
under the Warrant Certificate evidencing such Warrant and under this
Agreement shall cease.
"BUSINESS DAY" shall mean any day on which (i) banks in The City
of New York, (ii) the principal U.S. securities exchange or market, if any,
on which any Common Stock is listed or admitted to trading and (iii) the
principal U.S. securities exchange or market, if any, on which the Warrants
are listed or admitted to trading, are open for business.
SECTION 2.02. EXERCISE, EXERCISE PRICE, SETTLEMENT AND DELIVERY.
(a) Subject to the provisions of this Agreement, a holder of a Warrant
shall have the right to purchase from the Company on or after the Issue
Date and on or prior to the close of business on the Expiration Date
thereof an amount of fully paid, registered and non-assessable Warrant
Shares determined in accordance with Section 1.01 (and any other securities
or property purchasable or deliverable upon exercise of such Warrant as
provided in Article V), subject to adjustment in accordance with Article V
hereof, at a per share purchase price equal to 110% of the last reported
market price per share of Common Stock on or prior to 12:00 noon (New York
time) on the Issue Date, determined (i) by reference to the US national
securities exchange or quotation system on which the Company's Common Stock
is listed or quoted, (ii) if (i) above is not available at such time, by
reference to a reputable quotation service or a newspaper of general
circulation in the Borough of Manhattan, The City and The State of New York
customarily published on each Business Day, designated by the Company, or
(iii) if (i) and (ii) are not available, in accordance with subparagraph
(i) of the definition of Current Market Value (defined in Section 5.01(n)),
which price shall be set forth in each Warrant Certificate (the "EXERCISE
PRICE"). The number and amount of Warrant Shares issuable upon exercise of
a Warrant (the "EXERCISE RATE") shall be subject to adjustment from time to
time as set forth in Article V hereof.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity, including any predecessor of any
such entity.
(b) Warrants may be exercised on or after the Issue Date by (i)
surrendering at any Warrant Exercise Office the Warrant Certificate
evidencing such Warrants with the form of election to purchase Warrant
Shares set forth on the reverse side of the Warrant Certificate (the
"ELECTION TO EXERCISE") duly completed and signed by the registered holder
or holders thereof or by the duly appointed legal representative thereof or
by a duly authorized attorney, and in the case of a transfer, such
signature shall be guaranteed by an eligible guarantor institution, and
(ii) paying in full the Exercise Price for each such Warrant exercised.
Each Warrant may be exercised only in whole.
(c) Simultaneously with the exercise of each Warrant, payment in
full of the aggregate Exercise Price may be made, at the option of the
holder, (i) in cash or by certified or official bank check, (ii) by a
Cashless Exercise (as defined below) or (iii) by any combination of (i) and
(ii), to the office or agency where the Warrant Certificate is being
surrendered; provided, however, in the event that the Current Market Value
(calculated as set forth herein) per share of Common Stock on the date of
exercise is less than the Exercise Price, payment in full of the aggregate
Exercise Price may be made only in cash or by certified check. For
purposes of this Agreement, a "CASHLESS EXERCISE" shall mean an exercise of
a Warrant in accordance with the immediately following two sentences. To
effect a Cashless Exercise, the holder may exercise a Warrant or Warrants
without payment of the Exercise Price in cash by surrendering such Warrant
or Warrants (represented by one or more Warrant Certificates) and, in
exchange therefor, receiving such number of shares of Common Stock equal to
the product of (1) that number of shares of Common Stock for which such
Warrant or Warrants are exercisable and which would be issuable in the
event of an exercise with payment in cash of the Exercise Price and (2) the
Cashless Exercise Ratio (as defined below). The "CASHLESS EXERCISE RATIO"
shall equal a fraction, the numerator of which is the excess of the Current
Market Value (calculated as set forth in this Agreement) per share of
Common Stock on the date of exercise over the Exercise Price per share of
Common Stock as of the date of exercise and the denominator of which is the
Current Market Value per share of Common Stock on the date of exercise.
Upon surrender of a Warrant Certificate representing more than one Warrant
in connection with a holder's option to elect a Cashless Exercise, such
holder must specify the number of Warrants for which such Warrant
Certificate is to be exercised (without giving effect to such Cashless
Exercise). All provisions of this Agreement shall be applicable with
respect to a Cashless Exercise of a Warrant Certificate for less than the
full number of Warrants represented thereby. No payment or adjustment
shall be made on account of any distributions of dividends on the Common
Stock issuable upon exercise of a Warrant. If the Company has not effected
the registration under the Securities Act of the offer and sale of the
Warrant Shares by the Company to the holders of the Warrants on or prior to
the Exercise Date (as defined below) thereof, the Company may elect to
require that the holders of the Warrants effect the exercise thereof solely
pursuant to the Cashless Exercise option and may also amend the Warrants to
eliminate the requirement for payment of the Exercise Price with respect to
such Cashless Exercise option. The Warrant Agent shall have no obligation
under this section to calculate the Cashless Exercise Ratio.
(d) Upon surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than
any Warrant Exercise Office that also is an office of the Warrant Agent),
such Warrant Certificate and payment shall be promptly delivered to the
Warrant Agent. The "EXERCISE DATE" for a Warrant shall be the date when
all of the items referred to in the first sentence of paragraphs (b) and
(c) of this Section 2.02 are received by the Warrant Agent at or prior to
11:00 a.m., New York City time, on a Business Day and the exercise of the
Warrants will be effective as of such Exercise Date. If any items referred
to in the first sentence of paragraphs (b) and (c) are received after 11:00
a.m., New York City time, on a Business Day, the exercise of the Warrants
to which such item relates will be effective on the next succeeding
Business Day. Notwithstanding the foregoing, in the case of an exercise of
Warrants on the Expiration Date thereof, if all of the items referred to in
the first sentence of paragraphs (b) and (c) are received by the Warrant
Agent at or prior to 5:00 p.m., New York City time, on such Expiration
Date, the exercise of the Warrants to which such items relate will be
effective on such Expiration Date.
(e) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise
Price (or election of the Cashless Exercise option), the Warrant Agent
shall: (i) except to the extent exercise of the Warrant has been effected
through a Cashless Exercise, cause an amount equal to the aggregate
Exercise Price to be paid to the Company by crediting such amount in
immediately available funds to the account designated by the Company in
writing to the Warrant Agent for that purpose; (ii) advise the Company
immediately by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii)
as soon as practicable, advise the Company in writing of the number of
Warrants exercised in accordance with the terms and conditions of this
Agreement and the Warrant Certificates, the instructions of each exercising
holder of the Warrant Certificates with respect to delivery of the Warrant
Shares to which such holder is entitled upon such exercise, and such other
information as the Company shall reasonably request.
(f) Subject to Section 5.02 hereof, as soon as practicable after
the exercise of any Warrant or Warrants in accordance with the terms
hereof, the Company shall issue or cause to be issued to or upon the
written order of the registered holder of the Warrant Certificate
evidencing such exercised Warrant or Warrants, a certificate or
certificates evidencing the Warrant Shares to which such holder is
entitled, in fully registered form, registered in such name or names as may
be directed by such holder pursuant to the Election to Exercise, as set
forth on the reverse of the Warrant Certificate. Such certificate or
certificates evidencing the Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be
deemed to have become the holders of record of such Warrant Shares as of
the close of business on the Exercise Date. The Warrant Shares may
initially be issued in global form (the "GLOBAL SHARES"). Such Global
Shares shall represent such of the outstanding Warrant Shares as shall be
specified therein and each Global Share shall provide that it represents
the aggregate amount of outstanding Warrant Shares from time to time
endorsed thereon and that the aggregate amount of outstanding Warrant
Shares represented thereby may from time to time be reduced or increased,
as appropriate. Any endorsement of a Global Share to reflect any increase
or decrease in the amount of outstanding Warrant Shares represented thereby
shall be made by the registrar for the Warrant Shares and the Depositary
(referred to below) in accordance with instructions given by the holder
thereof. The Depository Trust Company shall (if possible) act as the
Depositary with respect to the Global Shares until a successor shall be
appointed by the Company and the registrar for the Warrant Shares. After
exercise of any Warrant or Warrant Shares, the Company shall also issue or
cause to be issued to or upon the written order of the registered holder of
such Warrant Certificate, a new Warrant Certificate, countersigned by the
Warrant Agent pursuant to written instruction, evidencing the number of
Warrants, if any, remaining unexercised unless such Warrants shall have
expired.
SECTION 2.03. CANCELLATION OF WARRANT CERTIFICATES. In the
event the Company shall purchase or otherwise acquire Warrants, the Warrant
Certificates evidencing such Warrants may thereupon be delivered to the
Warrant Agent, and if so delivered, shall at the Company's written
instruction be canceled by it and retired. The Warrant Agent shall cancel
all Warrant Certificates properly surrendered for exchange, substitution,
transfer or exercise. Upon the Company's written request, the Warrant
Agent shall deliver such canceled Warrant Certificates to the Company.
SECTION 2.04. DELIBERATELY OMITTED.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.01. ENFORCEMENT OF RIGHTS. (a) Notwithstanding any
of the provisions of this Agreement, any holder of any Warrant Certificate,
without the consent of the Warrant Agent, the holder of any Warrant Shares
or the holder of any other Warrant Certificate, may, in and for his own
behalf, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, his right to exercise
the Warrant or Warrants evidenced by his Warrant Certificate in the manner
provided in such Warrant Certificate and in this Agreement.
(b) Neither the Warrants nor any Warrant Certificate shall
entitle the holders thereof to any of the rights of shareholders of the
Company, including, without limitation, the right to vote or to receive any
dividends or other payments or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or for the election
of directors of the Company or any other matter, or any rights whatsoever
as shareholders of the Company.
