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): May 17, 1999
WIRELESS ONE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-26836 72-1300837
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
2506 Lakeland Drive, Jackson, Mississippi 39208
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (601) 936-1515
1080 River Oaks Drive, Suite A150, Jackson, Mississippi
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. Other Events.
On May 17, 1999, Wireless One, Inc. (the "Company") issued a press release
attached as exhibit 99.1 hereto and incorporated herein by reference announcing
that the Company has received a commitment letter from Cerberus Capital
Management, L.P. to provide a debtor-in-possession financing facility (the "DIP
Facility"). The DIP Facility commitment letter is attached as exhibit 99.2
hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Press Release dated May 17, 1999.
99.2 DIP Facility Commitment Letter from Cerberus Capital
Managament, L.P. dated May 17, 1999.
<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 hereunto duly authorized.
WIRELESS ONE, INC.,
a Delaware corporation
Date: May 17, 1999 /s/ Henry M. Burkhalter
-----------------------
Henry M. Burkhalter
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
EXHIBITS
- --------
(c) Exhibits.
99.1 Press Release dated May 17, 1999.
99.2 DIP Facility Commitment Letter from Cerberus Capital
Management, L.P. dated May 17, 1999.
EXHIBIT 99.1
WIRELESS ONE, INC. RECEIVES NEW FINANCING COMMITMENT
$36 MILLION AGREEMENT WOULD PROVIDE FUNDS NEEDED TO EXIT BANKRUPTCY
JACKSON, MISS., May 18, 1999 - Wireless One, Inc. (OTC Bulletin Board: WIRL)
announced today that it has received a commitment letter from Cerberus Capital
Management L.P. for $36 million of financing that would provide the Company
with the funds needed to implement a plan of reorganization.
The Company said it would use the financing to repay approximately $20.5
million of indebtedness, including interest and fees, under the Company's
existing debtor-in-possession credit facility and to fund the working capital
needs of the Company.
"The new financing is a key part of the Company's strategy to restructure its
balance sheet and exit bankruptcy a stronger, more viable company," said Henry
Burkhalter, President and CEO of Wireless One. "The financing gives us the
working capital necessary to further develop our broadband wireless spectrum
designed to provide high speed internet access, data transmission and telephony
services to commercial accounts and customers throughout our Southeastern
eleven-state footprint."
The financing, which, except in certain circumstances, would mature two years
from the closing date, will accrue interest at 13 percent per annum, payable
quarterly in arrears. The financing provides for a three percent commitment
fee payable at closing (or under certain other circumstances provided in the
commitment letter) and a three percent facility fee payable upon maturity or
earlier repayment of the financing. The lender will also receive warrants to
purchase 2.5 percent of the fully-diluted common stock of the reorganized
Company at a nominal price.
The Company has filed a motion in the United States Bankruptcy Court for the
District of Delaware for approval of the commitment letter and has requested
that a hearing on the matter be held before the end of this month. A
subsequent hearing, which the Company has requested for June 25, 1999, will be
required to approve the financing. The closing of the financing is subject to
a number of conditions, including approval by the Bankruptcy Court and
negotiation of final documentation.
As announced on May 14, 1999 and described in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999, the Company is reviewing the
appropriateness of the provisions of the proposed plan of reorganization that
the Company filed with the Bankruptcy Court on March 15, 1999 in light of
recent developments in the Company's industry. If the financing is
consummated, the lender would have the right to approve any revisions to the
plan of reorganization proposed by the Company, except that the lender would
not have the right to approve the allocation of the equity of the reorganized
Company.
THE COMPANY
Wireless One, Inc.'s exclusive licenses in the MMDS and WCS spectrums
enable the Company to provide digital broadband (i.e., high-capacity) wireless
access (commonly known as "BWA") services (such as high-speed Internet
connection, data transmission and telephone). In addition, the Company
provides analog wireless multichannel subscription television programming
(commonly known as "wireless cable") services primarily in small to mid-size
markets in the southern and southeastern United States.
The Company also has a marketing alliance with DIRECTV, Inc. that enables it
to provide expanded television programming via Direct Broadcast Satellite
signal.
FORWARD-LOOKING STATEMENTS
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. Such statements include,
without limitation, statements regarding future liquidity, cash needs and
alternatives to address capital needs, and are indicated by words or phrases
such as "anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company
intends," "we believe, "we intend," and similar words or phrases.
Important factors that could cause actual results to differ materially from the
Company's expectations include, without limitation, the final terms and
conditions of the proposed financing, Bankruptcy Court approval and any other
approvals required for the proposed financing, any other matters requiring
Bankruptcy Court or other approvals, the future amount of the Company's
negative cash flow, the future results of the Company's operations, resolution
of the Company's supply need for modems used in the Company's high speed
Internet product, business opportunities that may be presented to and pursued
by the Company, changes in laws or regulations, uncertainty of the Company's
ability to obtain FCC authorizations, competition, physical limitations of
wireless cable transmission, changes in general business and economic
conditions in the Company's operation regions and issues arising from Year 2000
information technology matters, many of which are beyond the control of the
Company. Further information regarding these and other factors that might
cause future results to differ from those projected in the forward-looking
statements is described in more detail under the heading "Factors That May
Affect Future Results of the Company" in the Company's Form 10-K for the year
ended December 31, 1998 and under the heading "Management's Discussion and
Analysis" in the Company's Form 10-Q for the quarter ended March 31, 1999.
# # #
Editors Note: More information about Wireless One is available on the internet
at www.wirelessone.com.
EXHIBIT 99.2
CERBERUS CAPITAL MANAGEMENT, L.P.
450 Park Avenue, 28{th} Floor
New York, New York 10022
May 17, 1999
Henry Burkhalter
President and Chief Executive Officer
Wireless One, Inc.
1080 River Oaks Drive
Jackson, Mississippi 39208
Re: DIP FINANCING COMMITMENT
------------------------
Dear Henry:
Wireless One, Inc. (the "Parent"), debtor and debtor-in-possession under
Title 11 of the United States Code (the "Bankruptcy Code"), and its
subsidiaries and affiliates (together with the Parent, each a "Company" and
collectively, the "Companies") (i) have advised Cerberus Capital
Management, L.P. that the Parent will require debtor-in-possession
financing to repay existing indebtedness of the Parent and for general
working capital purposes of the Companies, and (ii) have requested that
Cerberus Capital Management, L.P., or an affiliate (the "Lender") provide
such financing. The Lender is pleased to advise you that the Lender is
willing to provide the Companies with a term loan facility of up to
$36,050,000 (the "Financing Facility") substantially on the terms and
conditions set forth in the Outline of Proposed Terms and Conditions
attached hereto as Exhibit A (the "Term Sheet"). The obligations of the
Companies under the Financing Facility will be secured by substantially all
assets of the Companies including, without limitation, all accounts
receivable, inventory, equipment, general intangibles and all other assets
of the Companies. The Lender's commitment to provide the Financing
Facility is subject in all respects to satisfaction of the terms and
conditions contained in this commitment letter and in the Term Sheet.
The Lender understands that the Bankruptcy Code and the applicable
Bankruptcy Rules require the approval of, and entry of an order by, the
United States Bankruptcy Court (the "Bankruptcy Court") having jurisdiction
over the chapter 11 case of the Parent (the "Case") and at least 15 days'
notice for approval of such financing pursuant to a final order by the
Bankruptcy Court (the "Final Order") in form and substance satisfactory to
the Lender.
The Parent acknowledges that the Term Sheet is intended as an outline only
and does not purport to summarize all the conditions, covenants,
representations, warranties and other provisions which would be contained
in definitive legal documentation for the Financing Facility. The loan
documentation for the Financing Facility will include, in addition to the
provisions that are summarized in this commitment letter and the Term
Sheet, provisions that, in the opinion of the Lender, are customary or
typical for this type of financing transaction and are not inconsistent
with the terms herein and in the Term Sheet.