SECTION 3.02. OBTAINING STOCK EXCHANGE LISTINGS. In the event
that, upon the initial exercise of any Warrant, the Common Stock of the
Company is authorized for quotation on the Nasdaq National Market or the
Nasdaq SmallCap Market or is listed on any National Securities Exchange
(within the meaning of Section 6 of the Exchange Act), the Company will, at
or prior to the time the Warrants are exercised and the Warrant Shares are
issued, take all action which may be necessary so that all Warrant Shares,
upon issuance, will be authorized for quotation or listed on each such
market or exchange on which the Common Stock of the Company is authorized
for quotation or listed at such time; provided that, with respect to
Warrants issued subsequent to such initial exercise the Company will, as
promptly as practicable, take all action which may be necessary so that the
Warrant Shares issuable upon the exercise of such Warrants will be
authorized for quotation or listed on each such market or exchange on which
the Common Stock of the Company is authorized for quotation or listed; and,
provided further that, in the event that the Common Stock becomes so
authorized for quotation or listed following the initial exercise of any
Warrants or any such subsequent issuance of Warrants, the Company shall
provide that all Warrant Shares issuable upon exercise of the Warrants will
also be authorized for quotation or listed on each such market or exchange
on which the Common Stock of the Company is authorized for quotation or
listed at such time.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.01. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrants
and of the Warrant Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or other governmental
charge which may be payable in respect of any transfer or exchange of any
Warrant Certificates or any certificates for Warrant Shares in a name other
than the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant. In any such case, no transfer or exchange shall be
made unless or until the Person or Persons requesting issuance thereof
shall have paid to the Company the amount of such tax or other governmental
charge or shall have established to the satisfaction of the Company that
such tax or other governmental charge has been paid or an exemption is
available therefrom.
SECTION 4.02. RULES 144 AND 144A. The Company covenants that it
will file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules, regulations and policies adopted by the
Securities and Exchange Commission thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act
and, if at any time the Company is not required to file such reports, it
will make available such information as is necessary to permit sales
pursuant to Rule 144A under the Securities Act.
SECTION 4.03. SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS. The Company will also agree to comply with all applicable laws,
including the Securities Act and any applicable state securities laws, in
connection with the offer and sale of Common Stock (and other securities
and property deliverable) upon exercise of the Warrants; provided, however,
except as provided in the Warrant Registration Rights Agreement, nothing
contained in this Section 4.03 or any other provision of this Agreement
shall require the Company to register any offer or sale of the Warrants or
the Common Stock (or other securities issuable or property deliverable)
upon exercise of the Warrants with the Securities and Exchange Commission
or any state agency.
SECTION 4.04. RESOLUTION OF PREEMPTIVE RIGHTS, IF ANY. The
Warrant Shares shall not be subject to any preemptive or similar rights.
ARTICLE V
ADJUSTMENTS
SECTION 5.01. ADJUSTMENT OF EXERCISE RATE; NOTICES. The
Exercise Rate is subject to adjustment from time to time as provided in
this Section.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, on or after the
Issue Date (as defined herein), the Company:
(i) pays a dividend or makes a distribution on shares of its
Common Stock payable in shares of its Common Stock or other Capital
Stock of the Company;
(ii) subdivides or splits any of its outstanding shares of Common
Stock into a greater number of shares;
(iii) combines any of its outstanding shares of Common Stock into
a smaller number of shares; or
(iv) increase or decrease the number of shares of Common Stock
outstanding by reclassification of its Common Stock;
then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted to a number determined by
multiplying the number of shares of Common Stock that such holder would
have owned or have been entitled to receive upon exercise had such Warrants
been exercised immediately prior to the happening of the events described
above (or, in the case of a dividend or distribution of Common Stock or
other shares of Capital Stock, immediately prior to the record date
therefor) by a fraction, the numerator of which shall be the total number
of shares of Common Stock outstanding immediately after the happening of
the events described above and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
happening of the events described above, in each case determined on a fully
diluted basis; the Exercise Price for each Warrant shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
event by the aforementioned fraction. An adjustment made pursuant to this
Section 5.01(a) shall become effective immediately after the effective date
of such event, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Common Stock or other shares of the
Company's capital stock. If there are no outstanding shares of Common
Stock that are of the same class as the Warrant Shares at the time of any
such action and such action has therefore been taken only in respect of
shares of another class of Common Stock, such adjustment shall relate to
the Warrant Shares as Warrant Shares (and not in the form of shares of
Common Stock) if it would not frustrate the intent and purposes of, and to
the extent indicated by, this Section 5.01.
In the event that such dividend or distribution is not so paid or
made or such subdivision, combination or reclassification is not effected,
the Exercise Rate shall again be adjusted to be the Exercise Rate which
would then be in effect if such record date or effective date had not been
so fixed.
If after an adjustment a holder of a Warrant upon exercise of
such Warrant may receive shares of two or more classes of Capital Stock of
the Company, the Exercise Rate shall thereafter be subject to adjustment
upon the occurrence of an action taken with respect to any such class of
Capital Stock as is contemplated by this Article V with respect to the
Common Stock, on terms comparable to those applicable to Common Stock in
this Article V.
(b) ADJUSTMENT FOR CASH DIVIDENDS AND OTHER DISTRIBUTIONS. In
the event that at any time or from time to time the Company shall
distribute to all holders of Common Stock (i) any dividend or other
distribution of cash, evidences of its indebtedness, shares of its capital
stock or any other assets, properties or debt securities or (ii) any
options, warrants or other rights to subscribe for or purchase any of the
foregoing (other than, in each case, (x) any rights, options, warrants or
securities described in Section 5.01(c) and (y) any cash dividends or other
cash distributions from current or retained earnings), then the number of
shares of Common Stock issuable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number of shares of
Common Stock issuable upon the exercise of such Warrant immediately prior
to the record date for any such dividend or distribution by a fraction, the
numerator of which shall be the Current Market Value per share of Common
Stock on the record date for such dividend or distribution and the
denominator of which shall be such Current Market Value per share of Common
Stock on the record date for such dividend or distribution less the sum of
(x) the amount of cash, if any, distributed per share of Common Stock and
(y) the fair value (as determined in good faith by the board of directors
of the Company, whose determination shall be evidenced by a board
resolution filed with the Warrant Agent, a copy of which will be sent to
Holders upon request) of the portion, if any, of the distribution
applicable to one share of Common Stock consisting of evidences of
indebtedness, shares of stock, securities, other assets or property,
warrants, options or subscription or purchase rights; and the Exercise
Price shall be adjusted to a number determined by dividing the Exercise
Price immediately prior to such record date by the aforementioned fraction.
Such adjustments shall be made whenever any distribution is made and shall
become effective as of the date of distribution, retroactive to the record
date for any such distribution; provided, however, that the Company is not
required to make an adjustment pursuant to this Section 5.01(b) for any
Warrant if at the time of such distribution the Company makes the same
distribution to the Holder of such Warrant as it makes to holders of Common
Stock pro rata based on the number of shares of Common Stock for which such
Warrant is exercisable. No adjustment shall be made pursuant to this
Section 5.01(b) which shall have the effect of decreasing the number of
shares of Common Stock issuable upon exercise of each Warrant or increasing
the Exercise Price.
(c) ADJUSTMENT FOR RIGHTS ISSUED TO ALL HOLDERS OF COMMON
STOCK. In the event that at any time or from time to time the Company
shall issue to all holders of Common Stock without any charge, rights,
options or warrants entitling the holders thereof to subscribe for
additional shares of Common Stock, or securities convertible into or
exchangeable or exercisable for additional shares of Common Stock,
entitling such holders to subscribe for or purchase shares of Common Stock
at a price per share that is lower at the record date for such issuance
than the then Current Market Value per share of Common Stock, then the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of
shares of Common Stock theretofore issuable upon exercise of each Warrant
by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights, options,
warrants or securities plus the number of additional shares of Common Stock
offered for subscription or purchase or into or for which such securities
that are issued are convertible, exchangeable or exercisable, and the
denominator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, warrants or
securities plus the total number of shares of Common Stock which the
aggregate consideration expected to be received by the Company (assuming
the exercise or conversion of all such rights, options, warrants or
securities) would purchase at the then Current Market Value per share of
Common Stock, in each case as determined on a fully diluted basis. In the
event of any such adjustment, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
date of issuance by the aforementioned fraction. Such adjustment shall be
made immediately after such rights, options or warrants are issued and
shall become effective, retroactive to the record date for the
determination of stockholders entitled to receive such rights, options,
warrants or securities. No adjustment shall be made pursuant to this
Section 5.01(c) which shall have the effect of decreasing the number of
shares of Common Stock purchasable upon exercise of each Warrant or of
increasing the Exercise Price.