By its execution hereof and its acceptance of the commitment contained
herein, the Parent agrees to indemnify and hold harmless the Lender and
each of its assignees, its affiliates and its directors, officers,
employees and agents (each an "Indemnified Party") from and against any and
all losses, claims, damages, liabilities or other expenses to which such
Indemnified Party becomes subject, insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in
respect thereof) or other expenses arise out of or in any way relate to or
result from, this letter, or in any way arise from any use or intended use
of this letter, and the Parent agrees to reimburse each Indemnified Party
for any legal or other expenses incurred in connection with investigating,
defending or participating in any such loss, claim, damage, liability or
action or other proceeding (whether or not such Indemnified Party is a
party to any action or proceeding out of which indemnified expenses arise),
but excluding therefrom the fees of the Lender's in-house counsel and other
in-house advisors and all expenses, losses, claims, damages and liabilities
which are finally determined in a non-appealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Indemnified Party; PROVIDED, HOWEVER, that in the
event that the Financing Facility does not close, the Companies' liability
to the Lender in connection herewith shall be limited to the payment of the
Commitment Fee (as defined below) and of the Lender's expenses as set forth
below. In the event of any litigation or dispute involving this commitment
letter, the Lender shall not be responsible or liable to any Company or any
other person for any special, indirect, consequential, incidental or
punitive damages. In addition, the Parent agrees to reimburse the Lender,
in accordance with the terms set forth below with respect to the Deposit
(as defined below), for all reasonable fees and expenses (the "Expenses")
incurred by or on behalf of the Lender in connection with the negotiation,
preparation, execution and delivery of this commitment letter, the Term
Sheet and any and all definitive documentation relating hereto and thereto,
including, but not limited to, the reasonable fees and expenses of counsel
to the Lender and the fees and expenses incurred by the Lender in
connection with any due diligence, collateral reviews and field
examinations. The obligations of the Parent under this paragraph shall
remain effective whether or not definitive documentation is executed and
notwithstanding any termination of this commitment letter.
On the date on which the Bankruptcy Court enters the Commitment Order (as
defined below), the Parent shall pay to the Lender in immediately available
funds $50,000, and shall pay to the Lender in immediately available funds
an additional $50,000 thirty (30) days after the entry of the Commitment
Order, which together represent a deposit (the "Deposit") to fund out-of-
pocket expenses incurred by the Lender. The unused portion of the Deposit
to the extent actually paid to the Lender will be returned to the Parent or
applied to the payment of the Commitment Fee. In addition, a non-
refundable commitment fee (the "Commitment Fee") in an amount equal to
three percent (3%) of the amount of the Financing Facility, shall be earned
in full on the date on which the Parent accepts this commitment letter and
such Commitment Fee is approved by the Bankruptcy Court, shall constitute
an allowed administrative expense in the Case under section 503(b) of the
Bankruptcy Code and shall be payable on the earlier of (i) the Closing Date
and (ii) the date of substantial consummation (as defined in section
1101(2) of the Bankruptcy Code) of a plan of reorganization in the Case.
The Lender's commitment to provide the Financing Facility is subject to
(i) the negotiation, execution and delivery of definitive loan
documentation in form and substance reasonably satisfactory to Lender and
its counsel, (ii) the satisfaction of the Lender that since the date hereof
there has not occurred or become known to the Lender any material adverse
change with respect to the condition, financial or otherwise, business,
operations, assets, liabilities or prospects of the Parent and the
Companies, taken as a whole, other than the events resulting in the filing
of the Case, as determined by the Lender in its sole discretion (a
"Material Adverse Change"), (iii) such other conditions as are customary in
transactions similar to the Financing Facility and are not inconsistent
with the terms hereof and the Term Sheet and (iv) the entry of the Final
Order. If at any time the Lender shall determine (in its sole and absolute
discretion) that either (A) the Companies are unable to fulfill any
condition set forth in this commitment letter or in the Term Sheet or
(B) any Material Adverse Change has occurred, the Lender may terminate this
letter by giving five days' prior written notice thereof to the Parent
(subject to the obligation of the Parent to pay all fees, costs, expenses
and other payment obligations expressly assumed by the Parent hereunder,
which shall survive the termination of this letter).
The Parent represents and warrants that (i) subject to clause (ii) below,
all written information and other materials concerning the Parent and the
Companies (collectively, the "Information") which has been, or is
hereafter, made available by, or on behalf of the Parent or any Company is,
or when delivered will be, when considered as a whole, complete and correct
in all material respects and does not, or will not when delivered, contain
any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading
in light of the circumstances under which such statement has been made and
(ii) to the extent that any such Information contains projections, such
projections were prepared in good faith on the basis of (A) assumptions,
methods and tests stated therein which are believed by the Parent and the
Companies to be reasonable and (B) information believed by the Parent and
the Companies to have been accurate based upon the information available to
the Parent or the Companies at the time such projections were furnished to
the Lender.