(d) ADJUSTMENT FOR SALE OF COMMON STOCK BELOW CURRENT MARKET
VALUE. If, after the Issue Date, the Company grants or sells any Common
Stock or any securities convertible into or exchangeable or exercisable for
any Common Stock (other than (1) pursuant to the exercise of the Warrants,
(2) pursuant to any security outstanding as of the Issue Date convertible
into, or exchangeable or exercisable for, shares of Common Stock (3) upon
the conversion, exchange or exercise of any convertible, exchangeable or
exercisable security as to which upon the issuance thereof an adjustment
pursuant to this Article V has been made or which did not require any
adjustment pursuant to this Article V or (4) upon the conversion, exchange
or exercise of convertible, exchangeable or exercisable securities of the
Company outstanding on the Issue Date (to the extent in accordance with the
terms of such securities as in effect on such date)) at a price below the
then Current Market Value (calculated as set forth in Section 5.01(n)
hereof), then the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such sale or
issuance plus the number of additional shares of Common Stock offered for
subscription or purchase or into or for which such securities that are
issued are convertible, exchangeable or exercisable, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such sale or issuance plus the total number of shares of Common
Stock which the aggregate consideration received, upon such sale or grant,
or expected to be received by the Company (assuming the exercise or
conversion of all such rights, options, warrants or securities, if any),
would purchase at the then Current Market Value per share of Common Stock,
and the Exercise Price shall be adjusted to a number determined by dividing
the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustments shall be made whenever such
rights, options or warrants or convertible securities are issued. No
adjustment shall be made pursuant to this Section 5.01(d) which shall have
the effect of decreasing the number of shares of Common Stock issuable upon
exercise of each warrant or of increasing the Exercise Price. For purposes
of this Section 5.01(d) only, any issuance of Common Stock, or rights,
options or warrants to subscribe for, or other securities convertible into
or exercisable or exchangeable for, Common Stock, which issuance (or
agreement to issue) (A) is in exchange for or otherwise in connection with
the acquisition of the property (excluding any such exchange exclusively
for cash) of any Person and (B) is at a price per share equal to the
Current Market Value at the time of signing a definitive agreement, shall
be deemed to have been made at a price per share equal to the Current
Market Value per share at the record date with respect to such issuance or
the time of closing or consummation of such exchange or acquisition, if
such record date, closing or consummation is within 90 days of the date of
such definitive agreement. For the purposes of this subsection (d), the
fair market value of any property acquired by the Company shall be
determined in good faith by the board of directors of the Company whose
determination shall be evidenced by a board resolution filed with the
Warrant Agent, a copy of which will be sent to Holders upon request.
No adjustment shall be made under this paragraph (d) for any
adjustment which is the subject of paragraphs (a) and (f) of this Section
5.01.
No adjustment in the Exercise Rate shall be made under this
paragraph (d) upon the conversion, exchange or exercise of options to
acquire shares of Common Stock by present, future or former officers,
directors, employees or consultants of the Company; provided that the
exercise price of such options, at the time of issuance thereof, is at
least equal to the then Current Market Value of the Common Stock underlying
such options.
"ISSUE DATE" means, with respect to any Warrant, the date of
initial issuance of such Warrant by the Company.
(e) NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the
Exercise Rate is adjusted, as herein provided, the Company shall deliver to
the Warrant Agent a certificate of a firm of independent accountants
selected by the board of directors of the Company (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail,
the event requiring the adjustment and the method by which such adjustment
was calculated (including a description of the basis on which (i) the board
of directors of the Company determined the fair market value of any
evidences of indebtedness, other securities or property or warrants,
options or other subscription or purchase rights and (ii) the Current
Market Value of the Common Stock was determined, if either of such
determinations were required), and specifying the Exercise Price and the
number of shares of Common Stock issuable upon exercise of Warrants after
giving effect to such adjustment. The Company shall, by written
instructions to the Warrant Agent, promptly cause the Warrant Agent to mail
a copy of such certificate to each Holder in accordance with the terms
hereof. The Warrant Agent shall be entitled to rely on such certificate
and shall be under no duty or responsibility with respect to any such
certificate, except to exhibit the same from time to time, to any Holder
desiring an inspection thereof during regular business hours. The Warrant
Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist which may require any
adjustment of the Exercise Price or the number of shares of Common Stock or
other stock issuable on exercise of the Warrants, or with respect to the
nature or extent of any such adjustment when made, or with respect to the
method employed in making such adjustment or the validity or value of any
shares of Common Stock, evidences of indebtedness, warrants, options, or
other securities or property.
(f) REORGANIZATION OF COMPANY; SPECIAL DISTRIBUTIONS. (i) If
the Company, in a single transaction or through a series of related
transactions, consolidates with or merges with or into any other Person or
sells, assigns, transfers, leases, conveys or otherwise disposes of all or
substantially all of its properties and assets to another Person or group
of affiliated Persons or is a party to a merger or binding share exchange
which reclassifies or changes its outstanding Common Stock (a "FUNDAMENTAL
TRANSACTION"), as a condition to consummating any such transaction the
Person formed by or surviving any such consolidation or merger if other
than the Company or the Person to whom such transfer has been made (the
"SURVIVING PERSON") shall enter into a supplemental warrant agreement. The
supplemental warrant agreement shall provide (a) that the holder of a
Warrant then outstanding may exercise it for the kind and amount of
securities, cash or other assets which such holder would have received
immediately after the Fundamental Transaction if such holder had exercised
the Warrant immediately before the effective date of the transaction
(whether or not the Warrants were then exercisable and without giving
effect to the Cashless Exercise option); it being understood that the
Warrants will remain exercisable only in accordance with their terms so
that conditions to exercise will remain applicable, such as payment of
Exercise Price, assuming (to the extent applicable) that such holder
(i) was not a constituent Person or an affiliate of a constituent Person to
such transaction, (ii) made no election with respect thereto, and (iii) was
treated alike with the plurality of non-electing holders, and (b) that the
Surviving Person shall succeed to and be substituted to every right and
obligation of the Company in respect of this Agreement and the Warrants.
The supplemental warrant agreement shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article V. The Surviving Person shall mail to holders
of Warrants at the addresses appearing on the Warrant Register a notice
briefly describing the supplemental warrant agreement. If the issuer of
securities deliverable upon exercise of Warrants is an affiliate of the
Surviving Person, that issuer shall join in the supplemental warrant
agreement.
(ii) Notwithstanding the foregoing, if the Company enters into a
Fundamental Transaction with another Person (other than a subsidiary of the
Company) and consideration is payable to holders of shares of Common Stock
(or other securities or property issuable or deliverable upon exercise of
the Warrants) in connection with such Fundamental Transaction which
consideration consists solely of cash, then the holders of Warrants shall
be entitled to receive cash on the date of such event on an equal basis
with holders of such shares (or other securities issuable or deliverable
upon exercise of the Warrants) as if the Warrants had been exercised
immediately prior to such event, less the aggregate Exercise Price
therefor. Upon receipt of such payment, if any, the rights of a holder of
such Warrant shall terminate and cease and such holder's Warrants shall
expire.
(iii) If this paragraph (f) applies, it shall supersede the
application of paragraph (a) of this Section 5.01.
(g) COMPANY DETERMINATION FINAL. Any determination that the
Company or the board of directors of the Company must make pursuant to this
Article V shall be conclusive.
(h) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent
shall have no duty to determine when an adjustment under this Article V
should be made, how it should be made or what it should be. The Warrant
Agent shall have no duty to determine whether a supplemental warrant
agreement under paragraph (f) need be entered into or whether any
provisions of any supplemental warrant agreement are correct. The Warrant
Agent shall not be accountable for and makes no representation as to the
validity or value of any securities or assets issued upon exercise of
Warrants. The Warrant Agent shall not be responsible for the Company's
failure to comply with this Article V.
(i) ADJUSTMENT FOR TAX PURPOSES. In the event of a taxable
distribution to holders of shares of Common Stock which results in an
adjustment to the number of shares of Common Stock or other consideration
for which such a Warrant may be exercised, the holders of the Warrants may,
in certain circumstances, be deemed to have received a distribution subject
to United States federal income tax as a dividend.
(j) UNDERLYING WARRANT SHARES. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock or Common Stock held in the treasury
of the Company, for the purpose of effecting the exercise of Warrants, the
full number of Warrant Shares then deliverable upon the exercise of all
Warrants then outstanding and payment of the exercise price, and the shares
so deliverable shall be fully paid and nonassessable and free from all
liens and security interests.
(k) SPECIFICITY OF ADJUSTMENT. Regardless of any adjustment in
the number or kind of shares purchasable upon the exercise of the Warrants,
Warrant Certificates theretofore or thereafter issued may continue to
express the same number and kind of Warrant Shares per Warrant as are
stated on the Warrant Certificates initially issuable pursuant to this
Agreement.
(l) NOTICE OF ACTIONS RESULTING IN ADJUSTMENT. (a) In the event
that the Company shall propose to (a) pay any dividend payable in
securities of any class to the holders of its Common Stock or to make any
other non-cash dividend or distribution to the holders of its Common Stock,
(b) offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares
of stock of any class or any other securities, rights or options, (c) issue
any (i) shares of Common Stock, (ii) rights, options or warrants entitling
the holders thereof to subscribe for shares of Common Stock, or (iii)
securities convertible into or exchangeable or exercisable for Common Stock
(in the case of (i), (ii) and (iii), only if such issuance or adjustment
would result in an adjustment hereunder), (d) effect any capital
reorganization, reclassification, consolidation or merger, (e) effect the
voluntary or involuntary dissolution, liquidation or winding-up of the
Company or (f) make a tender offer or exchange offer with respect to the
Common Stock, the Company shall, within five (5) days of the date on which
the Company's proposal to take such action is made public, send the Holder
and the Warrant Agent a notice of such proposed action or offer. Such
notice shall be mailed by the Company to the Holders at their addresses as
they appear in the Certificate Register, which shall specify the record
date for the purposes of such dividend, distribution or rights, or the date
such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed,
and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other
property, if any, and the number of shares of Common Stock and other
securities, if any, issuable upon exercise of each Warrant and the Exercise
Price after giving effect to any adjustment pursuant to Article 5 which
will be required as a result of such action. Such notice shall be given by
the Company as promptly as possible and (x) in the case of any action
covered by clause (a) or (b) above, at least 10 days prior to the record
date for determining holders of the Common Stock for purposes of such
action or (y) in the case of any other such action, at least 20 days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of Common Stock, whichever shall be
the earlier.
(m) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise
Rate or Exercise Price for outstanding Warrants under this Article V, any
subsequent event requiring an adjustment under this Article V shall cause
an adjustment to the Exercise Rate or Exercise Price for outstanding
Warrants as so adjusted.
(n) DEFINITIONS.
"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 securities, by contract or otherwise.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, partnership interests, participations, rights in or
other equivalents (however designated and whether voting or non-voting) of,
such Person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock whether outstanding on the Issue Date
or issued after the Issue Date.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date means (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an
Affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such
six-month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (provided that, in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
board of directors of the Company, a reasonable determination of value, may
be utilized) or (ii) (a) if the security is registered under the Exchange
Act, the average of the daily closing sales prices of the securities for
the 20 consecutive trading days immediately preceding such date, or (b) if
the security has been registered under the Exchange Act for less than 20
consecutive trading days before such date, then the average of the closing
sales prices for all of the trading days before such date for which closing
sales prices are available, in the case of each of (ii)(a) and (ii)(b), as
certified to the Warrant Agent by the President, any Vice President or the
Chief Financial Officer of the Company. The closing sales price for each
such trading day shall be: (A) in the case of a security listed or
admitted to trading on any US national securities exchange or quotation
system, the closing sales price, regular way, on such day, or if no sale
takes place on such day, the average of the closing bid and asked prices on
such day, (B) in the case of a security not then listed or admitted to
trading on any US national securities exchange or quotation system, the
last reported sale price on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reputable quotation source designated by the Company, (C) in
the case of a security not then listed or admitted to trading on any US
national securities exchange or quotation system and as to which no such
reported sale price or bid and asked prices are available, the average of
the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, The City and State of New York customarily published
on each Business Day, designated by the Company, or, if there shall be no
bid and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 30 days prior
to the date in question) for which prices have been so reported and (D) if
there are not bid and asked prices reported during the 30 days prior to the
date in question, the Current Market Value shall be determined as if the
securities were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States (i) which does not, and
whose directors, officers and employees or Affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its Affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its Affiliates and qualified to perform the task for which
it is to be engaged.
(o) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. The adjustments
required by the preceding Sections of this Article V shall be made whenever
and as often as any specified event requiring an adjustment shall occur,
except that no adjustment of the Exercise Price or the number of shares of
Common Stock issuable upon exercise of Warrants that would otherwise be
required by the preceding Sections of this Article V shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% the Exercise Price or
the number of shares of Common Stock issuable upon exercise of Warrants
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried
forward and made as soon as such adjustment, together with other
adjustments required by this Article V and not previously made, would
result in a minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of business
on the date of its occurrence. In computing adjustments under this Article
V, fractional interests in Common Stock shall be taken into account to the
nearest one-thousandth of a share.
(p) ADJUSTMENT OF EXERCISE PRICE. In addition, notwithstanding
any other provisions of this Article V, the Company may reduce the Exercise
Price (to an amount not less than the par value of the Common Stock) for a
period of time not less then 20 business days as deemed appropriate and
determined in good faith by the board of directors of the Company.
SECTION 5.02. FRACTIONAL WARRANT SHARES. The Company shall not
be required to issue fractional Warrant Shares upon exercise of the
Warrants or distribute Warrant Certificates that evidence fractional
Warrant Shares. In the event a holder is required by Section 2.02(c) to
make a Cashless Exercise, the number of Warrant Shares issuable shall be
rounded up to the nearest whole number. In addition, in no event shall any
holder of Warrants be required to make any payment of a fractional cent.
In lieu of fractional Warrant Shares, there shall be paid to the registered
holders of Warrant Certificates at the time Warrants evidenced thereby are
exercised as herein provided an amount in cash equal to the same fraction
of the Current Market Value per Warrant Share on the Business Day preceding
the date the Warrant Certificates evidencing such Warrants are surrendered
for exercise. Such payments shall be made by check or by transfer to an
account maintained by such registered holder with a bank in The City of New
York. If any holder surrenders for exercise more than one Warrant
Certificate, the number of Warrant Shares deliverable to such holder may,
at the option of the Company, be computed on the basis of the aggregate
amount of all the Warrants exercised by such holder.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.01. WARRANT AGENT. The Company hereby appoints First
Chicago Trust Company of New York as Warrant Agent of the Company in
respect of the Warrants and the Warrant Certificates upon the terms and
subject to the conditions set forth herein and in the Warrant Certificates;
and First Chicago Trust Company of New York hereby accepts such
appointment. The Warrant Agent shall have the powers and authority
specifically granted to and conferred upon it in the Warrant Certificates
and hereby and such further powers and authority to act on behalf of the
Company as the Company may hereafter grant to or confer upon it and it
shall accept in writing. All of the terms and provisions with respect to
such powers and authority contained in the Warrant Certificates are subject
to and governed by the terms and provisions hereof. The Warrant Agent may
act through agents and shall not be responsible for the misconduct or
negligence of any such agent appointed with due care.
SECTION 6.02. CONDITIONS OF WARRANT AGENT'S OBLIGATIONS. The
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof and in the Warrant Certificates, including the following,
to all of which the Company agrees and to all of which the rights hereunder
of the holders from time to time of the Warrant Certificates shall be
subject:
(a) The Warrant Agent shall be entitled to compensation to be
agreed upon with the Company in writing for all services rendered by
it and the Company agrees promptly to pay such compensation and to
reimburse the Warrant Agent for its reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel) incurred without
gross negligence or willful misconduct on its part in connection with
the services rendered by it hereunder. The Company also agrees to
indemnify the Warrant Agent and any predecessor Warrant Agent, their
directors, officers, affiliates, agents and employees for, and to hold
them and their directors, officers, affiliates, agents and employees
harmless against, any loss, liability or expense of any nature
whatsoever (including, without limitation, reasonable fees and
expenses of counsel) incurred without gross negligence or willful
misconduct on the part of the Warrant Agent, arising out of or in
connection with its acting as such Warrant Agent hereunder and its
exercise of its rights and performance of its obligations hereunder.
The obligations of the Company under this Section 6.02 shall survive
the exercise and the expiration of the Warrant Certificates and the
resignation and removal of the Warrant Agent.
(b) In acting under this Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of
the Company and does not assume any obligation or relationship of
agency or trust for or with any of the owners or holders of the
Warrant Certificates.
(c) The Warrant Agent may consult with counsel of its selection
and any advice or written opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur no
liability for or in respect of any action taken or omitted to be taken
or thing suffered by it in reliance upon any Warrant Certificate,
notice, direction, consent, certificate, affidavit, opinion of
counsel, instruction, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by
the proper parties.
(e) The Warrant Agent, and its officers, directors, affiliates
and employees ("RELATED PARTIES"), may become the owners of, or
acquire any interest in, Warrant Certificates, shares or other
obligations of the Company with the same rights that it or they would
have if it were not the Warrant Agent hereunder and, to the extent
permitted by applicable law, it or they may engage or be interested in
any financial or other transaction with the Company and may act on, or
as depositary, trustee or agent for, any committee or body of holders
of shares or other obligations of the Company as freely as if it were
not the Warrant Agent hereunder. Nothing in this Agreement shall be
deemed to prevent the Warrant Agent or such Related Parties from
acting in any other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for
interest on, and shall not be required to invest, any monies at any
time received by it pursuant to any of the provisions of this
Agreement or of the Warrant Certificates.
(g) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement (or any term or provision
hereof) or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its
authentication thereof).
(h) The recitals and other statements contained herein and in the
Warrant Certificates (except as to the Warrant Agent's authentication
thereon) shall be taken as the statements of the Company and the
Warrant Agent assumes no responsibility for the correctness of the
same. The Warrant Agent does not make any representation as to the
validity or sufficiency of this Agreement or the Warrant Certificates,
except for its due execution and delivery of this Agreement; provided,
however, that the Warrant Agent shall not be relieved of its duty to
authenticate the Warrant Certificates as authorized by this Agreement.
The Warrant Agent shall not be accountable for the use or application
by the Company of the proceeds of the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrains from acting with
respect to any matter contemplated by this Warrant Agreement, it may
require:
(1) an officers' certificate (a certificate signed by the
chairman or a co-chairman of the board of directors of the
Company, the president, the chief financial officer, any
executive vice president or any senior vice president of the
Company signing alone, or by any vice president signing together
with the secretary, any assistant secretary, the treasurer, or
any assistant treasurer of the Company) (an "OFFICERS'
CERTIFICATE") stating on behalf of the Company that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Warrant Agreement relating to the proposed
action have been complied with; and
(2) if reasonably necessary in the sole judgment of the
Warrant Agent, an opinion of counsel for the Company stating
that, in the opinion of such counsel, all such conditions
precedent have been complied with, provided that such matter is
one customarily opined upon by counsel.
Each Officers' Certificate or, if requested or required by this
Agreement, an opinion of counsel with respect to compliance with a
condition or covenant provided for in this Warrant Agreement shall
include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties
as are specifically set forth herein and in the Warrant Certificates,
and no implied duties or obligations shall be read into this Agreement
or the Warrant Certificates against the Warrant Agent. The Warrant
Agent shall not be accountable or under any duty or responsibility for
the use by the Company of any of the Warrant Certificates duly
authenticated by the Warrant Agent and delivered by it to the Company
pursuant to this Agreement. The Warrant Agent shall have no duty or
responsibility in case of any default by the Company in the
performance of its covenants or agreements contained in the Warrant
Certificates or in the case of the receipt of any written demand from
a holder of a Warrant Certificate with respect to such default,
including, without limiting the generality of the foregoing, any duty
or responsibility to initiate or attempt to initiate any proceedings
at law or otherwise or, except as provided in Section 7.02 hereof, to
make any demand upon the Company.