This commitment letter is delivered to the Parent upon the condition that,
prior to the filing of this commitment letter with the Bankruptcy Court,
neither the existence of this commitment letter or the Term Sheet, nor any
of their contents, shall be disclosed by the Parent or any Company, except
as may be compelled to be disclosed in a judicial or administrative
proceeding or as otherwise required by law (including as may be required by
the Bankruptcy Court) or, on a confidential and "need to know" basis, to
the directors, officers, employees, advisors and agents of the Parent. The
Parent agrees that (other than disclosure required by the Bankruptcy Court
or otherwise by law) it will (i) consult with the Lender prior to the
making of any filing in which reference is made to the Lender or the
commitment contained herein, and (ii) obtain the prior approval (which
approval shall not be unreasonably withheld) of the Lender before releasing
any public announcement in which reference is made to the Lender or to the
commitment contained herein. The Parent acknowledges that the Lender and
its affiliates may now or hereafter provide financing or obtain other
interests in other companies in respect of which the Parent or its
affiliates may be business competitors, and that the Lender and its
affiliates will have no obligation to provide to the Parent or any of its
affiliates any confidential information obtained from such other companies.
The Lender has previously delivered to Parent an executed Confidentiality
Agreement in form and substance satisfactory to the Companies.
The offer made by the Lender in this commitment letter shall expire, unless
otherwise agreed by the Lender in writing, at 5:00 p.m. (New York City
time) on May 30, 1999, unless prior thereto (A) the Bankruptcy Court has
entered an order, in form and substance satisfactory to the Lender,
authorizing and directing the Parent to execute this Commitment Letter and
to be bound by the terms hereof (the "Commitment Order") and (B) the Lender
has received (i) a copy of this commitment letter, signed by the Parent
accepting the terms and conditions of this commitment letter and the Term
Sheet and (ii) $50,000 of the Deposit, in immediately available funds. The
commitment by the Lender to provide the Financing Facility shall expire at
5:00 p.m. (New York City time) on June 30, 1999, unless on or prior to such
date, definitive loan documentation shall have been agreed to in writing by
all parties, and all conditions thereunder shall have been satisfied or
waived by the Lender.
Should the terms and conditions of the offer contained herein meet with
your approval, please indicate your acceptance by signing and returning a
copy of this letter to the Lender.
This commitment letter, including the attached Term Sheet (i) supersedes
all prior discussions, agreements, commitments, arrangements, negotiations
or understandings, whether oral or written, of the parties with respect
thereto, (ii) shall be governed by the law of the State of New York,
without giving effect to the conflict of laws provisions thereof,
(iii) shall be binding upon the parties and their respective successors and
assigns, (iv) may not be relied upon or enforced by any other person or
entity, and (v) may be signed in multiple counterparts, each of which shall
be deemed an original and all of which together shall constitute one and
the same instrument. If this commitment letter becomes the subject of a
dispute, each of the parties hereto hereby waives trial by jury. This
commitment letter may be amended, modified or waived only in a writing
signed by the parties hereto.
Very truly yours,
CERBERUS CAPITAL MANAGEMENT, L.P.
By: /S/ STEPHEN FEINBERG
--------------------
Name: STEPHEN FEINBERG
Title: Authorized signatory
Agreed and accepted on this
_______ day of May, 1999:
WIRELESS ONE, INC., debtor and
debtor-in-possession
By:
Name:
Title:
EXHIBIT A
WIRELESS ONE, INC.
OUTLINE OF PROPOSED TERMS AND CONDITIONS FOR FINANCING FACILITY
This Outline of Proposed Terms and Conditions is part of the commitment
letter, dated May 17, 1999 (the "Commitment Letter"), addressed to Wireless
One, Inc., a debtor-in-possession under Chapter 11 of the Bankruptcy Code
(the "Parent"), by Cerberus Capital Management, L.P. and is subject to the
terms and conditions of the Commitment Letter. Capitalized terms used
herein shall have the meanings set forth in the Commitment Letter unless
otherwise defined herein.
<TABLE>
<S> <C>
BORROWERS: The Parent and each direct and indirect subsidiary of the
Parent (collectively, the "Borrowers").