(k) Unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication from
the Company made or given under any provision of this Agreement shall
be sufficient if signed by the chairman or a co-chairman of the board,
the president, the chief financial officer, any executive vice
president or any senior vice president of the Company signing alone,
or by any vice president signing together with the secretary, any
assistant secretary, the treasurer, or any assistant treasurer of the
Company.
(l) The Warrant Agent shall have no responsibility in respect of
any adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge
and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances
as may reasonably be required by the Warrant Agent for the carrying
out or performing by the Warrant Agent of the provisions of this
Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties
hereunder from any one of the chairman or a co-chairman of the , the
president, the chief financial officer, any executive vice president
or any senior vice president alone, or any vice president together
with the secretary, assistant secretary, the treasurer or any
assistant treasurer, of the Company or any other officer or official
of the Company reasonably believed to be authorized to give such
instructions and to apply to such officers or officials for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions with respect to any matter arising in
connection with the Warrant Agent's duties and obligations arising
under this Agreement. Such application by the Warrant Agent for
written instructions from the Company may, at the option of the
Warrant Agent, set forth in writing any action proposed to be taken or
omitted by the Warrant Agent with respect to its duties or obligations
under this Agreement and the date on or after which such action shall
be taken and the Warrant Agent shall not be liable for any action
taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall
be not less than 10 Business Days after the Company receives such
application unless the Company consents to a shorter period); provided
that (i) such application includes a statement to the effect that it
is being made pursuant to this paragraph (n) and that unless objected
to prior to such date specified in the application, the Warrant Agent
will not be liable for any such action or omission to the extent set
forth in such paragraph (n) and (ii) prior to taking or omitting any
such action, the Warrant Agent has not received written instructions
objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed on behalf of the Company by any one of the chairman
of the board of directors, the president, the treasurer, the
controller, any vice president or the secretary or assistant secretary
of the Company or any other officer or official of the Company
reasonably believed to be authorized to give such instructions and
delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend its
own funds in the performance of its obligations and duties hereunder.
SECTION 6.03. RESIGNATION AND APPOINTMENT OF SUCCESSOR. (a)
The Company agrees, for the benefit of the holders from time to time of the
Warrant Certificates, that there shall at all times be a Warrant Agent
hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by
giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become
effective; provided, however, that such date shall be at least 60 days
after the date on which such notice is given unless the Company agrees to
accept less notice. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor Warrant Agent, qualified as provided in
Section 6.03(d) hereof, by written instrument in duplicate signed on behalf
of the Company, one copy of which shall be delivered to the resigning
Warrant Agent and one copy to the successor Warrant Agent. As provided in
Section 6.03(d) hereof, such resignation shall become effective upon the
earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 60 days after receipt by the Company of notice of such
resignation. The Company may, at any time and for any reason, and shall,
upon any event set forth in the next succeeding sentence, remove the
Warrant Agent and appoint a successor Warrant Agent by written instrument
in duplicate, specifying such removal and the date on which it is intended
to become effective, signed on behalf of the Company, one copy of which
shall be delivered to the Warrant Agent being removed and one copy to the
successor Warrant Agent. The Warrant Agent shall be removed as aforesaid
if it shall become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Warrant Agent or of its property shall be
appointed, or any public officer shall take charge or control of it or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation. Any removal of the Warrant Agent and any appointment of a
successor Warrant Agent shall become effective upon acceptance of
appointment by the successor Warrant Agent as provided in Section 6.03(d).
As soon as practicable after appointment of the successor Warrant Agent,
the Company shall cause written notice of the change in the Warrant Agent
to be given to each of the registered holders of the Warrants in the manner
provided for in Section 7.04 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the
Company shall fail to appoint a successor Warrant Agent within a period of
60 days after receipt of such notice of resignation or removal, then the
holder of any Warrant Certificate or the retiring Warrant Agent may apply
to a court of competent jurisdiction for the appointment of a successor to
the Warrant Agent. Pending appointment of a successor to the Warrant
Agent, either by the Company or by such a court, the duties of the Warrant
Agent shall be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by the
Company or by a court, shall be a bank or trust company, or an Affiliate
thereof, in good standing, incorporated under the laws of the United States
of America or any State thereof and having, at the time of its appointment,
a combined capital surplus of at least $50 million. Such successor Warrant
Agent shall execute and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder and all the provisions of
this Agreement, and thereupon such successor Warrant Agent, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Warrant Agent hereunder, and such
predecessor shall thereupon become obligated to (i) transfer and deliver,
and such successor Warrant Agent shall be entitled to receive, all
securities, records or other property on deposit with or held by such
predecessor as Warrant Agent hereunder and (ii) upon payment of the amounts
then due it pursuant to Section 6.02(a) hereof, pay over, and such
successor Warrant Agent shall be entitled to receive, all monies deposited
with or held by any predecessor Warrant Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent
hereunder may be merged or converted, or any corporation or bank with which
the Warrant Agent may be consolidated, or any corporation or bank resulting
from any merger, conversion or consolidation to which the Warrant Agent
shall be a party, or any corporation or bank to which the Warrant Agent
shall sell or otherwise transfer all or substantially all of its corporate
trust business, shall be the successor to the Warrant Agent under this
Agreement (provided that such corporation or bank shall be qualified as
aforesaid) without the execution or filing of any document or any further
act on the part of any of the parties hereto.
(f) No Warrant Agent under this Warrant Agreement shall be
personally liable for any action or omission of any successor Warrant
Agent.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENT. This Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of the holder of any Warrant Certificate, for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein, or to effect any
assumptions of the Company's obligations hereunder and thereunder by a
successor corporation under certain circumstances.
The Company and the Warrant Agent may amend, modify or supplement
this Agreement and the terms of the Warrants, and waivers to departures
from the terms hereof and thereof may be given, with the consent of the
Requisite Warrant Holders (as defined below) for the purpose of adding any
provision to or changing in any manner or eliminating any of the provisions
of this Agreement or modifying in any manner the rights of holders of
Warrants. "REQUISITE WARRANT HOLDERS" means (i) in the case of any
amendment, modification, supplement or waiver affecting only Warrant
Holders as such, holders of a majority in number of the outstanding
Warrants, voting separately as a class, or (ii) in the case of any
amendment, modification, supplement or waiver affecting Warrant Holders, a
majority in number of Warrant Shares represented by the Warrants that would
be issuable assuming exercise thereof at the time such amendment,
modification, supplement or waiver is voted upon. Notwithstanding any
other provision of this Agreement, the Warrant Agent's consent must be
obtained regarding any supplement or amendment which alters the Warrant
Agent's rights or duties (it being expressly understood that the foregoing
shall not be in derogation of the right of the Company to remove the
Warrant Agent in accordance with Section 6.03 hereof). For purposes of any
amendment, modification or waiver hereunder, Warrants held by the Company
or any of its Affiliates (other than any Purchaser) shall be disregarded.
Any modification or amendment made in accordance with this
Agreement will be conclusive and binding on all present and future holders
of Warrant Certificates whether or not they have consented to such
modification or amendment or waiver and whether or not notation of such
modification or amendment is made upon such Warrant Certificates. Any
instrument given by or on behalf of any holder of a Warrant Certificate in
connection with any consent to any modification or amendment will be
conclusive and binding on all subsequent holders of such Warrant
Certificate.
SECTION 7.02. NOTICES AND DEMANDS TO THE COMPANY AND WARRANT
AGENT. If the Warrant Agent shall receive any notice or demand addressed
to the Company by the holder of a Warrant Certificate pursuant to the
provisions hereof or of the Warrant Certificates, the Warrant Agent shall
promptly forward such notice or demand to the Company.
SECTION 7.03. ADDRESSES FOR NOTICES TO PARTIES AND FOR
TRANSMISSION OF DOCUMENTS. All notices hereunder to the parties hereto
shall be deemed to have been given when sent by certified or registered
mail, postage prepaid, or by facsimile transmission, confirmed by first
class mail, postage prepaid, addressed to any party hereto as follows:
To the Company:
Wireless One, Inc.
2506 Lakeside Drive
Suite 500
Jackson, MS 39208
Facsimile: (601) 936-1517
Attention: Henry G. Schopfer
with copies to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
Facsimile: (212) 751-4864
Attention: Samuel A. Fishman
To the Warrant Agent:
First Chicago Trust Company of New York
525 Washington Blvd.
Jersey City, NJ 07310
Facsimile: (201) 222-4106
Attention: Tenders and Exchanges Administration
or at any other address of which either of the foregoing shall have
notified the other in writing.
SECTION 7.04. NOTICES TO HOLDERS. Notices to holders of
Warrants shall be mailed to such holders at the addresses of such holders
as they appear in the Warrant Register. Any such notice shall be
sufficiently given if sent by certified or registered mail (postage
prepaid) or by facsimile transmission, confirmed by first class mail
(postage prepaid) to the address of such holder.
SECTION 7.05. APPLICABLE LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.06. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in
this Agreement expressed or implied and nothing that may be inferred from
any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any Person or corporation other than the Company, the
Warrant Agent and the holders of the Warrant Certificates and, with respect
to Sections 4.03 and 4.04, the holders of Warrant Shares issued pursuant to
Warrants, any right, remedy or claim under or by reason of this Agreement
or of any covenant, condition, stipulation, promise or agreement hereof;
and all covenants (except for Sections 4.03 and 4.04 which shall be for the
benefit of all holders of Warrant Shares issued pursuant to Warrants),
conditions, stipulations, promises and agreements in this Agreement
contained shall be for the sole and exclusive benefit of the Company and
the Warrant Agent and their successors and of the holders of the Warrant
Certificates.