LENDER: Cerberus Capital Management, L.P. or an affiliate thereof,
to be designated at closing.
FINANCING FACILITY: A term loan of $36,050,000, all of which shall be borrowed,
and the proceeds of which shall be paid to the Parent, in a
single borrowing on the Closing Date (as defined below).
TERM: The Financing Facility is to be repaid in full at the
earlier of (i) the date which is two years following the
Closing Date and (ii) the substantial consummation (as
defined in 11 U.S.C. <section> 1101(2)) of a plan of reorganization
(a "Plan") in the Case which has not been approved by the
Lender as set forth below (such earlier date, the "Maturity
Date"). Any confirmation order entered in the Case shall
not discharge or otherwise affect in any way any of the
joint and several obligations of the Borrowers to the
Lender or any other term, provision or condition of the
Financing Facility, other than after the payment in full
and in cash to the Lender of all obligations under the
Financing Facility and the delivery of the Warrants (as
defined below) in accordance with the terms hereof, on or
before the effective date of the Plan.
The Lender shall have the right to approve, or withhold
approval of, the Plan in its sole and absolute discretion;
PROVIDED, HOWEVER, that, subject to the delivery of the
Warrants, the Lender shall have no approval rights with
respect to the allocation of the equity of the reorganized
Parent; PROVIDED, FURTHER, that, subject to the negotiation
of financial covenants reasonably acceptable to the Lender
with respect to periods after substantial consummation of
the Plan, the Lender approves the Plan most recently
submitted to the Bankruptcy Court.
MANDATORY AND OPTIONAL PREPAYMENT: Proceeds from the sale or other disposition of any assets
of the Borrowers outside the ordinary course of business,
in excess of $6,000,000 in the aggregate, shall be paid to
the Lender to reduce the amounts outstanding under the
Financing Facility. Borrowers shall be permitted to prepay
the Financing Facility in whole or in part at any time
without penalty or premium other than the Facility Fee (as
defined below). Notwithstanding any such prepayment, the
Borrowers shall remain obligated to distribute to the
Lender the Warrants (as defined below) and the Liquidation
Distribution (as defined below)
CLOSING DATE: The first date (the "Closing Date") on which all definitive
loan documentation satisfactory to the Lender (the "Loan
Documents") is executed by the Borrowers and the Lender,
and all conditions precedent set forth therein, including
entry by the Bankruptcy Court of the Final Order in form
and substance satisfactory to the Lender, shall have been
satisfied or waived by the Lender, which date shall not be
later than June 30, 1999.
The Lender will provide drafts of loan documentation on or
prior to May 20, 1999. The parties agree to diligently
negotiate the loan documentation. The Company agrees to
promptly seek Bankruptcy Court approval of the loan
documentation and work diligently toward the entry of the
Final Order.
COLLATERAL: Prior to the substantial consummation of the Plan, all
obligations of Parent to the Lender shall be: (X) entitled
to super-priority administrative expense claim status
pursuant to 11 U.S.C. <section> 364(c)(1) in the Case, subject only
to (i) the payment of allowed professional fees and
disbursements incurred by the Parent and any official
committees appointed in the Case, in an aggregate amount
not in excess of $2,000,000 at any time outstanding,
provided that, only professional fees and disbursements
actually made after the occurrence and during the
continuance of an Event of Default shall reduce such amount
described in this clause (i) on a dollar-for-dollar basis
and (ii) the payment of fees pursuant to 28 U.S.C. <section> 1930
(collectively, the "Carve-Out Expenses") PROVIDED, HOWEVER
that the Carve-out Expenses shall not include professional
fees and disbursements incurred in connection with any
claims or causes of action against the Lender challenging
the Lender's rights under the Financing Facility or
asserting any claims against the Lender related thereto,
and (Y) secured pursuant to 11 U.S.C. <section> 364(c)(2) and
(c)(3) by a security interest in and lien on all now owned
or hereafter acquired assets and property of the estate (as
defined in the Bankruptcy Code), real and personal, of the
Parent, including all of the stock of each domestic
subsidiary of the Parent. The security interests in and
liens on all unencumbered assets and property of the estate
of the Parent shall be first priority, not subject to
subordination (unless agreed to by the Lender). The Lender
will have a lien on the Parent's FCC licenses to the extent
permitted by law.
All obligations of the Borrowers (including the reorganized
Parent) to the Lender shall be secured by a perfected first
priority (unless agreed to by the Lender) security interest
in and lien on all now owned or hereafter acquired property
and assets of the Borrowers, real and personal, tangible
and intangible, including, without limitation, all
receivables, contract rights, inventory, machinery,
equipment, furniture, fixtures, leaseholds, real estate,
general intangibles (including patents, trademarks,
licenses and other intellectual property and tax refunds),
the stock of each of the Borrowers' direct and indirect
domestic subsidiaries, and all books and records related
thereto and all proceeds thereof. The Lender will have a
lien on the Borrowers' FCC licenses to the extent permitted
by law.
No liens will be released until all amounts due under the
Financing Facility have been paid in full in cash, except
for (i) the sale or other disposition of obsolete or other
assets in the ordinary course of business and (ii) the sale
of assets not in the ordinary course of business of up to
$6,000,000 in aggregate proceeds.
INTEREST: The Financing Facility shall bear interest at a rate per
annum equal to thirteen percent (13%), payable quarterly in
arrears. All calculations shall be based upon a 360 day
year for the actual number of days elapsed.
FEES: Commitment Fee: Three percent (3%) of the amount of the
Financing Facility actually funded on the Closing Date, earned
in full (subject to the proviso below) on the date on which the
Parent accepts the Commitment Letter and such Commitment Fee is
approved by the Bankruptcy Court, and payable on the earlier of
(i) the Closing Date and (ii) the date of substantial consummation
of a plan of reorganization in the Case.
Facility Fee: Three percent (3%) of the amount of the Financing
Facility actually funded on the Closing Date, earned in full on
the Closing Date and payable on the Maturity Date or, if earlier,
the date on which the Borrowers repay the Financing Facility in
full.
EXPENSE DEPOSIT: $50,000, payable in full upon execution and delivery of the
Commitment Letter and approval by the Bankruptcy Court, and
an additional $50,000 payable 30 days thereafter. The
unused portion of the Expense Deposit shall be applied to
the Facility Fee or, if the Closing Date does not occur,
returned to the Parent.
USE OF PROCEEDS: To repay existing indebtedness of the Borrowers and to fund
working capital in the ordinary course of business of the
Borrowers (including capital contributions to Wireless One
of North Carolina, in amounts consistent with past
practice).
CONDITIONS The obligation of Lender to extend credit or to make any
PRECEDENT: advances under the Financing Facility will be subject to
customary conditions precedent including, without limitation,
the following:
(a) Lender's completion of its due diligence (including,
without limitation, the review of the work product of Zolfo
Cooper with respect to the validity of the Borrowers'
representations and warranties), with results satisfactory to
the Lender.
(b) Execution and delivery of appropriate legal documentation in
form and substance satisfactory to Lender, and the satisfaction of
the conditions precedent contained therein.
(c) Termination of existing financing facility including release of all
liens and security interests.
(d) No material adverse change in the financial condition, business,
prospects, profitability, assets or operations of the Borrowers.
(e) Entry of the Final Order by the Bankruptcy Court, satisfactory in
form and substance to the Lender, no later than June 30, 1999, which
Final Order shall approve the transactions contemplated herein, grant
the superpriority administrative expense claim status and liens referred
to above and which Final Order shall not have been reversed, modified,
amended or stayed.
(f) The delivery of financial projections prepared by the Borrowers (the
"Projections") and reviewed by Zolfo Cooper, in form and substance satisfactory
to the Lender.
(g) The Lender shall have been granted a perfected lien on all Collateral and
shall have received UCC, tax and judgment lien searches evidencing the absence
of any liens on the Collateral, except existing and other liens reasonably
acceptable to the Lender.
(h) Opinions from the Borrowers' counsel as to such matters as the Lender and
its counsel may reasonably request.
(i) The Lender's satisfaction with all ERISA, environmental tax and labor
matters.
(j) The Borrowers shall have obtained all required approvals, governmental and
otherwise.
(k) The Lender shall have completed reference checks on the Borrowers' senior
management, the results of which shall be satisfactory to the Lender.
(l) The Borrower shall have insurance, satisfactory to the Lender, such
insurance with respect to the Collateral to name the Lender as loss payee.