SECTION 7.07. HEADINGS. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 7.08. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original; but such counterparts shall together constitute but one and
the same instrument.
SECTION 7.09. INSPECTION OF AGREEMENT. A copy of this Agreement
shall be available during regular business hours at the principal corporate
trust office of the Warrant Agent, for inspection by the holder of any
Warrant Certificate. The Warrant Agent may require such holder to submit
his Warrant Certificate for inspection by it.
SECTION 7.10. AVAILABILITY OF EQUITABLE REMEDIES. Since a
breach of the provisions of this Agreement could not adequately be
compensated by money damages, holders of Warrants shall be entitled, in
addition to any other right or remedy available to them, to an injunction
restraining such breach or a threatened breach and to specific performance
of any such provision of this Agreement, and in either case no bond or
other security shall be required in connection therewith, and the parties
hereby consent to such injunction and to the ordering of specific
performance.
SECTION 7.11. OBTAINING OF GOVERNMENTAL APPROVALS. The Company
will from time to time take all action required to be taken by it which may
be necessary to obtain and keep effective any and all permits, consents and
approvals of governmental agencies and authorities and securities acts
filings under U.S. federal and state laws, and the rules and regulations of
all stock exchanges on which the Warrants may become listed which may be or
become requisite in connection with the issuance, sale, transfer, and
delivery of the Warrant Certificates, the exercise of the Warrants or the
issuance, sale, transfer and delivery of the Warrant Shares issued upon
exercise of the Warrants.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
WIRELESS ONE, INC.
By:
Name:
Title: Chief Executive Officer
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Warrant Agent
By:
Name:
Title:
[FORM OF WARRANT CERTIFICATE]
[FACE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL NOT PRIOR TO (X) THE
DATE WHICH IS TWO YEARS (OR SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE
144(K) (OR ANY SUCCESSOR PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS
SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY
AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE
"RESALE RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, FOR
ONE OR MORE SEPARATE ACCOUNTS MAINTAINED BY SUCH ACCREDITED INVESTOR 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 PROPERTY SHALL
AT ALL TIMES BE WITHIN SUCH ACCREDITED INVESTOR'S OR SUCH OTHER ACCOUNT'S
CONTROL, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. IF
ANY RESALE OR OTHER TRANSFER OF WARRANTS EVIDENCED HEREBY IS PROPOSED TO BE
MADE PURSUANT TO CLAUSE (E) ABOVE PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE, THE TRANSFEROR SHALL DELIVER A LETTER FROM THE TRANSFEREE
IN THE FORM ATTACHED AS AN EXHIBIT TO THE WARRANT AGREEMENT AND OBTAINABLE
FROM THE WARRANT AGENT. IN CONNECTION WITH ANY TRANSFER OF THESE
SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT AGENT. THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
<PAGE>
No. M-1 [ ] Warrants
WARRANT CERTIFICATE
WIRELESS ONE, INC.
This Warrant Certificate certifies that MERRILL LYNCH GLOBAL
ALLOCATION FUND, INC., or registered assigns, is the registered holder of [
] Warrants (the "WARRANTS") to purchase [ ] shares of
Common Stock, par value $0.01 per share, issuable upon exercise of the
Warrants (the "WARRANT SHARES") of WIRELESS ONE, INC., a Delaware
corporation (the "COMPANY," which term includes its successors and
assigns). Each Warrant entitles the holder to purchase from the Company at
any time from 9:00 a.m. New York City time on or after the Issue Date
hereof until 5:00 p.m., New York City time, on September 4, 2005 (the
"EXPIRATION DATE"), [ ] fully paid, registered and non-
assessable Warrant Shares at an exercise price of $[ ] for each share
purchased (the "EXERCISE PRICE"), subject to adjustment as provided in
Section 1.01 and Article V of the Warrant Agreement; upon surrender of this
Warrant Certificate and payment of the Exercise Price (i) in cash or by
certified or official bank check, (ii) by a Cashless Exercise or (iii) by
any combination of (i) and (ii), at any office or agency maintained for
that purpose by the Company (the "WARRANT EXERCISE OFFICE"), subject to the
conditions set forth herein and in the Warrant Agreement; provided,
however, in the event that the Current Market Value (calculated as set
forth herein) per share of Common Stock on the date of exercise is less
than the Exercise Price, payment in full of the aggregate Exercise Price
may be made only in cash or by certified check. For purposes of this
Warrant, a "CASHLESS EXERCISE" shall mean an exercise of a Warrant in
accordance with the immediately following two sentences. To effect a
Cashless Exercise, the holder may exercise a Warrant or Warrants without
payment of the Exercise Price in cash by surrendering such Warrant or
Warrants (represented by one or more Warrant Certificates) and in exchange
therefor, receiving such number of shares of Common Stock equal to the
product of (1) that number of shares of Common Stock for which such Warrant
or Warrants are exercisable and which would be issuable in the event of an
exercise with payment of the Exercise Price and (2) the Cashless Exercise
Ratio. The "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator
of which is the excess of the Current Market Value (calculated as set forth
in this Warrant) per share of Common Stock on the date of exercise over the
Exercise Price per share of Common Stock as of the date of exercise and the
denominator of which is the Current Market Value per share of Common Stock
on the date of exercise. Upon surrender of a Warrant Certificate
representing more than one Warrant in connection with the holder's option
to elect a Cashless Exercise, the holder must specify the number of
Warrants for which such Warrant Certificate is to be exercised (without
giving effect to the Cashless Exercise). All provisions of the Warrant
Agreement shall be applicable with respect to a Cashless Exercise of a
Warrant Certificate for less than the full number of Warrants represented
thereby. Capitalized terms used herein without being defined herein shall
have the definitions ascribed to such terms in the Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date means (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the Board of Directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a Person other than an
Affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such
six-month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (provided that, in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii) (a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the securities for the 20 consecutive trading days
immediately preceding such date, or (b) if the security has been registered
under the Exchange Act for less than 20 consecutive trading days before
such date, then the average of the closing sales prices for all of the
trading days before such date for which closing sales prices are available,
in the case of each of (ii)(a) and (ii)(b), as certified to the Warrant
Agent by the President, any Vice President or the Chief Financial Officer
of the Company. The closing sales price for each such trading day shall
be: (A) in the case of a security listed or admitted to trading on any US
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) in the case of
a security not then listed or admitted to trading on any US national
securities exchange or quotation system, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then
listed or admitted to trading on any US national securities exchange or
quotation system and as to which no such reported sale price or bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or
a newspaper of general circulation in the Borough of Manhattan, The City
and State of New York customarily published on each Business Day,
designated by the Company, or, if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States, (i) which does not, and
whose directors, officers and employees or Affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its Affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its Affiliates and qualified to perform the task for which
it is to be engaged.
The Company has initially designated the principal corporate
trust office of the Warrant Agent in the Borough of Manhattan, The City of
New York, as the initial Warrant Agent Office. The number of shares of
Common Stock issuable upon exercise of the Warrants ("EXERCISE RATE") is
subject to adjustment upon the occurrence of certain events set forth in
the Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York
City time, on September 4, 2005 shall thereafter be void.
If the Company, in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other
Person or sells, assigns, transfers, leases, conveys or otherwise disposes
of all or substantially all of its properties and assets to another Person
or group of affiliated Persons or is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock, the
holders of outstanding Warrants shall be entitled to receive distributions
on the date of such event on an equal basis with holders of shares of
Capital Stock (or other securities issuable upon exercise of the Warrants)
as if the Warrants had been exercised immediately prior to such event less
the aggregate Exercise Price therefor, subject to certain exceptions.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Warrant Certificate shall not be valid unless authenticated
by the Warrant Agent, as such term is used in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
WITNESS the facsimile seal of the Company and facsimile
signatures of its duly authorized officers.
Dated:
WIRELESS ONE, INC.
By: ______________________________________
Name:
Title:
Attest:
By: _________________________________
Name:
Title:
Certificate of Authentication:
This is one of the Warrants
referred to in the within
mentioned Warrant Agreement:
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Warrant Agent
By: __________________________________
Authorized Signatory
<PAGE>
WIRELESS ONE, INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants expiring at 5:00 p.m., New York City
time, September 4, 2005 (the "EXPIRATION DATE"), each of which represents
the right to purchase at any time on or after the Issue Date (as defined in
the Warrant Agreement) and on or prior to the Expiration Date,
[ ] Warrant Shares, subject to adjustment as set forth in
the Warrant Agreement. The Warrants are issued pursuant to a Warrant
Agreement dated as of September 4, 1998 (the "WARRANT AGREEMENT"), duly
executed and delivered by the Company to First Chicago Trust Company of New
York, Warrant Agent (the "WARRANT AGENT"), which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and
is hereby referred to for a description of the rights, limitation of
rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants.
Warrants may be exercised by (i) surrendering at any Warrant
Exercise Office this Warrant Certificate with the form of Election to
Exercise set forth hereon duly completed and executed and (ii) to the
extent such exercise is not being effected through a Cashless Exercise by
paying in full the Warrant Exercise Price for each such Warrant exercised
and any other amounts required to be paid pursuant to the Warrant
Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 11:00
a.m., New York City time, on a Business Day, the exercise of the Warrant to
which such items relate will be effective on such Business Day. If any
items referred to in the last sentence of the preceding paragraph are
received after 11:00 a.m., New York City time, on a Business Day, the
exercise of the Warrants to which such item relates will be deemed to be
effective on the next succeeding Business Day. Notwithstanding the
foregoing, in the case of an exercise of Warrants on the Expiration Date,
if all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 5:00 p.m., New
York City time, on such Expiration Date, the exercise of the Warrants to
which such items relate will be effective on the Expiration Date.
As soon as practicable after the exercise of any Warrant or
Warrants, the Company shall issue or cause to be issued to or upon the
written order of the registered holder of this Warrant Certificate, a
certificate or certificates evidencing such Warrant Share or Warrant Shares
to which such holder is entitled, in fully registered form, registered in
such name or names as may be directed by such holder pursuant to the
Election to Exercise, as set forth on the reverse of this Warrant
Certificate. Such certificate or certificates evidencing the Warrant Share
or Warrant Shares shall be deemed to have been issued and any Persons who
are designated to be named therein shall be deemed to have become the
holder of record of such Warrant Share or Warrant Shares as of the close of
business on the date upon which the exercise of this Warrant was deemed to
be effective as provided in the preceding paragraph.
The Company shall not be required to issue fractional Warrant
Shares upon exercise of the Warrants or distribute Warrant Certificates
that evidence fractional Warrant Shares. In lieu of fractional Warrant
Shares, there shall be paid to the registered Holder of this Warrant
Certificate at the time such Warrant Certificate is exercised an amount in
cash equal to the same fraction of the Current Market Value per share of
Common Stock on the Business Day preceding the date this Warrant
Certificate is surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for that purpose by the registered holder thereof
in person or by legal representative or attorney duly authorized in
writing, may be exchanged for a new Warrant Certificate or new Warrant
Certificates evidencing in the aggregate a like number of Warrants, in the
manner and subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that
purpose, a new Warrant Certificate evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder hereof as the absolute owner of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone) for the purpose of any exercise hereof and for all other purposes,
and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
The City of New York, (ii) the principal U.S. securities exchange or
market, if any, on which any Common Stock is listed or admitted to trading
and (iii) the principal U.S. securities exchange or market, if any, on
which the Warrants are listed or admitted to trading, are open for
business.
The Warrants and the Warrant Shares are entitled to the benefits
of a registration rights agreement dated September 4, 1998 relating to the
Warrants and the Warrant Shares issuable upon exercise thereof (the
"WARRANT REGISTRATION RIGHTS AGREEMENT"). The terms of the Warrant
Registration Rights Agreement are incorporated herein by this reference.
<PAGE>
[FORM OF ELECTION TO EXERCISE]
(To be executed upon exercise of Warrants on the Exercise Date)
The undersigned hereby irrevocably elects to exercise
________________ of the Warrants represented by this Warrant Certificate
and purchase the whole number of Warrant Shares issuable upon the exercise
of such Warrants and herewith tenders payment for such Warrant Shares as
follows:
$ _____________ in cash or by certified or official bank check; or by
surrender of Warrants pursuant to a Cashless Exercise (as defined in the
Warrant Agreement) for ___________________ shares of Common Stock at the
current Cashless Exercise Ratio.
The undersigned requests that a certificate representing such
Warrant Shares be registered in the name of ________ whose address is
____________________________________________ and that such shares be
delivered to ____________ whose address is ___________________________.
Any cash payments to be paid in lieu of a fractional share of Common Stock
should be delivered to ____________ whose address is ____________________
and the check representing payment thereof should be delivered to ___________
whose address is ______________________________________-.
Dated ___________, ____
Name of holder of
Warrant Certificate:_______________________________________________
(Please Print)
Tax Identification or
Social Security Number:____________________________________________
Address:___________________________________________________________
___________________________________________________________
Signature:_________________________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change whatever
and if the certificate representing the Warrant
Shares or any Warrant Certificate representing
Warrants not exercised is to be registered in a
name other than that in which this Warrant
Certificate is registered, or if any cash payment
to be paid in lieu of a fractional share is to be
made to a Person other than the registered holder
of this Warrant Certificate, the signature of the
holder hereof must be guaranteed as provided in
the Warrant Agreement.
Dated ______________, ____
Signature: ______________________________________
Note:The above signature must correspond
with the name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed:____________________________
[FORM OF ASSIGNMENT]
For value received __________________________ hereby sells,
assigns and transfers unto _____________________________ the within Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint __________________________
attorney, to transfer said Warrant Certificate on the books of the within-
named Company, with full power of substitution in the premises.
Dated ________________, ____
Signature:_______________________________________
Note:The above signature must correspond
with the name as written upon the face of this
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatever.
Signature Guaranteed:____________________________
PAYING AGENCY AGREEMENT
PAYING AGENCY AGREEMENT, dated as of September 4, 1998 (this
"AGREEMENT"), among WIRELESS ONE, INC., a Delaware corporation (the
"COMPANY"), and MERRILL LYNCH GLOBAL ALLOCATION FUND, INC. or one or more of
its affiliates (the "PURCHASER") and PRICEWATERHOUSECOOPERS LLP, as paying
agent (the "PAYING AGENT") and as collateral agent (the "COLLATERAL AGENT" and
in both capacities, the "AGENT").
W I T N E S S E T H
RECITALS:
WHEREAS, the Company has entered into a Discretionary Note
Purchase Agreement with the Purchaser (such agreement, as amended,
restated, supplemented or otherwise modified from time to time, the "NOTE
PURCHASE AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined) pursuant to which the Company
may issue and sell to the Purchaser Notes, the aggregate principal amount
of which shall not exceed $20,000,000 (the "NOTES");
WHEREAS, in order to ensure that the proceeds of the Note
Purchase Agreement are utilized strictly in accordance with the Business
Plan, the Company and the Purchaser have requested that the Paying Agent
act as paying agent with respect to the disbursement of such proceeds;
WHEREAS, in order to preserve the Company's business for the
benefit of all parties, the Paying Agent, as financial advisor to and on
behalf of the Purchaser, is willing to act as the Paying Agent and the
Collateral Agent under the Note Documents upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Company has previously established and currently
maintains the Securities Account with Deposit Guaranty, a division of First
American National Bank;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1 The Company and the Purchaser hereby appoint the Paying Agent to
act as paying agent in connection with the disbursement of the
cash proceeds to the Company made pursuant to the Note Purchase
Agreement.
2 At each Closing, the Purchaser will transfer proceeds of the
Notes into the Securities Account (the "PROCEEDS") in accordance
with the terms and conditions of the Note Documents. The
Purchaser shall be solely responsible for ensuring, and the
Paying Agent shall have no responsibility to verify, that all
amounts transferred into the Securities Account are transferred
in accordance with the terms and conditions of the Note
Documents. All transfers out of the Securities Account after the
Closing (other than transfers made pursuant to Section 9.5(b)(iv)
of the Note Purchase Agreement) shall be made in accordance with
the Business Plan and shall require the approval and written
authorization of both the Paying Agent and the Company.
3 The Company will, from time to time, from and including the
Initial Closing Date to and including the Business Day
immediately preceding the Maturity Date (the "DISBURSEMENT
PERIOD"), submit to the Paying Agent (with copies to the
Purchaser) written disbursement requests (each a "DISBURSEMENT
REQUEST") with respect to the disbursement of the Proceeds,
together with proposed wire transfer instructions for transfers
from the Securities Account. Each such Disbursement Request
shall specify in reasonable detail the amount and date of the
requested disbursements, and contain a certification from an
officer of the Company that the Company shall use such Proceeds
in accordance with the Business Plan and, with respect to each
such Disbursement Request after the Initial Closing Date, has
used all Proceeds disbursed from the Securities Account since the
date of the previous Disbursement Request in accordance with the
Business Plan. The Company shall provide in writing such further
details with respect to each Disbursement Request, and any
information with respect to the Company's compliance with the
Business Plan as certified in the most recently delivered
Disbursement Request as the Paying Agent may reasonably request.
4 The Paying Agent is hereby authorized and directed upon receipt
during the Disbursement Period of a Disbursement Request, in form
and substance satisfactory to the Paying Agent, to approve and
authorize for release the transfers proposed to be made by the
Company from the Securities Account; provided, however, that,
except as otherwise consented to in writing by the Purchaser, the
Paying Agent shall not, during any month during the Disbursement
Period or for the entire Disbursement Period, approve and
authorize for release pursuant to Disbursement Requests any
amount that would exceed the Business Plan for such month or such
period (which shall not include any Proceeds that were previously
approved and authorized for release by the Paying Agent pursuant
to any previous Disbursement Request and which were not utilized
and have been redeposited into the Securities Account), as the
case may be; provided, that in no event shall the Paying Agent
approve and authorize for release pursuant to Disbursement
Requests an aggregate amount in excess of the sum of the
Proceeds, cash on hand at the Initial Closing Date, and cash
receipts of the Company during the Disbursement Period.
5 The Company and the Purchaser hereby appoint the Agent to act as
collateral agent in connection with the Security Agreement and
the other Collateral Documents.
6 The Agent may resign as Paying Agent and Collateral Agent at any
time by giving 10 Business Days' written notice thereof to each
of the other parties hereto. Upon any such resignation, the
Purchaser and the Company shall appoint a replacement paying
agent. In the event the Purchaser and the Company have not
agreed to a replacement agent prior to the effectiveness of the
Paying Agent's resignation then the Purchaser shall name a
replacement paying agent.