(m) Such other conditions as may be required by the Lender in its reasonable
discretion and which are customary in transactions of this
nature.
WARRANTS; LIQUIDATION DISTRIBUTION: If, pursuant to a Plan, the Parent survives consummation of
the Plan in any form (i.e., the Plan does not contemplate
the complete liquidation of all of the Parent's assets and
the distribution of all proceeds of such liquidation to
creditors), the Lender will receive warrants (the "Warrants"),
exercisable at a nominal purchase price (i.e., penny warrants),
to purchase up to 2.5% of the equity of the reorganized Parent
(or such other company or companies as may issue equity pursuant
to the Plan). The Warrants will be immediately detachable, and
the Lender will receive anti-dilution protection and registration
rights, in each case reasonably satisfactory to the Lender.
If a Plan provides for the complete liquidation of the
assets of the Parent and the distribution of any portion of
the proceeds of such liquidation to the holders of the
equity of the Parent, the Lender shall receive a
distribution (the "Liquidation Distribution") equal to 2.5%
of all amounts otherwise distributed to such holders.
REPRESENTATIONS Usual representations and warranties in a debtor-in-
AND WARRANTIES: possession financing, including, but not limited to, corporate
existence and good standing, authority to enter into loan
documentation, occurrence of the Closing Date, validity of the
Final Order, governmental approvals, financial statements,
litigation, compliance with environmental, pension and other laws,
taxes, insurance, absence of material adverse change, absence
of default or unmatured default and priority of the Lender's liens.
COVENANTS: Usual covenants, including, but not limited to, provision of
financial statements, notices of litigation, defaults and unmatured
defaults and other information (including pleadings, motions,
applications and other documents filed with the Bankruptcy Court or
distributed to any official committee approved in the Case), compliance
with laws, inspection of properties, books and records, maintenance of
insurance, Year 2000 compliance, limitations with respect to liens and
encumbrances, dividends and retirement of capital stock, guarantees, sale
and lease back transactions, consolidations and mergers, investments,
capital expenditures, loans and advances, indebtedness, compliance with
pension, environmental and other laws, operating leases, transactions with
affiliates and prepayment of other indebtedness, in each case subject to
exceptions acceptable to the Lender.
Financial covenants to include minimum gross revenue and
EBITDA, based upon the Projections, tested both quarterly
and cumulatively.
EVENTS OF DEFAULT: Usual events of default, including, but not limited to,
payment, cross-default, violation of covenants, breach of
representations or warranties, judgment, ERISA,
environmental and change of control.
In addition, an Event of Default shall occur if: (i) (A)
the Case shall be dismissed or converted to a chapter 7
case; a chapter 11 trustee or an examiner with enlarged
powers shall be appointed; any other superpriority
administrative expense claim which is senior to or PARI
PASSU with the Lender's claims, shall be granted; the Final
Order shall be stayed, amended, modified, reversed or
vacated; a Plan shall be confirmed in the Case which does
not provide for payment in full in cash of the Borrowers'
obligations thereunder on the Maturity Date, and the
survival of all terms, provisions and conditions set forth
in the definitive documentation for the Financing Facility;
or an order shall be entered which dismisses the Case and
which order does not provide for termination of the
Financing Facility and payment in full in cash of all
obligations thereunder or (B) the Borrowers shall take any
action, including the filing of an application, in support
of any of the foregoing or any person other than the
Borrowers shall do so and such application is not contested
in good faith by Borrowers and the relief requested is
granted in an order that is not stayed pending appeal; or
(ii) the Bankruptcy Court shall enter an order granting
relief from the automatic stay to the holder of any
security interest in any asset of the Borrowers having a
book value in an amount equal to or exceeding $100,000 in
the aggregate.
Materiality for purposes of the Financing Facility will
generally be considered as $100,000 with respect to any one
incident or transaction or $1,000,000 in a series of
related incidents or transactions.
GOVERNING LAW: All documentation in connection with the Financing Facility
shall be governed by the laws of the State of New York
applicable to agreements made and performed in such State
except as governed by the Bankruptcy Code.
OUT-OF-POCKET All fees, including reasonable legal fees, and all
EXPENSES: reasonable out-of-pocket expenses associated with the
transaction are to be paid by the Borrowers (other than the
fees of Lender's in-house counsel and other in-house
advisors).
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