7 The Company, and to the extent not reimbursed by the Company, the
Purchaser shall indemnify the Agent and hold it harmless from and
against any loss, liability, costs, claims, damage, expense,
action or demand which the Agent may incur or which may be made
against it as a result of or in connection with its appointment
or the exercise of its powers or the administration or its duties
as the Paying Agent or Collateral Agent, as well as the
reasonable costs and expenses (including attorneys' fees) which
it may incur defending against any claim or liability except such
as may result from its own bad faith, gross negligence or willful
misconduct; provided that the Agent shall promptly notify the
Company and the Purchaser in writing of any such loss, liability,
cost, claim, damage, expense, action or demand, in respect of
which indemnity may be sought against the Company, or the
Purchaser; provided, further that prior to settling any such
loss, liability, cost, claim, damage, expense, action or demand,
in respect of which indemnity may be sought against the Company
or the Purchaser, the Agent shall promptly notify the Company and
the Purchaser in writing of the terms and conditions of any
proposed settlement, and the Company or, if the Purchaser is
reimbursing, the Purchaser may at its option assume the defense
thereof, including the employment of counsel and the payment of
all expenses in connection therewith, and the Company and, if the
Purchaser is reimbursing, the Purchaser shall thereafter have the
right to negotiate and consent to the settlement thereof
provided, in the event of any disagreement between the Company
and, if the Purchaser is reimbursing, the Purchaser as to such
defense or settlement, the Purchaser's decision shall be binding
on the Company. The Agent shall have the right to employ
separate counsel and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of
the Agent unless the employment of such counsel has been
specifically authorized by the Purchaser. Neither the Company
nor the Purchaser shall be liable for any settlement effected
without their consent, but if settled with the consent of the
Company and the Purchaser or if there be a final judgment for the
plaintiff in any action with or without consent, the Company and
the Purchaser agrees to indemnify and hold harmless the Agent
from and against any loss or liability by reason of such
settlement or judgment. Subject to the foregoing, the Agent and
its partners, principals, employees and agents shall incur no
liability and shall be indemnified and held harmless by the
Company and, to the extent not reimbursed by the Company, the
Purchaser for any action taken, omitted or suffered to be taken
in good faith, without bad faith, gross negligence or willful
misconduct, in reliance upon (a) any written opinion of counsel,
(b) any written or cabled or telexed instructions from the
Company or the Purchaser, or (c) any written direction, consent,
certificate, officers' certificate, affidavit, statement, notice,
request, order or approval, or other document conforming to the
requirements of the Note Purchase Agreement or this Agreement and
reasonably believed by the Agent receiving the same to be genuine
and to be delivered, sent or signed by the proper party or
parties. The Agent shall have no responsibility for any act, or
omission to act, of the Company or Purchaser.
8 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), (c) by a recognized delivery service (with charges
prepaid). Any such notice must be sent: if to any party
hereunder, addressed to it at its address specified in the Note
Purchase Agreement or, as to any party, at such other address as
shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this
paragraph. All notices and communications provided for under
this paragraph will be deemed given and effective only when
actually received.
9 Beyond the duties set forth in this Agreement, the Note Purchase
Agreement, the Security Agreement and the other Collateral
Documents, the Agent shall not have any duty to the Purchaser or
any other Secured Party as to any Collateral in the Agent's
possession or control or in the possession or control of any
agent or nominee of it or any income thereon or as to the
preservation of rights against prior parties or any other rights
pertaining thereto, EXCEPT that the Agent shall be liable for
their failure to exercise ordinary care in the handling of money.
10 The Agent shall, at the request of the Purchaser or any other
Secured Party, release (without recourse and without any
representation or warranty) any or all of the Collateral.
11 This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York applicable
to contracts made and performed in such State, without regard to
the principals thereof regarding conflict of laws, and any
applicable laws of the United States of America.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Paying Agency Agreement to be executed and delivered by its duly authorized
officer(s) on the date first set forth above.
WIRELESS ONE, INC.
By_______________________________________
Name:__________________________________
Title:_________________________________
Wireless One, Inc.
2506 Lakeland Drive
Suite 403
Jackson, MS 39208
Facsimile: (609) 933-6742
Telephone: (609) 933-6879
MERRILL LYNCH GLOBAL ALLOCATION
FUND INC.
By______________________________________
Name:_________________________________
Title:________________________________
Merrill Lynch Asset Management
Global Allocation Fund
Administrative Offices:
800 Scudders Mill Road
Plainsboro, NJ 08536
Telephone: (609) 282-1212
Mailing Address:
P.O. Box #9011
Princeton, NJ 08543-9011
<PAGE>
PAYING AGENT: PRICEWATERHOUSECOOPERS LLP
By______________________________________
Name:_________________________________
Title:________________________________
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
Attention: Martha E. M. Kopacz
Facsimile: (617) 439-3312
Telephone: (617) 439-3325
COLLATERAL AGENT: PRICEWATERHOUSECOOPERS LLP
By______________________________________
Name:_________________________________
Title:________________________________
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
Attention: Martha E. M. Kopacz
Facsimile: (617) 439-3312
Telephone: (617) 439-3325
EXHIBIT 99.1
PRESS RELEASE
Wireless One, Inc. Announces $20,000,000 Senior
Secured Discretionary Note Facility
JACKSON, Miss., Sept. 8/PRNewswire/ -- Wireless One, Inc. (Nasdaq:
WIRL) announced today that it has obtained a $20,000,000 Senior Secured
Discretionary Note Facility. On September 4, 1998, the Company issued
senior secured notes in the amount of $12,500,000. All of the notes (i)
mature on April 15, 1999, (ii) pay 13% per annum interest, (iii) are
secured by substantially all of the Company's assets. Upon the request of
the Company, the purchaser of the Notes may at its sole discretion purchase
up to an additional $7,500,000 of the notes. Such additional notes will be
subject to the same terms and conditions as the notes which were issued on
September 4, 1998 and will also mature on April 15, 1999. In connection
with the purchase of the Notes, the Company also issued to the purchaser of
the Notes seven year detachable warrants to purchase up to 6% of Wireless
One, Inc.'s fully-diluted common stock.
Wireless One, Inc. will apply the proceeds from the senior secured
notes to fund capital expenditures and operating costs to build out its
spectrums. The Company is a broadband wireless access provider with
exclusive licenses in the Multi-Point Multi-Channel Distribution System
("MMDS") and Wireless Communications Spectrum ("WCS"). The MMDS and WCS
licenses cover an estimated 7,700,000 households and 800,000 businesses in
67 markets located in 11 contiguous states in the Southeastern United
States. In addition, the Company owns a 50% interest in Wireless One of
North Carolina, L.L.C. a joint venture that holds exclusive MMDS and WCS
licenses in 13 markets in North Carolina that cover an estimated additional
3,000,000 households and 290,000 businesses in North Carolina.
The Company's business plan focuses on data services and video
services to maximize the economic value of its MMDS and WCS spectrums. The
Company's data service marketed under the name "WarpOne" is a high-speed
(burstable to 10 megs downstream and 1.5 megs upstream), two-way, wireless
Internet access product. WarpOne was launched in Jackson, MS in April and
expanded to Baton Rouge, LA in July and is initially being targeted to
medium and small size commercial customers who desire a reliable, high-
speed Internet access. The Company has been pleased with the responses to
WarpOne from the business community and expects to launch additional
markets in the near term. Future data services that can be delivered
utilizing the Company's MMDS and WCS spectrums including Local Loop and
Network Access for a broad range of data services as well as offerings to
multi-dwelling units ("MDU") for high-speed Internet access.
The Company currently provides video services in 37 of its markets.
The Company is expanding its MDU product by combining its MMDS channels
with DirecTV's Direct Broadcasting Service ("DBS") which together offers
MDU property owners and residents access to over 200 video channels. In
addition, DirecTV bears a significant portion of the costs for subscriber
equipment at installation, thus, decreasing the level of capital
expenditures required to provide video service to these customers.
Henry M. Burkhalter, President and CEO, stated, "We are pleased to
have entered into this $20,000,000 Senior Secured Discretionary Note
Facility. The initial $12,500,000 the Company is receiving as a result of
the sale of the Notes, will provide us cash over the near-term to enable us
to go forward with our business plan. I am very excited about what the
future holds for our MMDS and WCS spectrums. We have transitioned
ourselves from a pure video provider serving single family subscribers to a
multi-facet broadband wireless access provider with a future that will
include an array of data services such as Local Loop and Network access.
In 1997 we successfully bid for licenses for the WCS in a FCC auction for
primarily all of the Southeastern United States. This allowed our
engineers to develop our Internet access product to go two-way wireless
without using a MMDS channel for upstream transmission that would have
required FCC approval. I have been an operator in this industry since 1993
and am convinced that the potential for the MMDS and WCS spectrums is more
promising than ever before."
Forward-Looking Statement Disclaimer
Certain statements made in this press release, including statements
that are not a statement of historical fact, may constitute "forward-
looking" statements as defined in the Securities Act of 1933, as amended.
Actual results may differ materially from those projected in any forward-
looking statement. Readers are encouraged to read the section entitled
"Factors that May Affect Future Results of the Company" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, the
section entitled "Liquidity and Capital Resources" in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 which
contains information and analysis with respect to certain factors that
could cause the Company's results to differ materially from those contained
in any forward-looking statements made in this press release.
Wireless One, Inc., is a broadband operator that provides wireless
video and data transmission services over its own MMDS and WCS spectrums to
subscribers in the Southeastern United States. The Company targets its
subscription services to suburban and rural households, businesses and
apartments that are generally unable to receive hardwire alternatives.
Wireless One currently operates 37 systems. Wireless One has the
rights to 43 other markets that represent future development markets. The
Company takes advantage of geographically clustered systems for cost-
effective delivery of its video and data transmission services in Texas,
Louisiana, Mississippi, Alabama, Tennessee, Florida and Georgia.
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